Returns

The Vantage Overall Investment Risk (OIR) helps corporations and investors understand the risks associated with individual investments. Corporations and investors are able to assess their risk prior to spending any money, so they can protect themselves against bad investments. When the OIR is low, the economy is sound and risk is low, and when it is high, investments are risky.

In order to understand an OIR, examine the results of an OIR that was created in March 2007 and ran until December 2007. The OIR showed:

• The average employment change over the last year for low risk areas was
  +1.4%, compared to those areas with the highest levels of risk which
  averaged+0.03%. The national average was +0.8%.
• The average 2 year employment change for low risk areas was +4.6%,
  compared to an average change of just +0.62% for high risk areas. The
  national average was+2.4%.
• For those areas with the lowest risk rating, the average 2year change in
  housing prices was +9%; for those areas with the highest risk rating, the
  average was+6.2%. The national average was +6.7%.

By examining the economy and markets in 2007, one can see the analysis was accurate. Vantage Economics continues to provide accurate OIR’s to clients in order to help them make sound investments.

Leading Economic Indicators

Vantage Economics also calculates leading economic indicators. These indicators can be calculated nationally, regionally and for each state.

An LEI offers an analysis of 3-5 months into the future. This provides answers to business risk through business research.

During this process, cyclic indicators are examined. Once these indicators are examined, businesses and investors can predict their risks and know if it is the proper time to make a financial decision.

Companies are encouraged to make use of the LEI before they make decisions regarding their capital, including:

• Expansion
• Additional debt

In addition, LEI’s help investors optimize their investment so they can receive the best returns.

In fact, Since May 1996, the average S&P 500 return when the LEI was showing growth was +79% and when the LEI was showing contraction, the average return was -36%.

The LEI at Work

There are many examples of how leading economic indicators are used by Vantage Economics to predict changes in the economic climate.

• 2001-LEI showed slowdown was coming in June 2000 and that a recession was imminent in November 2000-four months ahead of the actual recession
• October 2006-LEI showed that a recession was highly probable in the following 4 to 6 months. Since that time, the economy has suffered and likely entered into a recession during the first quarter of 2008

Staying Ahead of the Competition

LEI’s have helped clients of Vantage Economics stay ahead of their competition. By predicting economic shifts, our clients understand when to make capital decisions and when to hold onto their money.

Since May 1996, the average S&P 500 return when the LEI was showing growth was +79% and when the LEI was showing contraction, the average return was -36%.