Nouriel Roubini & the Stock Market

The original idea for this post came from Ekonomiturk

Of late, Nouriel Roubini has been called a perma-bear by many people, and hence he has got knocked down few notches from the pedestal of Market Oracle where he had been placed in the wake of the Great Recession of 2008-09.

However, a new chart (shown below) seems to suggest that Nouriel Roubini does have the ability to predict market movements even when the general trend of the market is upwards. It is just that these predictions are quite unintentional. Mr. Roubini seems to be providing cues on when to buy and sell stocks in the market.

The good folks at Ekonomiturk have put out a chart which compares the popularity of the search keyword 'Nouriel Roubini' on Google (through Google trends) and the gyrations of the S&P 500. It seems that their movements are negatively correlated. i.e. when the market starts to take a breather and corrects after a few days of rising, the public starts to seek out Nouriel Roubini, to see whether the most recent crash is likely to lead to a double-dip recession and a harrowing market crash.

As soon as the correction ends, and the upward trend resumes, Mr. Roubini's popularity on Google crashes with the force of waves crashing into Marine Drive during the monsoons.

Here's the graph.




As a value investor, I try to avoid making my investment decisions based on such indicators, but it is a fun way to understand investor behaviour. I would file this post under my 'Behavioural Investing' bookshelf.