Analyst Cohen Forecasts Modest 8% Gain on S

Let’s get real.

So said one of Wall Street’s most prominent long-term bulls Thursday, as Goldman, Sachs & Co. Chief Investment Strategist Abby Joseph Cohen forecast the Standard & Poor’s 500 index will rise a modest 8% by the end of 2000, more or less reverting to its historical norm.

Her forecast would fall far below the 23% to 37% returns of the last four years, and about halfway below this year’s 16% gain so far.

But if Cohen’s past performance as a forecaster is any guide, the leading blue-chip index could rise much more.

Cohen, the top Wall Street strategist in Institutional Investor’s survey of money managers, has said for the last three years that the S&P; 500 would gain about 10%. Each year, the gains have dwarfed her predictions, with the index rising an annual average of 25% since 1997.

And money managers who follow Cohen’s work say she has the important part right: that stocks will rise and that investors should focus on shares of fast-growing companies.

“She’s been aggressive enough to keep you invested in the right way, and that’s what’s important,” said Charles Lemonides, chief investment officer at M&R; Capital Management Inc. in New York.

Cohen’s forecast assumes 8% growth in operating profit for the companies in the S&P; 500, slowing growth in gross domestic product, mild gains in inflation and a “tentative” global recovery, all of which she had previously announced.

The Dow Jones industrial average will reach 12,300 by the end of next year, she said, about a 9% gain. Her forecast for the S&P; 500 would put it at about 1,525 by the end of 2000.

A Reuters poll found Wall Street strategists maintain a similar view, with the median S&P; 500 forecast at 1,575 by the end of 2000. The nine strategists forecast about a 13% rise in the Dow Jones industrial average, which would put it at 12,725.