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Is Abby Joseph Cohen Still an Optimist?

The following commentary comes from an independent investor or market observer as part of TheStreet's guest contributor program, which is separate from the company's news coverage.

NEW YORK (TheStreet) -- Abby Joseph Cohen has been a legend on Wall Street for decades. Cohen, an economist and financial analyst, began her career in 1973 as an economist for the Federal Reserve Board at a time when women were just beginning to have an active presence in the rough-and-tumble financial world. Four years later, she moved to T. Rowe Price, working as a quantitative research director and economist.

In 1983 she moved to Drexel Burnham Lambert, where she stayed until a Justice Department inquiry led to the firm's demise. She worked briefly for Barclays de Zoete Wedd, then moved to Goldman Sachs in 1990 as vice president and co-chair of the bank's Investment Policy Committee. She rose through the ranks at Goldman, becoming a partner in 1996 and, ultimately, the bank's Chief Investment Strategist, a position she retained until David Kostin replaced her in March of 2008.

Abby Joseph Cohen

Cohen has enjoyed a reputation as a financial powerhouse -- the Ladies Home Journal named her one of the 30 most e powerful women in America in 2001, and Forbes ranked her No. 19 on its list of "The Most Powerful Women in 2005." However, Cohen reportedly indulges in none of the high-powered posturing that such a successful financier might be expected to display. She's described as soft-spoken and ladylike. She's also widely known for her indefatigable bullishness.

Cohen's reputation as an unfailingly upbeat forecaster was born when she famously predicted the bull market of the 1900s far earlier in the decade than more cautious analysts did. For years, Cohen spoke and investors listened breathlessly. However, her failure to predict the stock market declines of the early 2000s and, perhaps more critically, the crash of 2008, did her reputation as a financial superstar little good. Cohen's bullishness was viewed with increasing skepticism by financiers who began to wonder if hard data supported her ongoing optimism. As recently as Aug. 6, 2009, Cohen predicted that, "the new bull market has begun." As we all know, emerging circumstances failed to prove that prediction true.

Cohen did not agree to be interviewed for this article, perhaps with good reason. In January of this year, she made headlines not for the accuracy of her predictions, but for a singularly awkward interview she granted to Deborah Solomon of The New York Times. Investment banks have a very different reputation than they enjoyed even a few years ago, and Cohen apparently was not prepared for the tough questions that Solomon fired at her. Solomon began by grilling Cohen about why, when women now represent 30% of M.B.A. programs, they made up only 12% of Goldman Sachs partners. She went on to ask about Goldman's Facebook debacle, the ethics of international banking, and the meltdown of 2008. The Times acknowledged that the interview was "condensed and edited," so it's very possible that some of Cohen's salient points were omitted. Overall, however, the printed version portrayed an analyst who was unable or unwilling to respond succinctly to challenging questions from a skeptical journalist.

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