Abby Cohen Expansion Quotations

Equity prices can rise, despite decelerating profit growth and moderately rising interest rates, if investors expect economic expansion to continue. In previous such cases, stocks outperformed bonds, often notably.

The basic conclusion is that 1999-2000 will bring further gains in corporate profits, mild-mannered inflation and a generally favorable outcome for equity prices. Increasing confidence that the economic expansion will continue through our newly-extended forecast horizon encourages a modest upward revision in stock price targets.