Roubini's Popularity vs. S&P 500, Dr. Doom or Dr. Realist?

NYU professor Nouriel Roubini has been claiming that he is “Dr. Realist” not Dr. Doom. If he is indeed Dr. Realist, his name's popularity should be positively correlated with the S&P 500 index. However, if he is indeed Dr. Doom, his popularity should be negatively correlated with S&P 500 index. By using Google Trends we can measure the popularity of “Roubini” search phrase in Google search results. So, I downloaded a weekly index showing the popularity of “Roubini” (I also tried “Nouriel Roubini” and it was 99% correlated with “Roubini”) and calculated an 8-week moving average for “Roubini”. The correlation coefficient between S&P 500 and “Roubini” index is -0.685; the correlation coefficient between S&P 500 and 8-week moving average “Roubini” index is -0.83. The correlation coefficient is greater when we use the 8 week average because it smooths out those days when Roubini’s name is cited by major media outlets and gets disproportional attention.

When you look at the graph, you will notice the negative correlation especially after Summer of 2007. The graph covers Aug 2006- Apr 2010 period. The last time Roubini’s popularity increased tremendously was March 2009. Since then Roubini’s popularity has been declining and the stock market has been increasing. I also ran a regression test and found that 1 unit increase in Roubini’s popularity is associated with a 114 point decline in S&P 500 index. His popularity was 5.5 in March 2009 and it is 1 now, so this implies that S&P 500 index should increase by about 114*4.5= 513 points since March 2009. Considering that S&P 500 was around 680 when Roubini’s popularity peaked the last time, our regression tells us that S&P 500 index should be around 1200 today.

This simple analysis clearly shows that Dr. Roubini deserves the “Dr. Doom” name. A “realist” person would agree with that.

This article is published in Ekonomi Turk, Turkey's most popular economics blog.

Updated version of this article can be found at Insider Monkey:
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6 Yorum Var.:

jedi-tetsu dedi ki...

ben 2007 yi göremedim :)

MCO dedi ki...

öncü göstergelere eklememiz gereken bi etken:)

Bill dedi ki...

What's the correlation between Roubini and the VIX?

Editor dedi ki...


It has to be very high. That's what I am gonna look next. Also maybe I can create a Roubini indicator where you take positions based on changes in his popularity.

Unknown dedi ki...

Son yoruma çok güldüm..: ))

Bill Luby dedi ki...

Interesting work. FYI, to answer a question above, when I did Roubini and the VIX post last year, it got a great deal of attention.