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.
When Roubini has been wise enough to get out of the prediction game, he has put forward some sensible medicine for the ailing economy. For instance, he is advocating for a "payroll tax break" that would get more money into the hands of employees immediately and encourage employers to hire, as they'll be paying less for new employees. Since it's not a prediction of impending doom, however, his call for smart stimulus isn't likely to generate much in the way of front page headlines.And if you read between the back page headlines for Roubini's "payroll tax break," you can see he has hope for the U.S. economy after all. That's why you should get your "buy list" ready for cash you may still have on the sidelines. Here are three ETF areas that deserve attention when respective ETFs pull back 3 percentage points to 5 percentage points from intraday peaks: 1. Small-cap emergers: Smaller economies have lower correlations with one another and/or large economies. The same can be said about small companies in those smaller economies. Essentially, you will be able to enhance portfolio gains and lower risk by including small-cap emerging stock ETFs. The relative strength demonstrates a likelihood of continued percentage performance. Meanwhile, the lower correlation gives better diversification. Consider WisdomTree Small Cap Emerging Markets ( DGS) and Market Vectors Small Cap Brazil ( BRF). 2. Telecom: The valuation of the industry as a whole is magnificent, but this isn't a valuation-based market. OK, fair enough, but take a look at relative strength and you'll recognize telecom as the strongest in the 10 U.S. sectors. It gets better, too. The yield is second only to the slower-moving utilities, and if you're looking for a recession-resistant arena, know that telecom equipment and wireless services were among the very few to grow during the 2008-09 downturn. Consider Vanguard Telecom ( VOX) and iShares Global Telecom ( IXP). 3. "Apple ETFs": If the U.S. stock market rallies in the fourth quarter, you know it won't do it without its Nasdaq champ, Apple ( AAPL). On Friday, when Apple fell slightly, we still saw $645 million flow into buying on the weakness. ETFs with heavy exposure to the big AAPL? The Internet Architecture Fund ( IAH) as well as First Trust Nasdaq 100 Technology ( QTEC). >To submit a news tip, email: firstname.lastname@example.org.
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