Goldman Sachs market strategist Abby Cohen and I were on "Face the Nation" last Sunday talking about the stock market collapse — she, because she’s one of the most highly regarded analysts on the Street, and I, because Peter Lynch was unwilling to screw up his Labor Day weekend — and I have two things to report.

The first is that I’m not really as pessimistic as I may have sounded. I did mean, and do believe, that anyone who’s in the market on margin should sell enough to get off margin (and that anyone in the market who runs credit card balances or pays 10% on a car loan is, in effect, in the market on margin, only paying high non-deductible interest). But that’s always true. I did mean, and do believe, that people should not invest money they may NEED in the next five years, possibly even longer — but that’s always true. And, finally, I did mean and do believe that anyone in the market should pay special attention to transaction costs and fees — easy to overlook when the market is going up 25% a year, but a terrible drag on performance at any time, and painfully so when the market is actually stagnant or going down. And that’s always true as well. (It’s never smart, in my view, for example, to pay a 2% or 3% annual "wrap" fee to have some venerable brokerage firm manage your money — it’s insane.)

I even did mean and do believe that we probably haven’t seen the bottom yet. But on that point I would have liked to bold face and italicize the caveat: "Needless to say, I don’t have a clue where the market’s headed." Hunches, yes (more often wrong than right, I’d say), but a real clue? Nah.

So Abby was a lot more confident — not to say she was issuing any guarantees — in her expectation of a market back at 9300 by year’s end than I was/am in my hunch that we probably haven’t seen the bottom.

And sure enough, with the Labor Day Weekend over, the market opened up 380 points. So maybe we have seen the bottom, though my hunch … well, you know my hunch.

But over the long term, one should certainly be excited by and optimistic about our nation’s and our world’s prospects. We have to do a lot of things right to keep from blowing it — mainly, we have to resolve our conflicts peacefully, or as nearly so as possible — but the power of technological advance holds out the possibility for extraordinary gains in productivity and prosperity.

The second thing I wanted to say is that I got a lot of e-mail from friends snickering over Abby Cohen’s presumed unstated interest. Namely, that Goldman Sachs hopes to go public next month, so of course Ms. Cohen is, consciously or subconsciously, touting the market.

But interestingly, and to her credit, this may be dead wrong. Ms. Cohen is not a partner at Goldman Sachs; she is an employee (albeit a highly regarded, senior one). Which means that while the partners will, in effect, be "sellers" when Goldman goes public and would not mind seeing a strong market for their offering, Ms. Cohen will in effect be a buyer in that her stock options will, one presumes, be tied in some way to the opening price. The lower, the better.

So Abby Cohen may be right about the market or wrong about it, but she’s not bullish just to pump up her Goldman stock — she doesn’t own any.


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