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In September 1998, when the Long Term Capital Management crisis was still burning through the market, a group of Wall Streeters got together after the close one evening at what is best described as a dive. Talk turned to Abby Joseph Cohen, the bullish Goldman Sachs strategist.

"She was wrong!" one of them (bearish) yelled in the too-close-to-your-face manner of the somewhat drunk. "She was

insert favorite expletive wrong!" This went on for a while, the main point being that Cohen had stayed bullish throughout the downturn, and had even made the mistake of saying in early August that she believed the market was at the lower end of a trading range that it had entered that April.

"Abby Joseph Cohen was

insert expletive again wrong!"

But by the end of 1998, the

S&P 500

had reached new highs. Many would argue that Cohen was exactly right to stick to her guns. Still, if you were agile with your trading, and had sold in the summer and bought in the fall, you would have gotten a whole lot more upside than Cohen had given you.

This point wasn't lost on investors. Back when the market wasn't so volatile, Cohen could be all things to all investors. Once things started to jump around, however, that changed. Long-term investors and institutions whose aircraft-carrier-sized portfolios preclude them from moving nimbly were still well served by the strategist. Those who were interested in playing in the currents were not. And so Cohen's profile was diminished.

But Cohen didn't seem like such an artifact March 28, when she told clients she had reduced the stock weighting in her model portfolio to 65% from 70%. This, in itself, did not really roil the market; the

S&P 500

has only slipped about 1% since then. But it brought home something she had done two weeks before: a lowering of tech to underweight from overweight in her portfolio. (Cohen's portfolio now is 27% tech vs. the S&P's 33% or so.)

Though Cohen had published a note on the change, it hadn't been very well publicized. The

flurry on March 28 changed that, and since then there has been a massive rotation out of technology and into so-called Old Economy stocks. In the week ended Tuesday, the

Nasdaq Composite Index

skidded 14.2%, while the

TheStreet Recommends

Dow Jones Industrial Average

added 2.1%.

Sector Calls Outweigh Allocations

Though strategists' stock, bond and cash allocations still garner a lot of media attention, most reckon that it is this kind of sector call that matters the most these days. This was not always the case, but the bull market has now been so long-lived that few portfolio managers have the kinds of balanced stock, bond and cash portfolios that they once had.

"Most professional money managers are in the market," explains John Manley, portfolio strategist at

Salomon Smith Barney

. "They have no choice. They've hung out their placards to be stock managers."

These days, for example, most mutual fund managers feel that their mission is to be fully invested, even if it looks like the market is about to fall apart. It is the investor's job to figure out the appropriate equity exposure. For a typical manager "it's not even a question of, 'Do I want to raise cash or not raise cash?' " says Manley. "It's, 'I have to own stocks, you tell me which ones.' "

It's a situation where asset allocation is important only insofar as it colors a strategist's sector-allocation call.


J.P. Morgan

equity strategist Doug Cliggott, "If we can help investors avoid high-risk, low-return parts of the market, and push them into low-risk, high-return parts of the market, I would think we are doing a very good job." Cliggott is cautious in the current environment, and so his model portfolio is concentrated in the consumer staples and energy sectors, the areas he believes where accelerating earnings will help to mute any downside.

Though it is probably more valuable to both institutional and individual investors than any overall market call, good sector analysis isn't going to grab headlines. There's nothing sexy about it, and because it involves a lot of moving parts, even someone who's good at it is going to be wrong, often egregiously so, some of the time. That doesn't fit in well with the image of the always-right guru. Nor, in a market that skips around like this one, can any strategist give the kind of market-timing advice some investors want.

"This is a more difficult market to say that you've got a clear crystal ball," says Ed Hemmelgarn, who manages

Shaker Investments

, a Cleveland-based hedge fund with $1.5 billion under management. "In general, as the individual-investor dynamic has taken hold, the market prognosticators have had less and less of an impact."

So maybe there are fewer magazine covers in Ms. Cohen's future. On the other hand, these days you probably aren't going to find anyone in a Wall Street bar jumping up and down and talking about how

say it if you must wrong she was to cut back on tech.