This would take you to the screener page. From the drop-down list, you'd substitute agricultural commodities for gold and run the screen. When I tried it, three agricultural chemical companies came up as the top investment ideas. The screener displayed vital statistics like market cap, price to earnings, price to book, etc. Users can drill-down for more complete investment information.
The "Start Macro Trend Screener" link can also initiate screens. This takes you to the same screener we used in the last example, but no settings have been pre-selected. There are three steps to creating a screen. First, select a lever from the 40 or more available and indicate whether you want to screen for investments that are positively or negatively correlated with the lever. Next, you can limit your search to certain asset classes, sectors or countries. Third, you can limit the search to minimum and maximum market cap, P/E, price to book and other criteria. Then run the screen.
To analyze individual stocks, mutual funds or ETFs, go to the "Macro Profiles" area. Type a symbol into the box on the screen, and Hidden Levers arranges information in four quadrants on the screen. The upper left contains the macro profile. This shows economic levers correlated with the asset being analyzed that Hidden Levers believes have an effect on the asset's performance.
When I ran an analysis on Microsoft, the application indicated that the company was positively correlated with the S&P 500 and negatively correlated with the U.S. dollar index. In the lower left, the screen displayed a chart of Microsoft against the S&P 500. In the upper right is a detailed quote for the company based on the trailing 12 months. In the lower right, in the "advanced statistics" section, is additional information on the levers highlighted in the upper left.
These include the impact coefficient, standard error, R squared and the confidence level. You can expand this list to see the relationship between Microsoft and all the hidden levers. Sometimes, the regression analysis will show high correlations with other levers, but these levers were not flagged as causal by Hidden Levers' statistical and fundamental analysis.
Risk Management
The risk management section of the application is divided into four sections: "Scenarios," "Scenario Modeling," "Economic Modeling" and "Portfolio Stress Test." The first is an expanded list of the types of scenarios found under the "Macro Strategies" portion of the research side. When I logged on, there were more than 25 scenarios divided into six categories ("Trending Now," "Geopolitical & Worldwide," "Monetary & Banking," "Politics & Government," "Real Estate" and "U.S. Market & Economy.")
When you pick a scenario-for example, "Armed Conflict in Korea"-a page pops up with scenario impacts, scenario hedges and a button that allows you to run the scenario on a portfolio you've uploaded into the system. "Scenario Impacts" shows the estimated impact on the various hidden levers. If you want to adjust any of the estimates, you can do so using the sliders next to each value. Assuming you agree with the estimates, Hidden Levers suggests long plays and short plays for the scenario.
Recommendations in this case include going long gold and short restaurant stocks. To run a scenario on your portfolio, you select the portfolio and run the scenario. The resulting page displays the economic levers on the left and the portfolio holdings on the right. On the portfolio side, you can see the estimated impact on each holding, plus the total impact on the portfolio.
The "Scenario Modeling" section is just another way of reaching the "Scenario Analysis" tools mentioned above. Economic modeling allows you to select a portfolio and apply changes in one or more economic levers to the portfolio in order to determine the likely impact. For example, if I move the health-care inflation lever higher, as expected it will result in higher returns from the Vanguard Health Care mutual fund.
The portfolio stress test is designed to zero in on the scenarios that a given portfolio is particularly vulnerable to. Load a portfolio, run the stress test, and the application will display the scenarios that would do the most damage to your portfolio, including an estimated percentage decline, as well as economic indicators to watch that might indicate a likelihood of the scenario playing out. For example, if a double-dip recession would hurt the portfolio, I should probably keep a particularly close eye on the Consumer Price Index for urban consumers and commercial foreclosures and IT spending growth, according to Hidden Levers.