Nouriel Roubini doesn’t give specific investment advice, but he’s repeatedly mentioned that the S&P 500 index is at least 20% overpriced during the recovery. His stock market predictions have consistently been pessimistic. If you try to develop an investment strategy using his commentaries about the markets as your guideline, you would have lost most of your capital. Interestingly Insider Monkey developed an investment strategy using Google users’ interest for Roubini as an indicator. Using the Roubini Sentiment Indicator, one could have returned 2.4% per week during the past 4 years when the indicator is signaling a ‘BUY’.
Clearly Roubini doesn’t follow his own predictions or short the market indices. In fact, there’s one investment Roubini made which returned him more than 1500% in 4 years. According to a credible Turkish columnist, Nouriel Roubini charged organizers $10,000 to attend the 2007 Coface Country Risk Conference. This year the conference’s organizers wanted to invite Roubini again, despite his poor track record during the past couple of years. Surprisingly, this time Roubini demanded $150,000 to attend the conference. The man is building his brand, and the most recent development indicates Roubini’s investment in his name-brand reputation returned him 1500% since 2007.
In 2007 Roubini was an unknown, obscure economist with extremely pessimistic views about the markets. He was also pessimistic in 2004 because of $40 oil prices. You can criticize Roubini for anything but you can’t criticize him for being inconsistent. He is a permabear. Until 2008, this brought him ridicule and embarressment. However, his bearish views also provided him the tickets to be on TV where news producers try to balance the bullish commentators with bearish ones. Since there is no shortage of bullish investors in America, Roubini picked other side. Ever remember seeing a sensible commentator who is neither bullish nor bearish on TV?
Before the 2008 crisis, there were a few other permabears. They all became famous and had huge followers for a year or so. However, the 23-month increase in the stock market revealed their true nature to the unsophisticated investors. Roubini’s popularity plunged by more than 90% since its peak during the Fall of 2008. Roubini might be able to charge $150,000 for an appearance, but it seems like it’s getting more difficult to find sponsors who are willing to fork over that kind of cash for his subpar predictions.