Making money on the thinking of Nouriel Roubini is not what it used to be.
The New York University professor, who in 2006 foretold the worst financial unraveling since the Great Depression, has yet to say the economy is worth investing in again.
"There is a big risk of a double-dip recession," said Roubini, also known as Dr Doom, in his column in the Financial Times this week.
Anyone attempting to apply Roubini's wisdom to stocks may be forgiven for missing the biggest rally as the Standard & Poor's (S&P) 500 index rose 52 percent in six months.
While Roubini said in March the advance was a "dead-cat bounce", that it might "fizzle" in May and warned last month that the economy was "not out of the woods", the MSCI world index was posting a 58 percent gain, the largest since it began in 1970.
"We're looking at a bull cycle in phase one," according to Laszlo Birinyi. Birinyi was the top-ranked Dow Jones industrial average forecaster for most of the 1990s.
"No one wants to come out and say, 'This is a bull market.' Everyone's just dancing around the term," he said.
The S&P 500 added 14 percent since Birinyi Associates said on May 20 that a bull market had begun, according to data by Bloomberg.
Roubini, who forecast in last October that the US was in a recession that would last 24 months, said on March 9 the index might fall back to 600. It has risen to 1 028 since then.
About $4 trillion (R31.5 trillion) has been restored to US equity markets since March following better-than-forecast corporate profits and signs of an improving economy.
More than 72 percent of the S&P 500's companies beat analysts' average estimates for second-quarter earnings, matching the highest proportion since Bloomberg began tracking the data in 1993. The Conference Board's index of leading economic indicators has risen four consecutive months.
Roubini's July 2006 warning about the financial crisis protected investors from losses in the S&P 500's worst annual tumble in seven decades.
He also correctly warned investors to avoid stocks following the steepest advances last year.
He may have missed this year's bull market because Roubini is not focused on stocks, according to Birinyi.
Roubini had "done a very good job on the economy", Birinyi said. "Our approach is to try to understand the market and not try to do much more than that."
Jonathan Goldberg, the spokesman for Roubini, said this week that Roubini was not available to comment because he was on holiday.
Roubini wrote this week in the Financial Times that the economy might worsen again even after it stopped shrinking this year. The global contraction would bottom in the second half of this year, and the recession in the US would not be "formally over" before the end of the year, he said.
In July 2006, Roubini predicted the financial crisis that led to $1.6 trillion in credit-related losses and write downs.
He forecast a "catastrophic" meltdown in February last year, leading to the bankruptcy of large banks.
Since then, Bear Stearns and Merrill Lynch were taken over, American International Group and Citigroup required government bailouts and Lehman Brothers Holdings filed for the world's biggest bankruptcy.
Birinyi said on May 20 that the S&P 500 might reach 1 700 by 2011, shifting from his April 13 call that the market had risen too much "by almost every measure". In October 2007, he told investors to avoid bank stocks, saying bad loans and lower revenue would damp earnings. The S&P 500 financials index then plunged 82 percent through March.
"Both of them just have a pretty deep understanding of the history of economic and business cycles," said Eric Teal, the chief investment officer at First Citizens Bank. "Roubini has just had more of an academic background, whereas Birinyi has been much more in the spotlight managing money and working in capital markets."
The US economy has contracted four consecutive quarters. It will expand 2.2 percent during the third quarter and 2 percent in the fourth, before growing 2.3 percent next year, according to economists.
Roubini does not invest any money on behalf of customers.
"There's a lot more weight behind pundits who put their money where their mouth is," said Jack Ablin at Harris Private Bank in Chicago. "Where I get up and pay attention is when I see someone who's been bearish go bullish." - Bloomberg