Roubini’s ‘Smart Beta’ Low Risk, High Return Bet
In an interview with FOX Business Network’s Stuart Varney, world renowned economist Nouriel Roubini compared the differences in President Reagan’s recovery to President Obama’s -- and also offered some investment advice.
“There are a number of differences,” he said. “First of all, Obama entered the worst economic and financial crisis since The Great Depression, when he came to power the stock market was down 70 percent with [an] unemployment rate like we never had before. The economy was tanking, like during The Great Depression … initial starting point was very different.”
Roubini said you can’t compare employment today to Reagan’s era.
“Secondly, population growth is very different today than [it] used to be. Migration, aging of baby boomers -- so you cannot achieve full employment like you do right now because we are creating about 250,000 jobs per month with unemployment rate close to full employment at around 5 percent. So I would say that there is a difference in job creation but you cannot essentially [compare] apples and oranges,” he said.
He also offered insight into his new investment strategy that focuses on making it simple to invest outside of the U.S.
“The first principal of investment is diversifying your portfolio. You cannot put all your eggs into one basket. … there are a huge amount of investment opportunities around the world. For example, this year Japan and Europe have done much better than the United States… Now there [typically have been] two approaches with investment: one is passive… then there is active investment… [And] there is a new approach, the smart beta...that’s what we’re supporting. It’s low cost, it’s passive and it has high return and lower risk than active managed funds and benchmarks,” he said.