I sincerely hope we crash ~35%. Just to pull the mask off of these fraud analysts like her: http://ftalphaville.ft.com/blog/2007/03/07/3011/goldmans-cohen-just-calm-down-this-is-not-1987/ FT Alphaville, UK - Mar 7, 2007 Goldmanâs Cohen: âJust calm down. This is not 1987′ The recent market wobble has simply enhanced the attractiveness of leading US equities, Goldman Sachs strategist Abby Cohen declared on Wednesday. And anyone who tries to draw parallels between the current process of de-risking and the ugly events of October 1987 should look at the facts. The â87 crash was caused by portfolio insurance, which was found to be structurally faulty. It sought to minimise investorsâ losses by automatically reallocating assets when markets fell, but because prices gapped the system failed â resulting in computer-driven orders to sell equities at ever-lower prices. The current episode of market volatility is still underway and it is too early to carry out a full review of precisely what happened, Cohen says, but she does think its is a good moment to review the likely fundamental backdrop and therefore the attractiveness of equities. Cohenâs conclusions: * No changes to Goldmanâs baseline forecasts. âThese already reflect a notable deceleration in economic and profit growth in 2007, but there is no recession on the horizon.â * Valuation support is intact for US equities. âOur estimated fair value for year-end 2007 remains 1550, suggesting that the S&P 500 is now about 11% under pricedâ¦The strength of US corporate balance sheets, especially among the companies in the S&P 500, and strong ROEs, should also offer some ballast in a rocky market environment. We assume that margins will move lower in many industries this year, but from record-high levels to still-high levels.â * GS forecast has long presumed a deceleration in economic growth this year. âImportantly, core inflation is not expected to rise dramatically.â So itâs official then. Whatever Alan Greenspan thinks, the panicâs over. For now.