The Roubini Portfolio

Is Nouriel Roubini really 100% invested in equities, as Eddy Elfenbein and John Authers think? I asked him directly, and of course it's a bit more complicated than that.

Roubini, as a professor at NYU, has a 401(k) -- and that is invested in a broad range of domestic and international equities. Whatever percentage of his NYU salary that Roubini puts into his 401(k), then, will indeed be allocated 100% to equities. But apart from that, Roubini is 100% in cash. He's a boldface name these days, in high demand as a speaker around the world, and all those speaking fees -- which I should imagine add up to a substantial sum over the past three years or so, and which undoubtedly dwarf his 401(k) contributions over the same timeframe -- have gone into nothing but cash.

What's more, Roubini has a large equity stake in his company (and my former employer), Roubini Global Economics. Does that count as being "invested in equities"? Or is it more what Barbara Kiviat is talking about when she says that increasingly our jobs are our most important asset?

My feeling is that Nouriel, like me, is at heart old-fashioned when it comes to money: we don't believe we can beat or time the market, and we reckon that the best way to improve our net worth is to make money on the labor market, spend less than we earn, and save the difference. Gone are the days of making more money from your home than from your job: now we all need to go back to working for a living.

Comments

[thackers33:]

I agree, the younger generations need to re-discover the work ethic, real work that is not the pretend stuff they have been so busy with in recent times. Real work creates real value and is the only way forward. All this so called service stuff has run out of real assets to service and that is at the root of current problems.

Mar 16 03:20 PM

[Ricard:]

I think that if one were able to appraise companies that deliver real value, stock picking could be a profitable art. I would first look for companies who largely employ your work ethic in their daily operations.

Mar 16 03:24 PM

[Fred Voetsch:]

"...we all need to go back to working for a living."

NOOOOOOO!!!!

That's just SO unAmerican!

:-)

Mar 16 03:59 PM

[Jolly_Rancher:]

Bring back the 6 day work week.

Mar 16 05:33 PM

[joshuaodonnell:]

bring back the 3 day work week.

Mar 16 05:43 PM

[EricDM:]

So what does this mean for "younger workers"? When I entered the workforce 15 years ago, we were encouraged to save, but to use those savings to buy and hold a portfolio of diversified investments.

So now younger workers should just put their savings in the bank?

Mar 16 05:44 PM

[sr9web:]

6-day work week coming back soon? Excellent!
That will give me one day off per week...!


On Mar 16 05:33 PM Jolly_Rancher wrote:

> Bring back the 6 day work week.

Mar 16 05:45 PM

[xsellside:]

What, no cash, gold, or mattress option in the 401(k)?

Mar 16 05:54 PM

[William Cowie:]

It is how most people feel. Most people are also poor, or rather, not wealthy.

At the bottom of the cycle/market we all tend to feel poor and sorry for ourselves. At the top of the market, we all feel rich and overspend. Well, most of us, anyway. Most people who are truly wealthy are invested, and stay invested. They know the same portfolio now worth a pittance will, without changes, be worth double in three years or so, without having to do anything. For them, the only time the prices matter is when they cash out.

Mar 16 06:40 PM

[Stone Fox C...:]

How do you know this for a fact? Pretty sure he stated himself that he was 100% in index funds. Maybe it was just for his 401K but that is a substantial amount of money that has the tax advantage of trading in and out. Yeah, it ain't worth timing the market but when you supposedly know the financial system is going to collapse and banks will be insolvent why not cash out?

Mar 16 07:10 PM

[eternitus:]

Yes, the "younger generation" has got to learn about hard work... just like their parents who got drunk on asset bubbles, stole the younger generation's money through enormous deficit spending and will continue to steal in retirement. if only we youths could have such virtue.

Hypocrites.

Mar 16 11:00 PM

[Child Psych...:]

With each additional story that discusses Roubini's personal investment allocation, his Tribeca apartment, his taste in foie gras, his favorite Nina Simeone song .... I become increasingly sure that we have put in a major, if not the major, market bottom.

Mar 16 11:20 PM

[Lilguy:]

It appears that Roubini is actually putting his money where his mouth is. I have no problem with anyone who walks whatever his or her talk is.

I really get PO'd at the executives, advisors, analysts, and economists who talk one thing and do something else. Take Dick Fuld, please: "Here by this crap I'm selling, but I'm getting out of Dodge." I have no sympathy, indeed, I despise these hypocrites.

Mar 17 09:24 AM

[kelm:]

I don't consider owning your own business or a substantial portion of a business with your name on it being "in equities". I take him at his word.

Cramer had a very small article on TheStreet near the end of last year where he stated all of his 401k was in bonds as he had too much exposure to equities.

Mar 17 09:51 AM

[hpcooperjon:]

Pulleeezze! Not the C word.


On Mar 17 09:51 AM kelm wrote:

> I don't consider owning your own business or a substantial portion
> of a business with your name on it being "in equities". I take him
> at his word.
>
> Cramer had a very small article on TheStreet near the end of last
> year where he stated all of his 401k was in bonds as he had too much
> exposure to equities.

Mar 17 11:55 AM

[Old Trader:]

Hmmm...I seem to recall reading something in Bloomberg, a week or so ago, about how many of the wealthy European investors were moving heavily into physical gold.....that doesn't quite square with your comment (and no, I'm NOT a "gold bug", and yes, I DO realize Europeans have a different regard for gold, than do most US citizens).


On Mar 16 06:40 PM William Cowie wrote:

> It is how most people feel. Most people are also poor, or rather,
> not wealthy.
>
> At the bottom of the cycle/market we all tend to feel poor and sorry
> for ourselves. At the top of the market, we all feel rich and overspend.
> Well, most of us, anyway. Most people who are truly wealthy are invested,
> and stay invested. They know the same portfolio now worth a pittance
> will, without changes, be worth double in three years or so, without
> having to do anything. For them, the only time the prices matter
> is when they cash out.

Mar 18 12:37 AM

[svosavvy:]

Yeah, we should all get back to working for a living, 6 days a week. Now all we need to do is find a job. LOL I would offer that "the younger generation" (mine) needs to learn more about money management. I had to go to college before they taught me how to balance a checkbook. Spend less than you earn, truer words were never spoken. Entertain yourself on the cheap, heck look at Buffett. A burger, a coke, and a game of bridge and the guy's happy. Cost cutting always beats making more money, just look at the institutional imperative, spend a dollar restructuring to make 75 cents. That is a metaphor for life, give up your absurd lifestyle to be able to spend a day at the park with a loved one. After all having a loved one is the ultimate intangible asset that never suffers a goodwill impairment.

Mar 20 10:15 PM

[Analyste de...:]

I missed this article. Very interesting! If Roubini's a set-it-forget investor "investing for the long-term" & contributing to a Lifecycle 2025-2030 fund from either Vanguard or TiAA-CREF, both NYU's providers, he was DOWN -48% > -54% (10/12/07-3/9/09.)

Vanguard touts its index funds - and they aggressively & efficiently marketed these products in the plans I worked with - and contributing participants likewise took a bath. TIAA-CREF products are uniformly among the most expensive MFs. (It's possible that either of these fund companies offerred NYU a custom managed retirement product that dodged a bullet, but that's verrrrry unlikely: NYU lost $25 mil. with Madoff, after all.)

Mar 29 01:53 AM