The Roubini Portfolio

March 16, 2009

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.

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