Fear-Mongering For a Fee

These doomsayers are getting rich, but the only people they're helping are themselves.
By Skip Raschke ,

Not only does bad news sell, bad news makes the doomsayer rich! A perfect example of this phenomenon can be seen in professor-turned-entrepreneur Nouriel Roubini, who just bought a 3,700-square-foot Manhattan condo for the

cheap

price of $5.5 million, according to

Bloomberg

. That equates to a cost of just under $1,500 per square for the man who, as recently as 2005, was the

super bear

of real estate predictions! My how things can change in five years!

Now that five years have passed and the sky still hasn't collapsed, I suppose the ole professor isn't (wasn't?) so "grizzly" after all. Oh, Bloomberg also reported that Roubini took out an adjustable $2.99 million mortgage! Thus, we can also assume that he is rather confident that these low interest rates will be around for the foreseeable future. This is an interesting development, considering the fact that Roubini became famous as a result of his monotonous appearances on CNBC and Bloomberg, where he espoused his pessimistic predictions every chance he got.

However, even my 87-year-old mother was ahead of Roubini when it came to predicting the real estate fiasco! So was my neighbor, a comfortably successful homebuilder. He rapped up new construction around here in 2005. My point is this: if you were paying any attention to what was going in real estate speculation in 2005 and beyond, you saw the whole thing coming, just as my Mom, my neighbor and the ole professor did. The difference is in the fact that Roubini got the financial press to allow him to broadcast his yapping clarion calls. He then began signing up customers who though it wiser to pay him for his "visions" than to simply note the obvious for themselves! If somebody makes a movie about this period, they should call it Mr. Obvious Sees a Train Wreck Ahead.

Good for him and "boo" to those who pay for doomsayer yapping and ranting. Hey, it was a great year for those sold doom and gloom! CNBC's and Bloomberg's ratings must have gone up with the airing of each and every negative financial storyteller.

When I first started working on Wall Street, I was told that, if you want to be right, just keep saying the same thing over and over again and, sooner or later, the time will come when you are! The "perma-bears," as well as the "perma-bulls," all recognize the efficacy in this strategy of self-promotion. Ethically, that attitude and tactic was and still is repulsive to me. Yet, that is precisely the strategic core of both doomster and the Pollyanna crowds. It is their mantra. It is what they know works for them when it comes to financial prognostication in the 21st century.

They are fostered by the ratings they produce as they prognosticate regardless of whether or not they tend to be correct! Their first Holiday wish is for recognition when they are correct and forgetfulness (on the part of the audience) when they are wrong. Their final wish is to get paid so well for being so prescient that they, too, can afford a $5.5 million condo in Manhattan.

To them, I say, "Humbug!"

(There is no trade for today. Happy Holidays!)

Skip is a former registered options trader and member of the Philadelphia Stock Exchange. He was an equity options analyst and broker with Paine Webber and a proprietary trader for Van Der Moolen. He served in the USMC, as well as played minor league baseball with the N.Y. Yankees organization. He is an independent stock and options market consultant.

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