Nouriel Roubini's Portfolio ~ market folly

Thursday, March 19, 2009

Nouriel Roubini's Portfolio

In a shocking development, Nouriel Roubini, a.k.a. the harbinger of doom himself has been thrust in the spotlight yet again. And by shocking, we mean not shocking at all. Anyways, the FT recently gave us a glimpse into what Roubini himself invests in,

"Just ask Nouriel Roubini of New York University, who has a reputation as the most pessimistic economist in academe. He deserves it. His most recent paper, published last week, is entitled: “Can the Fed and Policy Makers Avoid a Systemic Financial Meltdown? Most Likely Not.”

Nobody is more aware of the gravity of the financial situation, and nobody has done more to point out the risks of a systemic crisis.

So how are Roubini’s own funds invested? They are 100 per cent in equities. In the long run stocks do best and he is not yet close to retirement, so he keeps putting more money into index funds each month.

Fully aware of the gravity of the financial situation, he is also aware of the futility of trying to take action or to time the market. Those tempted to make the investing equivalent of a goalkeeper’s depairing dive should take note."

Felix Salmon of Portfolio went one step further and then notes that while Roubini's 401k is in equities, he has his interests in his firm as well as a lot of cash on the sidelines. So, while Roubini has cash on hand, you'd have to think that he would be inclined to put more of it to work at some point. But, maybe the fact that he is so incredibly pessimistic will blind him from his own contrarian indicators... who knows. I have yet to decide whether or not Roubini turning bullish (if that ever happens) is a good or bad thing. I'm actually scared for that day. The point is, though, that Roubini is human. He has a 401k just like practically everyone else out there. And, he is invested in the markets for the long-term. So, if you were to extract a positive from all of this, there you have it. And, if I were you, I would savor it. Because after all, don't forget that Roubini's picture is listed under 'doom' in the dictionary.

We recently noted that Roubini's estimate for the S&P 500 is 600 on the dot. At that level, he suggests that the S&P companies will earn $50 a share and trade at 12x. He also did not rule out the possibility of seeing 500. Considering we are getting relatively close to his targets, you have to wonder if he is starting to get slightly more constructive deep down. You would assume that he would possibly be investing his own money if/when we reach those levels. But, that is pure speculation on our part. We're mainly making this point to show that while he is not apt to time the market, he has identified a level of valuation he deems acceptable.

Just remember that now you, too, can be Nouriel Roubini by printing off this Roubini Halloween mask and proceeding to talk about doom and destruction nonstop.

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