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Nouriel Roubini: Stock Market Bull?

January 23, 2009

Rocky suggests the following question for the 2009 College SAT Preparation Guide:
“Lex Luger is to Hulk Hogan, as Nouriel Roubini is to ___?”

Choose from:
(a) Timothy Geithner
(b) Robert Rubin
(c) Henry Kaufman
(d) Elmo
(e) None of the above

The correct answer is (c). Roubini, known for his premature and Nostradamus-like prognostications, recently claimed the Worldwide Title of “Dr. Doom” from Dr. Henry Kaufman, who held the coveted Title from 1977-2008. By analogy, Lex Luger took the World Wrestling Championship from Hulk Hogan after a similarly long string of “victories.”

Rocky suggests that Roubini, who is forecasting a further 20% stock market decline, may be (relatively speaking) a stock market bull! Rocky just checked the December 2009 S&P500 ETF 640 Covered Call, and discovered an annualized stand-still rate of return of about 14%. This BULLISH trade will make an attractive return even if Roubini’s 20% decline forecast proves correct. See http://www.optionseducation.org/strategy/covered_call.jsp for technical details.

Rocky concludes: The market is more bearish than Dr. Doom-Roubini and/or options prices (“implied volatility”) are too high. Rocky shuns forecasts, but he tends to think that the latter may be true. He strongly believes, however, that Noriel Roubini’s reign as Dr. Doom will be far shorter than Henry Kaufman’s.

  1. January 29, 2009 at 2:09 am

    Someone who is trying to prevent people from exuberence is always called a doctor doom . Its like stopping the music at midnight.

However i once heard one of his interview in 2006. I believe him. I was always frugal so it was easy to believe him. But he you were partying , buying and building house on debt and credit card. You would have thought that he was a stuffed up party crashes guy. I thank god i listened to him

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