Information to Action: Informing Investment Decisions Using Global Predictions
Many non-professional investors struggle to connect information in the world around them with actionable, investible insights. The deluge of information, analysis and commentary from media, friends and “informed” professionals make it hard to know when or what to trade.
Global Predictions is a data insights platform that makes it easy to conduct accessible, data informed research on the state of the economy and its impact on specific financial products. That means that Global Predictions can help you cut through the noise and connect the dots between what thousands of data sources are seeing in the global economy, and what that means for your investment portfolio. Typically, these data sources, proprietary models and portfolio management tools are only accessible to professionals. With Global Predictions, advanced models, up to data relevant data sources, and unbiased forecasts are at your fingertips.
Whether you’re investing in individual stocks, ETFs, indices or commodities, Global Predictions can help you assess risk and hone your investment strategy. Let’s take a look at how three different features within Global Predictions can help you understand security prices.
Here within the Portfolio tab, we’ve created a portfolio of five gold-based financial products and weighted them equally at 20%. If this was your portfolio, you could manually add the financial products or directly link your investment portfolio via our trusted Plaid integration. (If you want to get started right now, visit https://portal.globalpredictions.com/signup and create your free account. We can link your accounts securely and seamlessly within minutes.)
Directly uploading your portfolio is the best way to ensure that weightings are done accurately and risks are accounted for holistically among all your relevant assets. You can see here in the demo portfolio that we’ve given equal weighting to each product. In a real portfolio, that sort of construction is unlikely --- you’ve probably bought things over time in different market conditions, rather than allocating all your assets on a percentage basis.
This sort of “bird’s eye view” of all of your investments will give you a holistic perspective of what you own, and how you might want to either re-allocate, or designate future purchases. For example, many of our users have multiple investment accounts and monitor their performance individually. By seeing their full portfolio together, many have specific insights, like an over allocation toward the US technology sector, or uncover areas of relative neglect that they want to buy more into. Global Predictions even suggests portfolio improvements based on this full-picture view of your investments.
Within Explore, we can select financial markets, such as ETFs, and look at the projections for the performance of the Vanguard Total Bond Market ETF. This ETF seeks to track the performance of a broad and market-weighted bond index.
Global Predictions is predicting a relatively flat performance for this ETF. In fact, you can see that the predicted performance over the next 6 months is characterized by less movement than its performance over the previous twelve months. The predictions for the 75th and 25th percentiles show that there are many scenarios impacting the prospects of this ETF, but neither is extreme -- the 75th percentile doesn’t climb above the price in January 2021, when prices continued to decline. The 25th percentile dips, but not much below the ETFs standing at the end of February 2021.
This data driven forecast is based on a myriad of data sources and weighted to create a less biased, more accurate, and importantly, accessible format for users to understand factors influencing the market. We can see those underlying drivers, which we call “Influential Drivers” directly beside the forecast. In this case, our model is showing that the performance of the Vanguard Total Bond Market ETF is influenced or driven by the performances of factors like the US Interbank Rate (the rate of interest charged on short-term loans made between U.S. banks), the US GDP, and non-obvious factors like the performance of other ETFs that similarly track a broad set of market indicators. This sort of entanglement is represented and weighted within the knowledge graph (learn more here: https://www.globalpredictions.com/technology/knowledge-graph), and gives us a sense of both how intertwined and complex the economy is. Global Predictions then simulates various states for each of these factors to create the prediction and confidence intervals you see here within the dashboard.
Macroeconomics and Inflation
Within the macroeconomics tab, we can forecast for changes in the consumer price index (CPI). In an inflationary environment, we would see upward movement in the CPI. As we can see here, the US CPI is predicted to go moderately upward, but not nearly at the rate we’ve seen in recent months. In fact, one of the most powerful uses of these forecasts might not be the point forecast itself, it might be the confidence interval, showing a massive amount of potential variance (and therefore risk) because of inflation over the coming year. This data-driven approach to understanding inflation seeks to break away from the narrative focus or recency bias many may experience as a result of enhanced media coverage of inflation economics.
Global Predictions helps our users leverage huge amounts of data and the power of predictions to make informed decisions about their portfolios. By uploading your portfolio, understanding the drivers behind your performance and gaining data-derived insights about the risks and opportunities in your portfolio, Global Predictions helps you break through the noise and gain control.