Equity Risk Sciences (ERS) has emerged as the United States’ first independent Stock Risk Rating Agency, introducing a novel approach to evaluating stock price risks through quantitative, evidence-based ratings. Utilizing proprietary models that analyze SEC-filed financial data alongside 35 years of price history, ERS aims to provide fiduciaries and institutional investors with objective, conflict-free analysis powered by data science and AI.

The agency’s ratings, including the Fiduciary Stock Navigator (FSN) and the Loss Indicator (LI), are designed to measure the financial attributes and trends most likely to influence future stock price movements. The FSN offers a comprehensive assessment of a stock’s fiduciary suitability and risk of significant loss, while the LI focuses on financial statement strength and deterioration, pinpointing companies with heightened economic vulnerability.

ERS’s methodology is rooted in a rigorous statistical analysis of historical data, revealing the correlation between financial statement deterioration and subsequent stock price declines. For instance, stocks rated ‘A+’ by the FSN have historically demonstrated superior performance with fewer major losses, based on a 25-year analysis of over 400,000 stock ratings. Conversely, companies with an LI rating of ‘-3’ have consistently underperformed, even in rising markets, underscoring the LI’s value as an early warning system for downside risk.

Raymond Mullaney, Founder and CEO of ERS, emphasizes the agency’s commitment to providing probabilistic assessments rather than predictions, equipping fiduciaries with the necessary tools to avoid preventable losses. This initiative is particularly timely, as it challenges the misconception that significant stock declines are an inevitable part of long-term investing. By highlighting the preventable nature of most major losses, ERS’s ratings offer a critical resource for investment professionals under increasing regulatory and legal pressure to prudently manage risk.

ERS distinguishes itself by not issuing recommendations, managing money, or accepting payments from rated companies, ensuring the integrity and objectivity of its ratings. This independence is central to its mission of empowering fiduciaries and financial institutions with transparent, actionable risk assessments grounded in economic reality.

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