The American star economist is regarded as a naysayer for whom no scenario is too dark. At a performance where finews.ch was present, Nouriel Roubini has now shown a surprisingly fatherly side.
That he is a «Dr. Doom», a prophet of doom, hears Nouriel Roubini not so much. He prefers to refer to himself as “Dr. Realist», that is, as a realist who looks the many problems of the world in the face.
In his most recent volume, published last October «Megathreats» However, the Turkish-born star economist has once again lived up to his reputation as a pessimist. In it, he describes no fewer than ten trends that could pose a threat to us over the next two decades.
At one of the Zurich private market investment boutique Petiole organized webinar in which finews.ch participated, Roubini now commented on his future scenarios. Petiole Investment Manager Naji Take was not only interested in what the economist Roubini had to say – but also the professor who supervises young economists at the University of New York. Nehme wanted to know what advice he was giving his students for this risk-laden future.
White collar jobs at risk
“If you’re young today, you have to prepare to be 100 years and older,” said the 64-year-old economist. That is why it is important to take precautions not to be overtaken by rapid technological developments and put on the professional sidelines. Roubini assumes that future technologies such as machine learning or artificial intelligence will not only take over manual work, but also that previous white-collar jobs will become dangerous.
Accordingly, training in MINT subjects is advisable – albeit with the humanities as a supplement. “Assume that you will change jobs ten times in your career,” explained the star economist. You have to have verbal and written skills in order to be able to present yourself to the next employer.
Meme stock warning
He also advises against dreaming of quick riches and investing in meme stocks, for example. Instead, it would be better to save consistently and put the money into a diversified investment portfolio. This is how you make provisions for old age, because Roubini found that state pension schemes can no longer be relied on. In short, “learn, work hard, invest,” was his admonition to the young.
Although that’s the thing with investing. The founder of Roubini Global Economics (now Continuum Economics), an American provider of capital market and economic information, warned that the traditional portfolio of 60 percent equities and 40 percent bonds was outdated. “Inflation hits stock investments hard – this year you’ve lost an average of 20 percent of your wealth,” says Roubini. Because of the rising yields but also the prices of bonds have fallen. Investors would have lost twice as much this year as with shares.
A golden piece of advice
In the current environment, he recommends high-quality government bonds with short maturities, inflation-linked bonds and precious metals, especially gold.
The yellow metal benefits from an inflationary environment, explained the economic researcher. And inflation will stubbornly accompany the world economy for a long time to come. Roubini’s scenario is stagflation in developed economies and massive slowdowns in growth in emerging markets, and another debt crisis. This is because the cost of servicing debt has risen sharply with rising interest rates.
Confrontation of the tech superpowers
In his view, the advance of future technologies such as artificial intelligence has both economic and geopolitical components. Because in the future wars will be waged in cyberspace, with drones and robots, the technological lead will result in strategic dominance. The scientist believes that the tech superpowers USA and China would decide this race among themselves in the next two decades.
And although he obviously likes to talk about dangers and abysses, Roubini has designed a utopia for the world in the last chapter of his latest book. It is best to read for yourself what this looks like.