Roubini Mystery: Bear, Bull, or Both?

Wall Street, by its nature, is a hotbed of gossip, much of it rubbish. But you can't simply ignore what you hear because all too often your ear may pick up some amazing nuggets of truth amid all the hot air.

That brings me to one of the most intriguing stories presently making the Wall Street rounds. It centers on the country's latest economics star, Nouriel Roubini, who has been dubbed Dr. Doom because of his extremely pessimistic view of the economy. As a result of his ongoing economic tale of terror, Roubini, professor of economics at the Stern School of Business at New York University, has received international notoriety.

As such, if you were to compile a list of people who you thought were brainy enough to have escaped the stock market bloodbath of the past few years, one candidate would surely have to be Roubini. After all, the 60-year-old Istanbul-born economist -- widely treated by the media as though he walks on water because of his prowess in accurately forecasting hellish economic times -- has been predicting for at least 4 years a recession, credit crisis, housing bust and a major decline in stock prices.

Further, he's projecting more chaos ahead -- notably a double-dip recession in late 2010 or 2011 because of rising government debt, higher oil prices and lack of job growth. If that double dip forecast turns out to be the case, stocks would get butchered because of the predominant Wall Street view that the recession is all but history.

Common sense tells you that no logical mind with this kind of a gloom-and-doom sentiment is going to include in their portfolio investments which bet stock prices will go higher.

What's obvious and likely, though, is not always reality. According to Street scuttlebutt -- newsworthy because it has reached the ears of some key market players, which makes it worth reporting -- Roubini has actually been on the long side of the market (a bet it would rise) throughout his bearish tirade.

Further, one Wall Street contact who has been in touch with some people at Roubini Global Economics tells me he hears that Roubini has personally owned two Standard & Poor's index funds marketed by the Vanguard Funds during most of the financial crisis (which he may still own). Further, a well known economist says he's been told by an insider at the global consulting firm that when it comes to stock market investing, Roubini has all the educational skills of a child entering kindergarten.

One overseas manager who heard the Wall Street chatter of a Roubini long position in S&P funds during the financial crisis says if it's so it raises a real question about the conviction of his consistent negative economic espousal. "It may be," he quips, "that the Dr. Doom moniker should be changed to Dr. Doom, Maybe."

What's Roubini's response to all of this? Alas, no response. I tried reaching him several times at NYU, at his New York-based economic consulting firm and on his cell phone, but no luck. Informed in a voice message that I wanted to chat with him about his personal portfolio, the usually publicity-hungry Roubini, whom I've interviewed in the past, made it clear through his lack of his response that he's in no mood to gab about the subject.

What does it all mean? Assuming the talk of long equity investments is correct, it raises the question, as one money manager puts it, of whether Roubini is a bear, a bull, or a combination of both. Such a market figure would be a first for me. It could also be one for Ripley. Meanwhile, stay tuned. I'll keep trying for an answer, although I fear someone may well beat me to it.

Write Dan Dorfman at Dandordan@aol.com