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The Global Economy and Investing: New AIER Initiatives

The American Institute for Economic Research has been conducting research on the economy and business cycles since 1933. You may be familiar with our model, which helps predict downturns in the economy, and has been remarkably prescient over the years.

In 1950, AIER introduced its first business cycle model known as Statistical Indicators. In January of this year, we introduced the latest updates to the model. With the numerous updates and enhancements complete, today we announce the start of two new initiatives in our business cycle research program.

Going Global

Business-cycle research at AIER has so far focused on the U.S. economy, but now we are expanding. Over the eight decades since AIER’s founding, the world has become more interconnected. The exchange of information, trade in goods and services, the flow of capital, and the movement of people have all expanded exponentially. We believe that expanding our business-cycle research and applying our model methodology to monitor more of the world’s major economies will provide our readers with insights that will allow them to make informed decisions. We have already begun working on models that apply to other countries, and we plan to introduce them over the next few years.

A Fresh Look at Business Cycles

Armed with our newly updated U.S. business cycle model, we are taking a fresh look at the behavior of corporate earnings and equity prices during business cycles. In preliminary “back-testing” of our new U.S. model, we can see how investors would have fared by increasing and decreasing equity exposure at different points in the business cycle. If we find in our testing that using our updated model can help boost returns, it would help investors make decisions to adjust their portfolios in response to changing economic conditions. Our preliminary results are encouraging, but more work needs to be done. Stay tuned!

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