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The Eta Analysis Overview - Everything at a Glance!

How is the economy influencing your investments right now? The Eta Analysis Overview Report shows you at a glance. Many investment strategies only look at a company's past performance in the stock market and ignore what's happening in the larger economy. By contrast, EconomicInvestor focuses on how the current economy affects your stocks, funds, and portfolios, using our patented, exclusive Eta Analysis.

Because The Economy Matters, it's vital to understand how your investments are tied to the economy. Is the economy driving your portfolio to success, or holding it back from achieving its potential? Is your fund likely to skyrocket and plummet with every economic change, or is it a low-economic risk, stable investment? How much of your stocks' success is due to fluctuations in the economy, and how much is due to company-specific details? The Eta Analysis Overview gives you all of this exclusive information.

The Economic Climate Rating

The first image displayed on the overview report is an investment's Economic Climate Rating, which will be between 1 and 5. Economic Climate Ratings tell you whether the economy is currently helping or hindering your stock's performance. Imagine that your stock is like a ship travelling across the ocean. It can make its way forward with no wind at all, or even with a headwind, but it will reach its destination much faster if a tailwind is pushing it along.

The economy is like the wind. At times, the economy may hinder your stock's progress, even if the company is well-run and has a great product. At other times, the economy may be helpful to your stock, pushing it towards higher returns than it would otherwise realize. For instance, this happened during the "dot-com bubble" of the nineties, when even mediocre companies made gargantuan profits. If the economy is pushing your stock forward, it may have four or five stars; if the economy is hindering its progress, it will have fewer stars. (Note that EconomicInvestor's stars do not tell you whether the "ship" is well-built or leaky.) If you already have stocks that you think are "well-built ships," you can compare their Climate Ratings to see which of them the economy is currently favoring.

The Composite MacroRisk Index

You need to take economic information into account when considering how risky your investments are. Why? Because the economy is generally responsible for at least 80% of an investment's price variation! To help you see the economy's influence on your stocks, funds, and portfolios, EconomicInvestor gives you your investments' Composite MacroRisk Index, the CMRI. This patented tool tells you how much economic risk your stock is exposed to. Some stock prices only move a little bit when the economy changes, while others move a great deal. The higher the CMRI for your stock, fund, or portfolio, the higher its economic risk, and the more its price will tend to fluctuate as the economy changes. By keeping track of your investments' CMRIs, you can choose the level of risk that's right for you.

The Economy's Influence

We've discovered that the economy is often responsible for determining over 80% of a stock's price variation. The rest is governed by company-specific details, such as actual decisions that the CEO makes, the perception of the company by others in the field, or whether, for instance, the company just won a major lawsuit. Our Eta Analysis Overview page tells you how well the economy really explains your investment's changes in price. Of course, the total percentage of the stock's price that our model explains (called an "R²") is different from company to company and from index to index.

Price changes in the S&P 500, for instance, are caused almost entirely by the economy, while most companies' changes in stock prices are only mostly dependent on the economy. The higher the R², the better our models explain your investments' price movement. (For comparison, many other models that claim to tell you the risk of an investment have an R² of only 5%-15%.) By showing you how much of your stock, fund, or portfolio's price change is influenced by the economy, we let you decide how much other information you need to take into account.

For More Detail...

The Eta Analysis Overview is just the beginning. For more details on how the economy affects your stocks, funds, or portfolios, check out our exclusive MacroRisk Profile Report and our Climate Rating Report (only available to users with subscriptions).

Or, if you'd like, view a tutorial on how to use the Eta Analysis Overview.

Note: if you ran this report right now, the number of stars and values of displayed statistics might be different. This is because changes in the economy affect your stocks. Fortunately, EconomicInvestor updates its data weekly to keep you well informed.

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