Cohen, Ever Bullish, Likes Bank, Tech Shares

Goldman, Sachs & Co. investment strategist Abby Joseph Cohen told clients Monday that she recommends drug, banking and computer shares, including International Business Machines Corp. (ticker: IBM; price: $176.38) and Sun Microsystems Inc. (SUNW, $86.88).

In a conference call with clients, Cohen advised them to keep holdings of metal, paper and forest products shares below market weightings.

The strategist said energy prices, which plunged this year, have ended their decline. The price of crude is down about 42% year to date, and the Standard & Poor’s index of major oil companies is down about 13%.

As mild winters give way to more normal temperatures, “the demand for energy should pick up,” she said. “It’s probably a good time for portfolio managers to seriously consider energy again.”

She cautioned that her comments weren’t meant to be a short-term trading call.

The strategist reiterated her forecasts that the Dow Jones industrial average could reach 9,850 by the end of next year and the S&P; 500 index could rise to 1,275. Companies in the S&P; 500 will probably see their earnings rise 5% to 7%, she said.

“We remain comfortable that 1999 will be another year of corporate profit growth for the S&P;,” she said. Investors can expect higher volatility and lower returns in 1999, but returns nonetheless.

Cohen has been among the most accurate and bullish market forecasters in recent years. Rated Institutional Investor magazine’s top portfolio strategist, she was named a partner at Goldman in October.