Is it just me, or has the permanently glum Nouriel Roubini become a softy? The good professor has received more accolades than any other analyst or economist for predicting the demise of market-based securities in 2008, never mind the horrific calls he made the following year:
- In April 2009, near Dow 7,950, Roubini predicted the markets would retest the March lows of Dow 6,500. They never did.
- In July 2009, near Dow 8,100, he described the market's run as nothing more than a bear rally. Yet the Dow rose 38% over the next nine months.
- In October, near 9,700, Roubini called for a bearish 10% to 20% pullback. Not only was he six months early, but the market's sell-off went to 9,700 from 11,200. The current cyclical low is essentially at the same spot where Roubini made his bearish call ... six months earlier. You can't be much more off than that.
In truth, I am not giving Roubini a bad time; rather, this is more of a condemnation of fortunetelling and the mainstream media's need for heroes. Nobody has any idea what will happen -- it's the greatest certainty of all.
I'm not suggesting always dismissing the ideas espoused by intellectuals. Just that you have to be open to the possibility a thinker will be wrong. And not just in the arena of market-based investing.
I've watched Roubini pile on top of every crisis since 2008. He did not anticipate the investment markets rebounding from the sovereign debt fears, so he softened his stance on sovereign debt. He did not anticipate markets recovering from the U.S. "soft patch" either. In fact, Roubini all but assured a double-dip recession. (Granted, the
National Bureau of Economic Research
declared Monday that the recession ended in June, meaning " any future downturn of the economy would be a new recession and not a continuation of the recession that began in December 2007.")
Now, with each passing week, the prophet keeps shifting his stance. Second-half GDP will grind to a halt? Well, that's not the same as a double-dip. And in his latest commentary, he's placed the double-dip possibility at 40%. Mr. Gloom is less and less gloomy with each passing day.