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More Investors Leaving Sidelines: Goldman's Cohen

More investors are coming off the sidelines and investing in the stock market, Abby Joseph Cohen told CNBC Wednesday.

Abby Joseph Cohen
CNBC
Abby Joseph Cohen

The Goldman Sachs senior U.S. investment strategist and longtime market bullsaid investors are becoming more tolerant of risk, although Tuesday's 200-point drop in the Dow industrials was "an exception, everyone nervous about Greece."

However, "by and large, the worries about Europe have receded," she said. "That doesn’t mean there may not be some potential issues including how the Iranian situation is ultimately resolved."

There have been better U.S. economic data and a growing sense that "there is money on the sidelines that is coming into the markets right now and I think many institutional investors are either coming back in or at least preparing themselves to come back into the U.S. equity market," Cohen said.

She said stocks are undervalued. Using one particular metric, she said stocks on the Standard & Poor's 500 appear to have priced in a 7 percent decline in corporate profits for each of the next five years.

"That’s possible but it’s not likely," she said, "but it gives you a sense of how nervous investors have been, and the sort of opportunities in equities if, in fact, the recessionis over and profit growth continues."

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