Why Is Goldman Upbeat on Stocks? The Risks Are Baked In

One reason for Goldman Sachs' optimism about this market—it just upgraded equities—is that the risks are well-known, and thus already baked into prices, said senior U.S. investment strategist Abby Joseph Cohen.

"A lot of things investors are nervous about may already be priced in," she told CNBC's "Closing Bell" on Wednesday.

As an example she said the Federal Reserve still has time before it will need to pull in the reins on the $85 billion-a-month quantitative easing. "But everyone's already talking about it," Cohen said, "so it won't be a big surprise."

In a note Wednesday, Goldman upgraded equities to "overweight" over the next three months while cutting its position on commodities from "overweight" to "neutral."

"We feel that another major recession is unlikely in this investment horizon, and given that assumption and some conservative profit estimates that we're making, we think that equities in many different markets around the world offer good possible outcomes," Cohen said.

As for bonds, she said: "We are concerned that interest rates in many countries are near their lows for the cycle. ... We see potential risk—not right away, but over the next period of time, in fixed income, and much less risk in equities."

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