Advice on How to Become a Research Analyst
Note: This post has been amended (see the end) to include information requested by an overwhelming number of the readers. Thanks for your interest!
I am frequently asked, “What can I do to improve my chances of getting hired as a research analyst?” Beyond the obvious — become a CFA charterholder — there are a number of other steps that aspiring analysts may take.
Making the Intangible Tangible
What an aspiring analyst has to offer to an employer are largely abstract- and creative-thinking skills. These skills are intangible and difficult for recruiters to assess. This is one reason why firms in finance tend to recruit from the same schools decade after decade: rigor of the curriculum and reliably high quality candidates. This is also why those without experience in the investment industry find it hard to get hired for research analyst positions. That is, in the absence of other evidence, firms hire what they think they can depend on — that is, what is tangible: your education and your experience.
But do not despair if you have not gone to your country’s top educational institution or if you have no experience! I went to the University of Colorado (not a top school for finance recruiters) and had very little experience when I was hired as a research analyst at one of the largest and best-known US money managers.
What employers really want is for your intangible skills to be made tangible. This realization empowers you tremendously, because with this framework, you can focus on providing concrete evidence that you have the skills necessary for being an effective analyst. When I began my career I created a personal website that included: examples of my own personal research analysis on companies; book reviews of economics, finance, and investment texts that demonstrated my ability to think critically about information; and an extended version of my CV (i.e., greater than the orthodox one-page maximum), so human resources departments could see if I had what it took to be a research analyst.
By engaging in these activities it will also sharpen your own skill set. For example, when I created my own research reports — which I highly encourage you to do — I used only primary data sources, such as company annual reports. I also did all of my own calculations for things like future gross domestic product (GDP), the future shape of the yield curve, and the cost of capital.
Recognize that your opinion matters. Companies will be hiring you for your opinion as much as for your skill set. They hire you with the expectation that you will take responsibility for your choices. So, if you choose to make your intangible skills tangible by creating your own research reports then you must track how your investment recommendations do by noting the prices of assets on the day that you recommended them for purchase and then track how they perform over time. You must be honest with yourself, otherwise you won’t learn anything. This is more for you than for your future employer. (Though it certainly wouldn’t look good for you to get caught fudging the numbers in even a theoretical exercise.) Markets provide a valuable feedback mechanism for assessing your skill set. The beautiful and terrifying thing about investment management is that the results of your performance are measured objectively. You either did well for people or you did not. So, if you are not doing very well, then you need to identify where your analysis broke down, and then strive to improve.
I have a friend who took a similar approach as me to getting work. He sent his research reports to investment firms every single month for two years and eventually got a job interview. By doing this process he taught himself to be an analyst.
Look for a Mentor
Across the globe, CFA Institute has scores of local societies, which are made up of many generous individuals, many of whom may be willing to guide your career track. If that does not appeal, then contact money managers whose process is in alignment with your own. You may be intimidated, but the worst they can say is “no.” In any case, any possible anxiety you experience in approaching investment heroes is good practice for the anxiety you may experience in approaching management of prospective businesses, some of whom may include the likes of Rupert Murdoch or Li Ka-Shing.
Analysis Is Probably Not What You Think It Is
Most analysts — the aspiring and the experienced — think that investing is about facts, models, mathematics, and analysis. Yet, as I discuss extensively in my own book, The Intuitive Investor, there is no such thing as a future fact. Facts, by definition, are things that occurred in the past. Yet investing results unfold in the future. What this means is that investing is as much a creative and intuitive process as it is an analytical process. To be a well-rounded and experienced candidate you need to be able to think in a balanced fashion — that is, both analytically and creatively. Therefore, engage in activities that enhance your creativity, too. For me, I am an active meditator, as well as an artist. Your success as an analyst will depend on your ability to synthesize information and to see things no one else is seeing. After all, by definition, if you want to earn returns that no one else is earning, you have to do things that no one else is doing.
Stock Your Mental Toolkit
Another tip is to read, read, read, read. Read investment texts. Read texts on geopolitics. Read texts on mergers and acquisitions. Read economic texts. Read anything that sparks your curiosity, even fiction (potent advice from Tom Brakke, CFA). And most of all, read the news, from many sources every single day, and begin to develop an opinion about the news and how it affects different countries, industries, businesses, and individuals. The most important skill for any investor is: understanding information. He who understands information the best does better, and he who understands information the best and acts decisively on that information wins the day. When I was an aspiring analyst if I encountered a piece of news I did not understand, I would read not just the article in question, but also an entire academic paper or book on the subject. I did this day after day, month after month, and year after year until my mental mosaic became large.
So let your ignorance guide you. What you do not know and understand should inform what you try and learn next.
Introspection
Spend some time figuring out who you are as an analyst. This is critically important. Why? If your natural strengths as a thinker make you a good trader, then you will be very frustrated working at a deep value, long-term focused money management firm. Likewise, if your character is more in line with a long-term, deliberate process, then you will likely be frustrated at a high-frequency trading (HFT) shop. You want to know yourself so that you can make an informed decision about where you want to work, about what type of analysis works in accord with your mind, and about where to spend huge parts of your life.
Furthermore, your introspective process will allow you to take an inventory of your innate strengths and weaknesses — and we all have both. You want to develop skills that accentuate your existing talents and skills that compensate for your shortcomings, too.
Be Patient
Expect this entire process to take a lot of time. From the time I first had the idea to become a research analyst to the time I got hired doing the work I wanted to do, it took me five years. For some people it is a much shorter process. But then, having done all of the work I described above, once hired, I was promoted to portfolio manager in two short years and was fortunate enough (and maybe skilled enough) to have retired at age 35.
Best wishes for success!
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Update: Many of you in the comments section have requested a link to an example research report. When I began my career I got a copy of a brokerage report from my local market and then used it as the basis for my own report. I am going to point those interested in what a research report looks like to Zacks.com.
All posts are the opinion of the author. As such, they should not be construed as investment advice, nor do the opinions expressed necessarily reflect the views of CFA Institute or the author’s employer.
Image credit: ©Getty Images/TommL
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Excellent article
Hello Biharilal!
Long time, no communication…thanks for the praise, I am glad that you enjoyed the article.
With smiles,
Jason
Dear Jason,
It was very informative. I almost work as you did like your path of meditation & reading & enlarging the mental mosaic. I would need your help if I fail to undersatnd anything during my career path.
Hi Jason, I recommended your book to my friend..apparently he is unable to find in Singapore. Can you advise where to buy. He doest want to buy from amazon.
Thanks
Hi Patra,
Amazon is the only way that I know of for your friend to get The Intuitive Investor delivered to Singapore, sorry.
With smiles,
Jason
Thank for that.
Hi Mr. Jason,
I am writing my CFA level 3 this June 2016. I have a plan to become a capital market research analyst. Would you please advise me how I may start my journey, what software I should learn, what database I should access to, and so on. I am from Bangladesh.
Please have some time for me.
thank you.
Alim
Hello,
Best wishes for success on your Level III exam. My advice to you about software is to master Excel. If you have never learned to program a computer then you should learn a programming language, probably Visual Basic. It is very difficult to access platforms like Bloomberg, Factset, Capital IQ, and so on. But if you have the ability to learn these platforms then this is also useful for the beginnings of your career.
Yours, in service,
Jason
The way that I find companies in which to invest is to look at the new highs of public companies. I use data from analysts as a guide to show me where the shares might appreciate. I am primarily a chartist and use the laws of physics to guide my decisions. That is, stocks in powerful uptrends usually continue higher, including Transdigm and Valeant Pharma. A recent example is EGRX, which has rocketed from 10 to 96 over the past year. Analysts like the stock, the chart is great, and in a solid uptrend. I have also done well with SUPN, another firm that is moving higher, and is similar to HZNP, which is closing in on 40.
People ask me if I should get an MBA or CFA. I tell them that is not what I do. I leave the analysis to those individuals, but read charts to see details before the news hits the wires, good or bad. If anything, devoting enormous sums of time to modeling the stocks I like would slow down my process. One example is GIG, and oem company that has moved nicely in the past week. If I were a pure analyst, and modeled this firm, the move might be over before I finished. That’s counterproductive.
Also, I’ll add that since I have a disability (hearing impairment) my world is visual, so looking at patterns in the world to help me navigate it is second nature. Reading charts is an innate skill, and many analysts are lost when trying to figure out why their models don’t match up against the charts (if they even do that). I would say, then, that as a person with a disability, I compensate for the hearing loss in ways that those CFA’s and MBA’s do not and simply cannot compete against. Let’s say I like Walt Disney, know the history of the firm, use analyst predictions, and the chart to buy the stock. I really think those are powerful ways to buy stocks without just one time consuming analysis. I like MIDD, HAS, MKL, for example, all long term growing stocks with solid charts. I found them on the daily highs list and bought all of them. I also bought Disney. I can do all of this without the CFA, because as a person with a disability, I don’t need it to navigate stocks.
Hi Jon,
Thank you for sharing some insights about your process. Your response is strong evidence of the importance of my first point in this piece: know thyself. To be a great analyst requires that you use skills that amplify your talents and compensate for the things that are difficult for you. The reason why a CFA charter and/or MBA is useful is that one of the sources of intelligence is knowledge. These programs offer knowledge, especially regarding tools, and then methods for how to use those tools. Also, in learning about these things it is possible that you discover ways and means for activating your consciousness. Last, another benefit of the CFA charter and/or MBA is that firms value the credential because it is tangible evidence of knowledge and dedication.
Yours, in service,
Jason
Jason-
Thank you. I will mention that some of the greatest stock pickers are not CFA’s or MBA’s. In fact, and you can check this, Ann Scheiber was a self taught stock picker, who was right behind Ben Graham in rank. Ernie Kiehne of the Legg Mason Value Trust had no formal training. If you and I both recommend Disney, I’ll do it because I like the company and the chart, but I’ll use your analysis to extrapolate on future stock price. I agree that firms want to see the piece of paper to demonstrate knowledge, but what if there’s no material difference in whether I have it or not. I think the barrier to entry may be higher, but I think I would have an edge over the CFA/MBA because you’re not really looking at charts, but numbers. Charts often foretell success or failure or accumululation before the analysts model that.
Case in point. Biogen has had trouble for a few months now, and the chart showed trouble that was not yet apparent. I sold, and sure enough, the issue was poor earnings, That wasn’t something the analysts modeled, but because I know how to read charts, I got out of the stock. Similarly, analysts won’t often cover stocks below $5, where many biotechs/pharmas start moving. A good chart reader will catch the stock long before you do, but only because your firm might not be able to invest in these.
So, if we are here to make money, the guy who reads charts well, and catches a good stock at $5 will make 100% before the analyst even models the data. I’ll go back to Disney. If I like Disney’s chart, and believe it is moving higher, based on patterns, how is that less advantageous than modeling a stock? Those are two different methods. I think that one can’t be a good CFA unless one understands how to read charts. i think many companies begin moving long before estimates reflect good news. Consider Agenus and Eagle Pharma as examples. By the way, if we compare the CFA who gets 20% returns vs. the chart reader who gets 40%, what is the true difference? I’d rather have the chart reader on my staff, just because he’ll catch ideas before my analysts do. No program can teach you that as a CFA or MBA. Besides, I’d argue that having the chart reader and CFA might help me model stocks based on anomalies in the charts that make my CFA ask harder questions.
I appreciate your time.
-Jon
Chart reading is not a science where the controlled experiments tend to yield predictable results. IMO, investing is more about knowing thyself and the business you want to get into. Any investor is obliged to do a proper research before buying any security or he’s risking to get wiped out with Mr. Market. Arming yourself with only a chat is a recipe for loss marking. Bring me one chart reader and I’ll show you a fortune teller. Finally, I would like to know why most chart readers are broke comparing to value investors like Seth Klarman.
Dear Jon zipp – you are great. You have converted your scars – hearing disability – into wonderful eye scanning ability of chart reading. just one word of caution – charts are past. They are indicators of past trends. There are several other factors such as fundamentals, positive news flow, earnings, changes in macro economy etc etc which can potentially turn the tables any day. At least I would look for lot of other data along with chart to figure out future price action. Thanks – you are lovely and wonderful and so is Jason – who wrote this great blog in first place.
Dear Jason,
Thanks for this wonderful message!
I am sure a lot of students and members will be helped by your advice and insights.
I don’t remember coming across anyone who talked about the research analyst job so candidly like you do.
In a sense you are saying that it’s just not a 9 to 5 job, you have to immerse yourself fully into this world that you painted. Quite true, I have spoken to successul and upcoming fund managers and they too have sound ‘read anything and everything, you never now where your idea will come from’.
Thanks again for the message. Looking forward to hear more from you.
Regards,
M Ashok ,CFA
Hello M Ashok,
Yes, the job of the research analyst is one where all waking hours are spent working. Not necessarily at the job, but because your entire world is now contextualized through an investors’ lens. Everything you see and everyone you encounter is possibly ‘investable’ information.
Glad you liked the piece!
Jason
aHi Sir,
i am pursuing MBA in Finance. could you plz sugest me about the Research Analyst. What should be requirment for the Research Analyst.
Hello Subhash,
Every employer will have different criteria for what they want from a candidate. However, most will want a college degree; experience in a business environment, preferably in finance or economics, or in an environment where you have learned a significant amount about an industry; evidence of high performance; and so forth. Imagine what most employers want from a candidate and multiply by 5.
Look at some of the job descriptions on The Ladders for Research Analyst and you will get a good sense for what they want from candidates.
With smiles,
Jason
Thanks very much Jason for the time you take to teach us every step of your career building. This is inspiring for me since want to move from my current accounting position to investment field.
Hi Hermann,
Best wishes to you for success. You are welcome for the advice. Most business schools will not give you the kind of advice you really need and there is no need for such things to be secret.
Jason
This is an excellent article, and one to which I shall refer a lot of people.
One thing I would add is there in the article, but I’d emphasise it differently. When I was preparing for interviews at university, one of the best bits of advice I got was that interviewers look for enthusiasm in a candidate. I was told: “The course is hard work, and the person interviewing you will be teaching you, and you will be no fun to teach if you don’t love the subject. There are lots of candidates with the technical ability, but I always look for the one who really loves the subject.”
It’s clear that the writer really is interested in the stock market, or he would not have done his own research, built his website, and so on. This is like gold dust to an interviewer – I always ask analyst candidates if they trade stocks, or watch stocks, and it’s amazing how few of them do. But without that burning interest, a candidate is unlikely to put in the time to become a really good analyst – if all they care about is money, then they should go into corporate finance or sales.
Another example is my own sister – I got her an interview with my boss, the head of European research at a bulge bracket bank, and she met the team and the head of sales. The report was unanimous: “She’s very bright (she had just done an MBA at Wharton), everything’s there, but it’s just clear that she’s not really interested in markets and stocks, she just wants a job.” And it was hard to argue with them, as it was true. (She ended up doing well in advertising, which was much more to her taste).
So my advice to any candidate is to come armed with enthusiasm, and proof of enthusiasm, and this will really set you apart from other candidates. But one comment: an interest in the stock market as a form of gambling is not the same as an interest in stocks – what your boss will really be looking for is a passion for companies, how they succeed, and how the market rewards that – not just an interest in buying low and selling high. It’s a fine distinction, but you can always tell who has that curiosity, and that’s what every head of research wants to find and harness.
Good luck to you all!
Hi Tom,
I completely agree. Enthusiasm is absolutely essential. I used to ask prospective candidates which investment books were their favorites. Remarkably, I only ever got one good answer to this question in my career. Worse, I got many, “I dunno” answers. Unacceptable.
Thanks for adding to the post with your strong contribution!
Jason
That is such a useful article to the budding analysts out there. Patience and constant thrive for more knowledge is essential to do any work nicely.
Hello Paritosh,
Yea! I’m so pleased to read that you think the piece is useful for budding analysts. Hurray!
With smiles,
Jason
Hi Jason,
I am 21 years old, starting in this industry and I will definitely want to try to get a place as a Generalist Macro Research. I enjoy a lot to read about markets, thoughts, etc, that is why I would be very happy if you could share with me some of the sources/blogs/authors that you enjoy the most.
My mail is:
[email protected]
Thanks a lot,
Hi Jorge,
What a great question you have posed. Here are my favorites, in no particular ranking:
** Graham & Dodd’s Security Analysis, Fifth Edition; Cottle, Murray, Block; McGraw-Hill
** Financial Valuation: Businesses and Business Interests; James Zukin, editor; Warren, Gorham, and Lamont
* It’s When You Sell That Counts; Donald J. Cassidy; Irwin
* Against the Gods; Peter L. Bernstein; John Wiley
* The Shareholder Value Myth; Lynn Stout; Berrett Koehler
* Mydia Myth Makers; Benjamin Radford; Prometheus Books
* Strategic Intuition; William Duggan; Columbia Business School
* Models.Behaving.Badly.; Emanuel Derman; FreePress
* Profiting from Chaos; Tonis Vaga; McGraw-Hill
** The Intuitive Investor; Jason Voss (me); Select Books
* Analysis for Financial Management; Higgins; Irwin McGraw-Hill
* 101 Business Ratios; Gates; McLane
** Financial Reporting and Statement Analysis; Clyde P. Stickney; Dryden
** Financial Management: Theory and Practice; Brigham and Gapenski; Dryden
I could go on as there are so many choices. But those are among my favorites. Those that I gave a ‘**’ are the ones I like the best and feel will give you a well-rounded, non-business school, education.
Best, very best wishes for success!
Jason
I can’t believe you didn’t mention “The Intelligent Investor” (Benjamin Graham) – the best book on investing ever written – while you listed your own book. Jason – tsk tsk 😉
Damian
Hi Damian,
While it may be one of the “best” books ever written on investing it is not one of my favorites – which is how I characterized my list. I prefer the modern update of Graham and Dodd’s “Security Analysis: Fifth Edition” done by Cottle, Murray, and Block.
Also, how could I not recommend my own book as a favorite? That would be disingenuous of me to write it but not like it : )
Hope you enjoyed the post!
Jason
Hey Jason,
Thanks for the well written, thorough article! Good food for thought as I start to tackle L3 – any book recommendations? Trying to understand the world (via the economic, geopolitical & financial lens is tough!). Any suggestions for streamlining one’s focus?
Thanks!
Zofia
Hello Zofia,
Congratulations on having passed levels one and two of the CFA exam. Whew! Almost there! See my above answer to Jorge for some book ideas.
Advice for streamlining your focus: as I described up above I would spend serious time in quiet contemplation sorting out how you see the world. Try not to reference other people’s thoughts. In other words, try to get to the heart of what you personally believe instead of, “I’m kind of a value investor like Graham and Dodd, but I disagree with them here.” Instead, think about your disposition, are you quiet or gregarious? Does your consciousness evaluate short-term things better than long-term things? What do you do and enjoy that triggers a zeal for discovery? Does looking at the macro economy before looking at individual businesses make more sense to you? And so forth. Once you know that about yourself then you can unequivocally throw yourself into the pursuit of what you want.
I hope that was helpful!
Jason
Thank you for these thoughts!
This is great insight that help in the understanding of oneself.
Hello Mohamed,
Thank you for your feedback, I am so pleased that you like the insight provided!
With smiles,
Jason
Good day, I just happened to “stumble” across this article, but I must state that it was one of the most concise and motivating pieces I’ve been fortunate to read. Thank you for sharing your knowledge and advice, it is grately appreciated, I’m from Trinidad and Tobago in the Caribbean and look forward to reading more of your pieces.
“In other words, let your ignorance guide you. What you do not know and understand should guide what you try and learn next” This sentence was especially motivating!!!
Hi Jason!
I am glad that you enjoyed the piece and am glad that you liked the ‘let your ignorance guide you’ bit. You probably have already figured it out, but you can read my other 108 posts by going here: http://blogs.cfainstitute.org/investor/author/jasonvoss/
My colleagues also publish much that is worthwhile. If you subscribe to our blog then you will get a daily e-mail with new stories.
Best wishes for you down in Trinidad and Tobago!
Jason
Yes indeed it’s a very good article and guides very well into what it takes to be an analyst in the industry. Thank you
Hi Aalok,
I’m so glad that you approve of the advice I shared.
With smiles,
Jason
Thanks Jason for a great article!
I’m looking for a sample equity research report (comprehensive) that will walk me through the steps (with best practices in mind); assuming no experience, only Level I CFA knowledge. Any suggestions?
Thanks,
Sona
Hello Sona,
There really is not a book that teaches you how to write a research report. However, if there is a local brokerage firm in your city (Barclays, UBS, Citigroup) I would ask the firm if you can have a copy of one of their reports. I also am happy to send you a version of one of my old spreadsheets so that you can look at it.
With smiles,
Jason
Hi Jason,
I am in the same boat as Sona, so if you could send those samples to me as well that would be really helpful.
Regards,
Sailesh
Hello Sailesh,
I have amended the piece – see the end – to include a link to what an equity research report looks like and that allows you to sign up for a free 30-day trial where you can get an in-depth look. In my career, I got my hands on one report and used it as a template for my own original analysis.
Best wishes for success!
Jason
Hello,
I would like to suggest James Valentine’s book on “Best Practices for Equity Research Analysts”. James used to be at Morgan Stanley as a sell-side research analyst and was responsible there for training analysts. James now runs training sessions. I found that this book bridges the knowledge areas of valuation techniques and communicating ideas effectively.
Jean-Pierre
Hello Jean-Pierre,
Thank you for suggesting Valentine’s book, I am certain that readers will track it down.
With smiles,
Jason
the closest you can get is
Valuation: Measuring and Managing the Value of Companies, 5th Edition
also try the links below
Macabacus.com
http://www.exinfm.com/free_spreadsheets.html
http://www.wallstreetoasis.com/forums/attached-equity-research-template-examples
if you are looking for a step by step process of making an equity report the GIRC competition by the CFA is an excellent opportunity for students (even though it is primarily academic in its nature)
or you could just quite simply do some internships
on a side note I would recommend using only financial modelling techniques that are understood in your country (for example analysts in my country use none of the risk analysis or quantitative techniques learned during the CFA, essentially most of the CFA skills are wasted in my country) because anything too complex in modelling will be of no use and just as Jason said it is the insight that matters.
I like to think of equity research through the eyes of a consultant, that way you can analyze the business in a more meaningful way for example understanding the company’s operations, processes, performance measurement methods its impact on sales, customer satisfaction, also understanding the organization’s deisign, etc however, site visits if your firm conducts them do not always allow for such analysis in so much detail due to the company’s resources and also because it also depends upon the level of professionalism & policies of the companies being analyzed
in other words analyze the business as you would if you were its manager or its internal analyst
that is why I read anything and everything related to business management: organizational psychology, organizational design, ISO regulations, business processes (MIS and otherwise), operations research, programming etc … get degrees in them if you want to, use the Uol International Program
and yes Jason your book will also be read one day
the message above was in response to Sona’s question … i know my timing is sort of late but well
Hi Jibran and Sona,
I think that Jibran has delivered a very powerful piece of advice in the above commentary. That is, think like an internal analyst or consultant when evaluating businesses. I also always have that mindset when doing analysis. This has many advantages:
* You begin to harmonize with the company the way the company sees the company itself.
* It leaves the gyrations of the stock market in the background. This helps to mitigate some of the emotions and behavioral distortions that can occur when investing.
Nice advice, Jibran!
Jason
sona i forgot to mention this book
Best Practices for Equity Research Analysts: Essentials for Buy-Side and Sell-Side Analysts – James J. Valentine
the book above along with the McKinsey book on valuation can provide you what you are looking for but if you were talking about a guide to modelling on excel then i would recommend the following books
Building Financial Models – John S. Tija 2nd edition
Wiley Financial Modeling with Crystal Ball and Excel Mar 2007 – 2nd Edition
Financial Simulation Modeling in Excel + Website A Step-by-Step Guide (Wiley Finance) 2nd
Nice article
Hello Satya,
Thank you, much appreciated!
Jason
Hi Jason
Thanks for your useful article.I am student in this field and I want to move from my current accounting position to investment field.Iran market has high risk for investing and this article help me at several situation.
Thanks a lot,
Hello Hamid,
I am so happy that you found the article useful. Best wishes for success in the Islamic Republic.
With smiles,
Jason
Great advice and sharing.
You are so weclome, Jordan.
Hi Jason,
I kind of felt like I was reading my story. You genuinely clicked come important points there.
I am at a point where I have just started to question the decision to skip the business school and go for CFA. Since I am in the same initial phase as you were once. Overqualified, less experience, difficulty in landing interviews, even getting mentors.
I understand the need to read n read n read, keep opinions, but I personally think that the kind of motivation and the learning that you get when you are on the desired job or there is some real money in the play is not possible otherwise.
Hello Salman,
Definitely look to see if there is a CFA Society near you and start there when you are looking for a mentor. Many of our members, myself included, believe in giving back to the investment community. Mentoring is a part of us giving back to our business.
With smiles,
Jason
I love this! Such a practical piece.
Thanks, Gina for your feedback.
Thanks Jason for the wonderful message and guidance to many. I am a research analyst and I do follow what you have prescribed in the message. I love my job and am enjoying it every moment.
Rgds,
Shahnawaz Ali
Blackrock
Hello Ali and Jason,
Do you need and intern? 😉 I am 21, just finished my bachellor and this Summer I was part of the Summer Internship Class in Global Markets in NOMURA London. I am trying to start my carrear in Macro/Strategy Research and the only thing I need is a PLACE, SOMEONE who believe that I can succeed in this business! Do you know anybody? Hahaha GREAT POST! I will definitely read all those books Jason, thanks.
[email protected]
Jorge Otto
By the way, In december I will take my first CFA exam!
Hello again Jorge,
CFA Institute does hire interns. However, we do not do research analyst type activities here, so interning here would give you experience working at a non-profit that is focused on serving its members needs. I am guessing that isn’t quite what you are looking for in terms of gaining experience : )
I would recommend looking for any investment managers in your local market and approaching them for an internship.
With smiles,
Jason
Hi Shahnawaz,
I wish to become a research analyst too. Where do I get some research reports so that I can learn from them and start making my own.
Also do you suggest some good reads over the net to help me get into this field?
Looking forward for your valuable advice.
Regards,
Sailesh
Hello Sailesh,
Thank you for your interest in this post. I have added several links to the post (see above at the end) that point people to an example of what an equity research report looks like).
Jason
Hello Shahnawaz Ali,
Thank you for sharing your story with the readers. Are you at Blackrock in NYC? If so, I may look directly into your office!
With smiles,
Jason
Nice article! I’m a recent graduate without work experience, so the stuff you’ve mentioned makes so much sense to me.
Hi Keith!
Yea! That’s nice to hear. One of the best things about the world of investing is that everything you encounter is potentially applicable to an investment; and everything you know and all of your skills can be potentially affecting. So if you really want a job as a research analyst keep at it. It does take time.
With smiles,
Jason
Your advice on reading, reading, and reading is very helpful. I am currently reading Breakout Nations by Ruchir Sharma. I am working in a back office environment in an investment company. This book encouraged me to become an analyst. How do you see career change idea of the person who is at his late forty? Thanks.
Hello Shai,
I cannot directly speak to the experience of trying to become an analyst if you are in your late 40s. However, I can tell you that the firm I used to work at hired several people in their 40s whose prior role had been something other than working as a research analyst. So it is possible. I also know that, at least in the United States, investment management firms often prefer people who are experts in their field.
Best wishes for success to you,
Jason
Thanks Jason for your valuable comments. I have seen that CFA Institute has CFA and CIPM programs. I think CIPM is also for analysts, but this one is for investment performance only. Since you are heavely involved in CFA institute, can you please throw some lights on CIPM program and the future ? Does your suggestion also apply to investment performance performance profession? Thanks.
Hi Shai,
I was a part of the group that helped to re-tool the CIPM program. It is not just about performance measurement, but also now about performance analysis. I can attest that when I was a portfolio manager that I got very bad reports from my accounting department. I ended up creating my own fairly complex spreadsheet to analyze my performance each day. Having a CIPM on staff right by my side would have helped me to gain transparency into the sources of my performance.
The advice I wrote above was not for the performance measurement side of the business. Unfortunately, I do not have professional experience in that field, my apologies.
In case other readers are interested in this program I am going to put a link to the program in this comment: http://www.cfainstitute.org/programs/cipm/Pages/index.aspx
With smiles,
Jason
Fabulous article. I currently work in a job where I am not doing what I love which is Equity research. I have passed all 3 levels of the CFA and can’t wait to achieve the Charter. This article speaks to me on so many different levels. I read alot, do my own valuations, have made my own mistakes trading (which revealed what kind of investment personality I am) and actively invest in the markets. However, your idea of starting and maintaining one’s own website is brilliant. I will look into it so that when my dream job comes along, I’m prepared to knock it out of the park!
Hello Vishnu,
I am pleased to hear that this article spoke to you on many levels; I am happy about that.
Sincerely, my best wishes for your continued success!
Jason
Hello Jason
Firstly I am thankful to you for the wonderful article about steps to be performed to get into the famous position “Research Analyst”.
I have recently passed June 2013 Level-1 exam of CFA & the job title in question is the driver which drove me to register to Level-1 of CFA.
I had work experience of one year in Investment Banking Operations & with interest what I have towards Investment Industry now I am keen of CFA exams.
I would like to ask you for your suggestion regarding better book for “Financial Modelling” as I have come across this particular subject very frequently in these days.
Thank you not for the first time & not for the last. Your article has really given stimulus to my confidence & expectations to get hired as research analyst.
I will look forward for next rest levels of CFA to enhance my knowledge.
Best Regards,
Ravi Kumar Dasari.
Hello Ravi,
The only author that I can recommend in this field is Simon Benninga and his book “Financial Modeling” http://www.amazon.com/s/ref=nb_sb_noss_1/188-1209697-2643008?url=search-alias%3Daps&field-keywords=financial%20modeling&sprefix=financial+mod%2Caps&rh=i%3Aaps%2Ck%3Afinancial%20modeling
Unfortunately, I have not read the most recent edition of the book. But back in the late 90s – when I was working – his book was excellent and showed you how to use Microsoft Excel to create financial models.
I wish you tremendous success!
Jason
Thank you Jason for sharing this article. Its very useful.
The field of Performance Measurement excites me and makes me nervous simultaneously, mostly because I do not have any experience in the field. Taking up CIPM was a part of my efforts to understand it.
Part of my work made it an daily affair to communicate with performance measurement deptt. as I was to audit funds and check reports before signing off, performance reports included (sometimes). But that was it. That leaves me with a vague idea about it.
Are there any sample performance reports available for us to understand how it works in a practical sense? Any other suggestion you would like to give in terms of reading? I have made a note of the books you mentioned in the article.
Thanks
Komal
Hi Komal,
I am going to refer you to the program head of our CIPM program and he may be able to help you.
With smles,
Jason
Thank you Jason…. 🙂
I guess I have a couple of questions more with regard to
-Should I appear for the exams and then think about the experience
– or Should I start looking for opportunities so that I develop a better understanding of the course work…
Thanks
Komal
Hello Komal,
When you say opportunities are you talking about job opportunities or investment opportunities? My advice is that if you are looking for a job opportunity that if you would hire yourself to work as a research analyst then you are probably ready. If you are uncertain that you would hire you then you probably need to do more to learn the things necessary to increase your confidence.
If you are talking investment opportunities my advice would be to do your research analysis and establish how to do that in your mind. Ideally you get to the point where you feel that buying a security requires only one leap of faith on your part, as opposed to many leaps of faith. Newer analysts always want to start investing right away, but honestly if you are not ready then your mistakes will be magnified. It is much better to make mistakes when the stakes – your pride and feelings of ignorance – are so much lower. Do not be too anxious to jump into it.
With smiles,
Jason
Thank you once again Jason. 🙂
Its very kind of you to take time out to answer our questions. Really appreciate that. I figure I have a long way to go, and lots to learn.
Many thanks
Komal
Hi Jason,
Its an awesome article. I like the way you said read, read, read and read. I am 21 and have cleared CFA Level 2. But even so i feel that I lack practical knowledge about markets and the economy. I have recently started reading some finance texts and also try to analyse financial reports of companies. But I don’t find these things to be much effective unless written(or made tangible). Can you guide me how to write research reports or may be provide me with some samples, as I have no work experience..
Hello Ashis,
The feeling you describe above is also one that I went through…where I didn’t feel I knew anything. It took me about two years of constantly reading and writing about my thoughts via a research report until I felt like a legitimate research analyst. If you keep at it this feeling will come, I promise.
Best wishes for your success!
Jason
Hey Jason,
It’s really a very useful and brief guide for young professionals, like me.
I just passed my Level-1 and want to start my career.
Can you please guide me,how should I start??
Hello Umair,
In addition to the steps I described above I then used the Internet to identify all of the investment managers that I could. I eventually created a database of over 2,000 money managers. I then sent over 500+ of them my CV and a cover letter. Of the 500 I sent out I got 50 responses, 40 “nos” and 10 interviews. Of the interviews I received 3 job offers.
If you have personal contacts in the business – which I did not – then I would start with them first.
With smiles,
Jason
Dear Jason:
I think this is a very important advice from you. Everything boils down to GRIT. You had the patience to handle rejections and persistence to still move forward.
Best regards,
Biswajeet
Hello Biswajeet,
Thank you for your kind words. Yes, GRIT is definitely a part of what it takes to “get your foot in the door” and what it takes to ultimately ensure that the door is taken off of its hinges once you land your position. I treated the entire activity as the hardest thing I would ever do in my life and mentally compared it to fighting a war for my home; defeating cancer; and giving birth. My mindset ensured that I kept pushing until a coveted role was mine.
Yours, in service,
Jason
Hi Jason,
Great advice.
To all other candidates: I recently went through a one-year job search and FINALLY landed the position I coveted for so long. You cannot give up no matter how many rejections you face. I applied to well over 100 places and only landed one interview (luckily that’s all I needed).
“I treated the entire activity as the hardest thing I would ever do in my life…” – so true. I should have done this sooner!
Hello Sean,
What great news! I am so pleased to hear that you attained a position. Well done! Thank you for taking the time to share your story.
Yours, in service,
Jason
This is a fantastic article and very practical too.
Can you please suggest some sites where I can find some research material that you have suggested us to prepare and then I can start following on the same foot steps. Basically I am looking at a few examples and then I can build something on my own and take it forward.
Regards,
Sailesh
Hello Sailesh,
I have amended the piece – see the end – to include a link to what an equity research report looks like and that allows you to sign up for a free 30-day trial where you can get an in-depth look. In my career, I got my hands on one report and used it as a template for my own original analysis.
Best wishes for success!
Jason
Hello Jason,
The article is really great to me. I had done one thing exactly as you guided in the article after my graduation. I wanted to work as a research analyst for a property consulting firm in Vietnam but I failed after 2 interviews. Then, I spent 2 months doing my own research reports on Vietnam real estate market and the competition between the real estate consulting firms and sent them. Finally, I got hired for an intern position and then, worked as a full-time research executive. But now, I am pursuing a career in investment management industry and going for CFA Program as well. Your guidance in the article and your sharing are really the lighthouse for me at this time. I am trying day after day to enlarge my mental mosaic. Also, I will get the book list you shared above.
Hope to read more articles and books from you.
Best wishes,
My Nguyen
Hello My Nguyen!
Thank you for sharing your story! Ours is a consistent story – that to get the work you have to make your intangibles tangible. I will not be surprised to hear of future success given your understanding of this critical skill!
Best wishes for your continued success!
Jason
Hello Jason Voss,
Thanks. It was nice to read such valuable post. I am too sailing on the same boat. Cleared my CFA Level II in July 13 and carrying 6+ yrs experience in Trade Finance but finding tough to get a desired Job now related to Invesment or Capital Market Industry. I vl definitely follow the steps suggested by you in the above post.
Can u pl share the format for Reserch writing if possible? or provide us with link which can help us for the same. Also pl guide us with useful links/blogs/websites which can help us in keeping ourselves updated with Finance knowledge and happenings.
Hello Amit!
I have amended the piece – see the end – to include a link to what an equity research report looks like and that allows you to sign up for a free 30-day trial where you can get an in-depth look. In my career, I got my hands on one report and used it as a template for my own original analysis.
Best wishes for success!
Jason
Hi Jason,
Nice article. I must admit the bitter truth of what you mentioned in your article as I learnt it in the hard way. I’m a book lover, but all these years I read only the fictions and novels which gave me the insight into understanding human nature but nothing relating to the economy or the industry.
I used to believe I would be able to excel in financial/ research analysis by just passing the exams. I was graduated with a Finance major and passed Level II of CFA (flunked Level III this time). My theoretical knowledge improved, i was able to apply most of what I learnt in my job as a corporate financial analyst, but, my market knowledge was very poor. I realized this only when I was rejected from many job interviews. I realized I need to improve my market and industry knowledge, which led me to read daily business news papers and give more attention to the world outside the text books (it is on one of those efforts I stumbled on your article too, as if it’s a sign 😉 ).
Your article was really helpful to realizes that it’s still not too late to amend my mistakes and achieve my long term goals.
Thank You very much.
Hello Ishani,
Thank you for including your story for others to read about. Yes, having hired folks to work as interns, analysts, and portfolio managers, I can attest that the hardest thing is to see tangible proof that they know how to do the job well. Anything you can do to make real and concrete your skill and passion for investing helps the interviewer make a more informed decision.
Best wishes for your success!
Jason
Thanks, Jason. This is a good follow-on to some of our discussion about the profession a few weeks ago.
Any readers that have an interest in an additional advice can read my series of “letters to a young analyst”: http://researchpuzzle.com/files/view/young-analyst-series.pdf
When I posted the comment above, I hadn’t realized that one of the links in the piece is to the series. Thanks!
Hi Tom,
Who loves ya? Hope you felt this piece was complementary to your own valuable work on the subject.
Cheers,
Jason
…also, I have just added your name to the post to make it more explicit that you are referenced : )
Jason
Hi,
I also want to become a research analyst and with this in my mind, to get a job as research analyst around a year back I started my own blog about economics. I write infrequently at my blog. I started a blog to get a job as research analyst, but as it has been 1 year and still not got job, I thought that this may not be the effective idea(of writing blog) to get a job.
From your article, I have realized that I am on right track and somewhere somebody has got success with the same idea. Thanks for giving your example and reconfirming my belief in writing blogs.
Hello Shivang Shrivastav!
Your story is a very familiar one to many of the folks I know that work in investment management. I hope that your perseverance pays off for you.
With smiles,
Jason
Hello Jason,
Your article and its’ advice are very helpful. Reading one of the replies of someone in their late 40’s who is looking at a career change and has experience in a back office of an investment company raises a question for me. What is your advice for a career changer in their early 50’s without any investment industry experience? My educational background is relevant, but we are talking 25 plus years ago when I graduated. I’m sure my age and lack of industry experience are big obstacles to overcome.
Hello Jeffrey,
I cannot speak authentically to the specifics of your situation. If I were in your shoes I would try and demonstrate to a prospective employer your talent for investment management as proven by your work. In the post above I talked about the importance of creating your own research reports and this would be one very powerful way of making your skills tangilbe to a prospective employer. This takes time. The success of a research report is in the success of the business you examine and most investment managers will want to see long-term success (at the minimum a one-year track record, and ideally 2-3 at least) in how you view the world.
One thing working in your favor is that success in the investment management business is not measured subjectively, but objectively. The returns you generate, if demonstrable, should trump other obstacles, such as your age.
Take a look at the democratization of the investment business taking place at websites such as http://www.estimize.com.
I won’t lie to you, your situation is certainly unique and presents unique challenges and unfortunately I don’t feel qualified to address them beyond what I wrote above.
Best wishes for success sent to you!
Jason
Hi Jason,
I greatly appreciate your efforts. I just joined a Venture Capitalist firm as a Research Analyst and after reading your article many things just came into perspective and I am inclined to redefine and reshape my future plans.
Thank you for sharing your invaluable knowledge and experience. I wish you many successes in the time to come.
Happy Hunting!
Arsalan Ahmed
Hello Arsalan Ahmed!
I hope that the story I described above helps you in your future endeavors. I am certain that our audience appreciates you having shared your story.
Thank you for reaching out!
Jason
Hi Jason,
In my earlier comment I said that you helped me put a perspective on certain things. I am writing this comment to share my experiences after that.
Problems I Was Facing — How I Got Them Fixed
Mediocre Presentations — Took an online course on MS PowerPoint and read few hundred good articles with key terms “preparing financial presentation for dummies”.
Poor Verbiage in Analyses — I started teaching an intermediate course on “financial planning for entrepreneurs” during the weekends at a community center; it greatly helped because I had to explain different financial “numbers” and “formulae” at a very rudimentary level. This exercise took care of my fundamental concepts and I am now gulping two or three different reports from various NBFIs on a daily basis to shorten my absorption period.
Lack of Recognition in the market — I created an informal weekly newsletter highlighting different areas of opportunities/problems; now at least people in my company know my name. And a few senior partners are providing me with invaluable feedback (stating that “at least you are trying”).
I still have couple of things on which I am currently working on; I’ll try to provide an update if I get any success.
I know I am still at the base of that vertical curve which will need many months of practice and even more tiring nights; which will be spent studying. But I know now that “every problem” has a “possible solution” and the more “problems” I manage to solve the more “competent” I would become.
Happy Hunting!
Arsalan Ahmed
Hello Arsalan Ahmed!
What a great testimonial about the amount of hard work and smart work it takes to get better and more competitive as a human being. Thank you for sharing your story with everyone.
Guiding criteria for me were always: “what don’t I know” and, “would I hire me?”
Indeed, happy hunting!
Jason
Hi Jason,
It has been long 24 days since I posted back and I am shell-shocked at how much I didn’t know back then. I am continuing with my previous regime of pouring, coding and storing knowledge in my memory bank and I can clearly see abstract concepts shape up in my mind. I just understood why you refer to yourself as “an active meditator and an artist”.
I just wished you could have somehow stuffed few “people management” philosophies in your main article. I am realizing that my previous perspective regarding “finance is all about number crunching” is completely wrong. I guess I have to take up some Sales or Marketing Management classes as I genuinely lack in that arena. I am quite ashamed to it admit it that none of our teachers/professors told us this, consequently I just assumed that “sales management is for sales people” so I slept through those classes. Now I have to make up for that lost time as well as missed opportunities. I would highly appreciate your input on this.
Best Regards,
Arsalan Ahmed
On a personal note: I might sound like a total “groupie” for saying this, but I really appreciate you taking time out from your busy life to write this piece. It helped me closing the bridge between being a student and a professional (still on an amateur level, but trying to improve) , with much ease and convenience. For that I am truly thankful. Cheers!
Hello again Arsalan Ahmed!
[Note: These words are in reply to the comment below. WordPress would not let me reply directly to Arsalan Ahmed.]
Wow, that is perhaps the best feedback I have ever received for something that I have written. Thanks to you for taking the time out of YOUR busy life to share your thoughts and experiences. You words are meaningful to me : )
I am beyond pleased that the interconnections between things are starting to “shape up in [your] mind.” This is fantastic to hear!
As for your concern that “none of our teachers/professors told us [that investment management is just as much about soft skills]: One of the motivations for me writing the post was because massive overemphasis on number crunching in the investment business. I have been fortunate to observe several great investors at work and their alpha has come from their soft skills.
As for your question about what additional information to read to get a soft skills perspective. I just wrote another blog post that is sort of a follow up to this one about what non-financial books to read to help you be a better financial professional. In there I recommended Schermerhorn, et. al.’s “Basic Organizational Behavior” as a comprehensive resources.
Feel free to connect with me further.
With smiles!
Jason
Hi Jason,
It has been over 3 years since I posted the last comments; I do however re-visit the page sometimes when my personal compass needs some re-tuning.
I am again writing to share my experiences.
Problems I Was Facing — How I Got Them Fixed
Improving Soft/People Skills – I ventured-off from the VC/PE sector to join a mid-tier bank (in the complaint management division) where I had to deal with dissatisfied customers most of the time. Plus, I got to learn all about the banking products and services, and I was briefly introduced to all the various aspects of a banking company.
Returning Back to Core Financial Industry – After spending a year and a half in customer services, I joined an investment banking outfit (as Associate, Syndications and Debt Capital Markets Division) of another mid-tier bank. That transition required a pay-cut from the existing salary and enormous amount of hardwork to earn a job confirmation and acceptance within the division.
Lack of Recognition – I was assigned as a transaction support in few syndicated financing transactions. That provided a chance to learn the transaction and market dynamics, and routinely coordinate with the local syndicates/consortiums as well as the lenders’ technical/legal advisors. With the help of some very helpful colleagues, my teams were able to tread the waters on it own, leading to the successful financial close of such transactions. Consequently, I have good working relations with the syndicate banks’ working teams. Later on, the experience as a transaction support enabled me to take lead on a few syndicated financing transactions of my own which will further add value to my future growth.
Self/Skill Development – Till date I am rigorously following the old routing of “pouring, coding and storing knowledge in my memory bank” which has enabled me to work on making client pitches, creating structures for proposed/potential transactions, creating/analyzing detailed financial models to check projects’ viability, review of transaction documents (both the project related as well as financing agreements), etc.
At present, all the theoretical knowledge and the hands-on experience is helping in shape up the abstract concepts rather nicely.
Last, but not least, I would like to thank you for the “Guiding criteria … “what don’t I know” and, “would I hire me?”’. This one line has kept my compass pointing correctly and has driven me to work beyond my capacity. (many thanks for this.)
Best regards,
-Arsalan
Hello Arsalan,
What an amazing thing you have done in providing an update on your progress. Congratulations to you are in order for all of the efforts you have made.
Continued best wishes for your success!
Jason
As-Salamu-alikum …… Sir
Hope you are fine…. I m Asad from Pakistan.
I ve done MBA in finance in 2016.. I m very interested in financial analysis studies.. .
but I ve no guidance here… soo I need your enlightened advice..
My email address is [email protected]
Hello Asad,
Thank you for your question. My advice is to begin reading books about investment analysis. Do this to identify the approaches and methods that resonate with your mind, and the way you see the world. Once you have identified the approach then you need to practice it. Usually this means by engaging in analysis yourself, and as I advise in this article. Once you have practiced the approach over time, then you can publish your research and share it with employers. This allows you to show them that you have the skill needed to be an investment professional.
If you have other questions, feel free to ask. Also review the extended comments of this article because almost every question that someone could ask has been asked, and I have answered it.
Best wishes for success!
Jason
Hi Jason,
Thanks for your invaluable insight. I was interviewed this year for Research Analyst position. To my surprise, all the questions were centered on my CV and no question on investment, stocks, etc. I thought I did well with the interview, I did not get te job. I just think the interviewers were not fair with the questioning. My experience on the CV was in sales and the fact that I was a level II candidate. Your thoughts?
Hi Daniel,
My thoughts are that the investment management business is very difficult to land a position in. In my situation I sent out over 500 resumes and cover letters over a 9 month period to investment management firms. In most cases the firms had no job advertised; so these were sent to them “cold.” I had created a database of money management firms using the Internet – which you can still do to this day.
Of those 500 resumes sent I received 50 responses, 40 of which were “nos,” 10 of which were interviews. Of the 10 interviews I got 3 job offers. That is well less than 1% of the resumes and cover letters I sent out. So an additional thought is to keep at it. You are in the hunt for the one “yes” not the multitude of “nos” – which are inevitable.
Best wishes for success!
Jason
Hi Jason,
I enjoyed reading your article. I have a Maths degree but I took some time to focus on starting a family. Now I want to get back to focusing on my career, hopefully as a Research Analyst. I’m registered to sit for CFA Level 1 in June 2014. I have just downloaded the curriculum and I must admit I’m rather overwhelmed by the volume of material that I need to master. Do you have any advice or pointers for someone starting their CFA journey?
Hello Lorrine,
The closest thing I can recommend to a an easy way to master the CFA program’s curriculum is to make everything you learn applicable to your world. That is, if you have created a personal identity for yourself that includes, “I am a research analyst” or a future “investment manager” then the material you will learn will be personally valuable and therefore pique your deepest interest. It also becomes fun to read the material as you recognize that every sentence read is another chance at personal mastery of a potentially very valuable career.
Barring this deep alignment with the power of the material it is likely to be a grind.
When I took the exams – 1998 to 2000 – I totaled up the number of pages of reading and then divided that total by the number of days dedicated to study. The number of days dedicated to study was 6 days a week – I took Sundays off because otherwise it becomes too much of a grind, and probably more importantly, you need an opportunity to reflect on what you have read. I also allowed myself one month of final study. I also read aloud the material and took notes all throughout the reading process because the more senses engaged – here, seeing, hearing, and feeling – the greater the capacity to remember.
I hope that your adventures in finance are fruitful!
Jason
Hello Jason,
Thanks for the post,
I been very passionately curious about stock market at a young age, after feeding my curiosity, I gained a little knowledge about value investing and long term investing. I want to work for an hedge fund one day. My concern is that I have been trading futures contracts and planning to making some income so I can I invest securities later on. I am 19 years old. Can the mind set of trading conflict with ultimate goal of becoming a successful value investor?
Thank you
Milan
Hi Milan,
I have no first person experience to be able to answer your question. Very generally, you are most likely to have success when the investment strategy you are employing is in accord with the way you naturally understand the world. If the combination you proposed above does this for you then I think you are more likely than not to have success.
With smiles!
Jason
Jason, thank you for an inspiring advice, exactly what I was looking for!
Best regards,
Maria
Hi Maria,
You are so welcome!
With smiles,
Jason
Hi Jason,
Thank you for your article. It came to me at the right time. I was working in the Indian stock markets for the past 7.5 years before I got married and moved to Canada,though not working right now.
I can totally relate to your advice as I was always on my toes when I joined the markets,crazy about it and totally into it in my earlier years. But with markets becoming dull and not so easy to survive, I too became less enthusiastic about it, which had always bothered me.
Since I lost some track of my field in the past few months, your article came to me as a light in the dark tunnel. I am going to take every piece of your advice and prepare for my brighter future prospects.
Thank you once again,
Kiran
Hello Kiran,
I am glad that this blog post has inspired you. Most of all, thank you for sharing your story in the comments section as I know it will, in turn, inspire someone else to pursue their dream!
With smiles,
Jason
I wrote two articles on this topic:
How Do I Find a Job in Finance? http://alephblog.com/2011/09/27/how-do-i-find-a-job-in-finance/
How Do I Find a Job in Finance? (Part 2) http://alephblog.com/2011/09/29/how-do-i-find-a-job-in-finance-part-2/
And more — I get lots of requests for advice in this area from students, and those looking to change fields
Hi David,
Thank you, your contributions always have value.
With smiles,
Jason
Hello Jason,
Thanks for yours insights and for the list of books you suggested Jorge. I 100% agree on making the intangibles tangible. However, I have a question with regard to the zacks research report link you posted.
This report is just filled with numbers. When I try my hands at creating research reports, I am very comfortable with doing all the math and extracting all the numbers/ratios. What I am trying to understand more and learn is about the verbiage that goes into such reports. Also, the interpretation of these numbers. Would like to hear your thoughts on this?
Thanks in advance for your time!
P.S. If its not too personal, I’d like to know why you retired at 35 from a PM position?
Hello Varun,
Yes, the verbiage is very important to the success of a research report. I am not sure where you live but I would contact a brokerage firm and ask if they would send you a research report. You might try approaching a CFA charterholder and tell them that you would like an example report in order to polish your skills as an analyst. Unfortunately, I no longer have access to such reports as I am no longer working as an investment manager. Also look around on the internet to see if you can find another example of a research report.
As for why I retired at 35 – that story is the story with which I open my book, “The Intuitive Investor.” In short, it was because of a deep meditation where I had many important insights, one of which was that I felt there was going to be a global financial crisis and that it would be very difficult to manage money through that environment. Another reason is that I have very diverse interests, including the martial arts, and I wanted to explore some of those things while I was still relatively young.
Thanks for your feedback – I am glad that you found the book list useful.
Best wishes for success to you!
Jason
Hello Jason,
Thanks for your words. This article inspired me a lot.
We were taught in college to deal with extremely difficult number
crunching problems but we were not really designed to write detailed
analysis in form of reports. That being said, when I got my “first real job” in investments
I find it difficult to create investment reports that would be easily
consumed by our board of directors and shareholders. I thought
this is something that should frustrate or disappoint me. Gladly I found
this article and this gave me so much insights about what lies ahead and what are the
things that I should do to be an excellent analyst. I’m only 21 y.o and still
young. I’m also pursuing my CFA designation. Thanks for your wonderful words.
God bless us!
Kind regards,
Odc Hernandez
Hello Julian!
Your story really resonates with me. Here is the sad thing: I felt the same way when I was 21 years old and now am 43, so nearly a quarter of a century later we have the same complaint about the quality of our business school educations. This does not reflect well on the willingness of business schools to evolve their course work into the 21st century.
You are so welcome for the wonderful words and I sincerely hope that your path forward is paved with success!
Jason
Jason,
Thanks for this wonderful read. Your passion for your profession and your eagerness to help young aspirants, shines through every line of the article and each and every personalized reply. For my part, I am sharing your thoughts with people in my network. I will certainly look forward to reading your book and blogposts.
Aniruddha
Hello Aniruddha,
You are welcome for the read. Yes, I am passionate about investment management and to help people who have a similar passion for the work to have their chance.
You are so kind to share this information with people in your network – thank you for your endorsement.
With smiles!
Jason
Great article. Thank you for sharing your experiences and views. I myself looking to start my career in the area of Equity research. This article gave me a lot of insights on how to build my career in the area. Once again thank you so much for writing this article
Regards
Umesh Neelakandan
Hello Umesh,
You are very welcome for the article. Its success has overwhelmed and humbled me, I ‘m so glad that so many of you have found meaning in the words I shared : )
Best wishes for success!
Jason
Hi Jason,
I also highly recommend folks publicize their equity research ideas on platforms like ours (www.InteractiveBuyside.com). Really sends a message to potential employers that researching and analyzing companies is a passion of yours, and you are active in posting your research on your own time. That’s one of the reasons why we created our platform.
Thanks for writing this piece.
Sam
Hi Sam,
Thank you for weighing in with your suggestion. Yes, anything aspiring analysts can do to make their skill set tangible is highly recommended. Another resources for the aspiring young analyst is http://www.estimize.com. Estimize has democratized earnings estimate calculations. Anyone may submit their earnings estimate numbers to the site and then the community tracks the accuracy of the analysts in estimating earnings. To become well known in this community would be valuable. StockTwits has a similar set up but is more generalized equity buy and sell recommendations of businesses. It is now much easier to make tangible the intangible skill of being an analyst.
With smiles!
Jason
Is this the most ‘commented’ article in recent times? (on cfa blog)
Hello Ashok,
I am not entirely sure if it is or not. I can say with certainty that this is my most commented upon piece for The Enterprising Investor, and I am very humbled by the response it has gotten : )
With smiles,
Jason
Jason,
Such an excellent article and I wholeheartedly agree. I have spent many years recruiting young research associates and analysts and that process is more art than science. I am now in the position of advising my daughter, a senior finance and economics major at Notre Dame on how to secure a position as a buy side analyst. I am going to pass along this article. Thank You!
Hi Carol,
Wow! What high praise from a recruiter! Thank you for taking the time to share your feedback with me. I hope my work helps your daughter and other potential recruits, too.
Would you mind sharing some of the other things you look for in young candidates? I am certain – if the number of comments to this post are any guide – that many of the readers would appreciate such information.
With smiles,
Jason
Jason,
I am not a “recruiter” but former high yield analyst and research director at a large buy-side firm. The other two things I would add are the following: do your own primary research and find something that not everyone else is looking at; go to a store and speak with the salespeople, experiment with the technology, think about how demographics impact your thesis. The other thing is to not let fear paralyze you. Interestingly, you are never going to be right 100% of the time; 60 % is pretty darn good. Young people coming out of school are used to getting the A, etc. . Be passionate about your decision, back it up with well researched data, but make a decision!
Carol
Hi Carol,
Thank you for clarifying your role, as well as sharing advice for prospective analysts.
With smiles,
Jason
Great article! Everything you wrote hits home for me, except when you created your own website. Call me a simple data/number geek, but I don’t know the first thing about creating a website that features my own research and ideas.
That being said, you did accomplish this. I have to conclude that it’s within the realm of possibility that I could eventually learn how to do this (a little scared!). Do you have any advice or resources for someone who would like to establish a web presence to feature their own research?
Sincerely,
Tom
Hi Tom,
Alternatively, you can use LinkedIn to serve as a web presence for yourself. The key is for people to be able to see or download examples of your work. WordPress also makes it very simple to set up your own website. Last, Adobe DreamWeaver also makes it pretty easy to set up your own website.
I am not sure of your resources, but you can also hire someone to create a website for you. Just remember that your website communicates a lot about who you are and is evidence of who you are. So make sure that it represents only what you want it to represent.
With smiles,
Jason
Great column.
Enthusiam and a natural aptitude for analysis are major difference makers with respect to persuing a career in analysis / portfolio management.
In the short-term, a lot of people can get a job in analysis, but over the long-term, it is hard to compete against people who are very keen for it.
Hi Mark,
If I may offer some criteria for evaluating “natural aptitude.” In my experience, in working as a portfolio manager, working with other portfolio managers, hiring analysts and my portfolio manager successor, as well as having the privilege of seeing one of history’s greatest investors at work, the folks that are best at investment management have a balanced mind. They are left-brained and right-brained. I used to offer up an analogy to help people understand why investment analysis is not just a left-brained activity.
Investing is like detective work. Invite ten detectives to a crime scene to solve a crime and there is certainly something to be said for the detectives that diligently observe fact-gathering protocols, record evidence, and execute technique. But the detective that solves the crime is the detective that can tell which facts are important and which are not, and most importantly, can see the underlying story that makes the facts make sense.
Sadly, many people attracted to the investment business are left-brained technocrats looking for a quantification of their intellect as measured by big dollar pay. Ugh! Enough of those folks. We need more of the passionate folks with natural aptitude for solving mysteries.
With smiles,
Jason
Dear Jason,
I just stumbled upon your post and found it very encouraging and inspiring! Thanks!
Further to your great insights and analogy of the group of detectives solving a crime scene, how do I attain that skill to see the underlying real story weaving the facts together? How should I work on connecting the dots and have that A-HA! moment to see things fall into place and then buy into the companies?
Thanks for your advices!
Hello Wei-Yi,
This is among the best questions of the entire series here. This is the very reason that I wrote my book, The Intuitive Investor. Your answer lies in cultivating skills that are right-brained in nature. Here I am referring to the brain functions that are creative and intuitive, rather than systematic and analytical.
The right brain thrives in an environment that is unfocused and unbounded. One easy way to get into that state of mind is to not focus on the problem you are trying to solve. Instead, ask yourself, “What do you do that rejuvenates you?” This could be exercising (e.g. running, swimming, yoga, etc.), art making (doodling, drawing, painting, sculpture, music, dancing, photography, etc.), spending time in nature (e.g. hiking, gardening, etc.), contemplation (e.g. meditation, prayer, mindfulness), cleaning (doing the dishes, sweeping, dusting, etc.), and so forth. When you engage in these activities you give the analytical functions of the brain something to do, when it is occupied, then the more creative, intuitive parts of the brain are allowed to flourish.
Of the activities I just described, I find meditation to be the most powerful of the sources because of its flexibility in application. You can use the meditative mind state to do many powerful things, that to the unpracticed seem magical, including “solving crimes!”
Look for more of this kind of content from our The Enterprising Investor online forum.
With smiles,
Jason
Excellent article. I will keep this one close to my desk to reference back to.
Thank you.
Best,
Lana
Hi Lana,
That’s very nice to hear. Thank you for letting me know!
Jason
Excellent article! It’s an inspiration and of great help to youngsters, like me, who have an interest and a passion for Investment Management. Thank You!
I usually do my research on the firm and then look at numbers to back it up. Since I do not have professional experience yet, how do analysts usually go about their research? Is there a “norm” in the industry?
Thanks,
Chris
Hi Chris,
I am pleased that you enjoyed the piece and I hope it helps you!
In my experience “how” investment firms look at investment opportunities is exactly what differentiates firms from one another. The methods are like fingerprints, unique to the analyst. Even within firms applying the same “this is how we do it” methodology there are variations.
With smiles,
Jason
Hello Jason,
Go Buffs.
Go Buffs!
Best advice I’ve ever seen. Thank you.
I only wish I’d read your words 40 years ago.
Hi Bruce,
Wow, what high praise! Thank you for your kind words. It sounds as if you have some experience to lend to others, too : )
With smiles,
Jason
Hi Jason,
Nice Post I must say, I want your inouts , I wish to persue CFA program would be appearing for L1 soon, however I do not intend to be restricted to be pure Finance role , In my career span of over 5 years now I have worked in Automotive(Operations), Analytics and Banking , would be shifting to a credit rating firm soon , eventuall would like to be in a strategic consulting role , I agree with your views that One needs to have a bigger picture or “Overview” instead of just following Models or forecasts , would like your opinion if CFA would be ideal for me considering my aspirations?
Hello Shankar,
If I understand you correctly you would like my input, yes? I think the easiest way to answer your question is to work backward from your dream career. Ask yourself: in my market do people doing the work I dream about hold CFA charters? If so, then, yes, of course get your CFA charter. If people doing your dream work do not have CFA charters then I would suggest you think carefully before investing the considerable time and effort into achieving the gold standard financial designation. You can do this by looking at job/position listings to see if they ask for a CFA charter. If they ask for such a designation then clearly it is important in your market.
One other way to get a better answer to this question would be to contact someone who is doing the work you want to do and ask them if having a CFA charter will make you a more qualified candidate. If the answer is, yes, then by all means sign up : )
I hope that helps,
Jason
HI JAson,
Thanks for your reply! Well, I have seen people with both with and withour CFA charter , Interestingly most I have seen are with CFA L1 or CFA L2 only ie they are not complete CFA charter , they have complemented it with PMP(Project management program) etc , so thats what I am aiming ..any further comment/inputs?
Hello Shankar,
I cannot think of any additional comment or input at this time.
Best wishes for success!
Jason
Hi Jason. Enjoyed reading your article. Research Analysis is a highly sought after profession, and though there are lots of these self proclaimed research guys out there, the quality ones are only a few.
Hi Annapurna!
Thank you so much for reaching out and sharing your thoughts. I agree that good research analysts are very rare.
With smiles,
Jason
Thanks for your advise… Got at the right time when I contemplating moving to Research Analyst role from Accounting in near future…
Cheers!!!
Have a great day 🙂
Hello Tenzing,
I am very pleased that the advice I shared has come at the right time for you!
Big wishes for your long-term success!
Jason
Hi Jason.Just graduated 3 months ago and during my time in undergrad i was able to get my CPA.But when i reached the real world i felt what i had learnt both as my undergrad and in CPA was so different from what was expected in the real world.always loved finance and one thing that i promised myself is that the CFA that am learning will be made practical !!!!…the blog idea was great and thanks for the inspiration.Just opened a blog with a fellow friend experiencing the same problem.Now to put in the hard work ( we are both level 1 2014 candidates )
Hello wamicwe,
Thank you for sharing your story with readers of this post. It takes time to learn how to apply your CPA and other skills to the real world. Enrolling in the CFA program is another way to improve your tools.
My best wishes for your further success! Good luck with your blog!
Jason
Hi Jason,
Thanks so much for your advice, and the book list. I’m strongly considering going back to school for my graduate degree in Finance. I’ve always intended on completing it, but have held out for an employer to subsidize some of the tuition, instead of having to take out a loan for the whole cost. When I was studying for the CFA exams, and after ultimately getting the charter, I did not think an MBA was all that necessary in landing a job in equity research or portfolio mgmt. That’s where I want my career to progress towards. But with my experience as a Sr. Financial Analyst in industries outside of financial services, and a project manager earlier in my career, I’m thinking an MBA will be necessary. As a charterholder, I’ve been overqualified for all my past experiences as an analyst – I know that’s because I don’t have actual real world experience in asset and wealth management. An Finance focused MBA program feels like the only way to go to get into that field.
However, I’m reading blogs online that unless the MBA is from a top 2 grad program (Harvard, Stanford, e.g.) than it isn’t worth the investment. Do you have any thoughts on this?
Btw, I ordered The Intuitive Investor today.. Looking forward to getting my hands on it. 🙂
Thanks,
Danny
Hi Danny,
These are very difficult questions to answer as they require your own personal vesting in the decision making process.
I will share with you how I thought about these choices when I got an MBA. The opportunity costs involved with getting an MBA are very, very large…two years of your life and with no assurance of your dream job on the other side. I got my MBA because I had no guarantee of landing work in my preferred field: investment management. I felt an MBA was a general business education that would serve me forever. And it has. When I exited retirement to take my current position at CFA Institute having an MBA was a requirement for the position.
An MBA and CFA have a lot of overlap. But having general business knowledge – that an MBA provides – actually helped make me a better investment manager because I could understand the business issues better, as well as the organizational behavior and marketing issues that very business confronts. Your CFA charter will not help you evaluate the marketing plans of a business, or its relationship with its employees.
RE: don’t get your MBA unless it is with one of the top two schools. I am not sure who is offering that piece of advice, but I have found my MBA at least as valuable as a CFA charter. Almost everyone I know professionally has their MBA and from a variety of institutions. Each of them is very glad to have their MBA.
But at all of this is up to you, of course.
Best wishes for success!
Jason
PS – Thanks for purchasing The Intuitive Investor.
Hi Jason,
Great article ! I feel inspired after reading it !
Cheers,
Gaya
Hello Gaya,
I’m so pleased to read that you were inspired after reading this piece. Would you care to share which portions you found inspiring? Do you currently work in financial services?
Cheers!
Jason
Hi Jason,
I am 30 years old and did my bachelors in computer science but did my MBA in Finance in 2008. Please tell if it’s too late to become a research analyst. How should I start my journey, I am afraid that companies won’t hire me because I don’t have any experience. I would like to follow my passion in investment/equity research.
Thankyou.
Hello Sara,
Thank you for reaching out. I will attempt to answer your thoughtful questions as best as I can answer them. Just note that this is one person’s opinion, therefore you possess an embedded option to reject whatever I say : )
Most crucial to your success as a research analyst is passion for the calling. If, in assessing yourself, you cannot imagine yourself as anything so fully as a research analyst then you have 90% of what recruiters are ultimately looking for in a candidate. This inner fire will drive you to constantly evaluate what you need to do in order to accomplish your goal. The inner fire will also insist that you do those things that are necessary to ensure your success. If you truly believe this about yourself then the battle becomes something else entirely: how to make tangible this passion of yours to someone that is, and I guarantee that they are, looking for someone passionate.
My post above describes many of the best ways to make this passion and your skill set tangible for someone. Additionally, read through the comments above where I also provide advice to other questions that people have.
Once you are able to demonstrate your passion and your skill set to someone then you have to persist, and for quite awhile. From the time that I first realized I wanted to be a research analyst to the time I got my first official job as a research analyst was five years. However, two of those years were spent getting an MBA in finance in order to re-contextualize who I was as a person for possible recruiters. I was a middling undergraduate student in economics with a B+ average whose work experience included being a not very good stock broker and a high quality customer service representative. I had to change the image of this person (me) for everyone and got my MBA in finance and accounting and had a 3.8 GPA and was the graduate school representative for 6,000 grad students the entire student body of 25,000 total students. And so forth. My point is that you are already far ahead of where I was when I started my quest. One way for you to re-contextualize who you are is to take the CFA exam so that recruiters understand who you think you are yourself.
I hope that helps!
Best wishes for perseverance and success,
Jason
Hi Jason Voss,
You have written a great article. It is really awesome
I just want your advice to pursue my passion in investment field, I am a Btech in mechanical engg with 3 years of experience in same field. i am always passionate towards market movements since my school days. i went through many websites and learnt some basics principles like one must see before investing in stocks ( technical and fundamental aspects), Right now I am doing stock trading with this normal trading knowledge. But. i feel i can do alot better. But i am not getting what are the books/literatures/courses can help me out? is CFA is really good option for my career advancement? please tell me how can i move forward, is there any other course for this? pl also tell me as a retail investor what other trading options, apart from stocks and commodity are available?
Thank you
Regards
Rahul
India
Hello Rahul,
I apologize for the delayed response; I was on vacation and not able to get to your comment until today. Yes, the CFA program is the very best way that I know of to advance your candidacy for becoming a successful research analyst. The curriculum is comprehensive and constantly updated to ensure its applicability to the investment management business.
Other things that you can do to improve your candidacy are mentioned throughout my answers to the many comments associated with this blog post. Also, you might want to look at my other post entitled “Seven Nonfinancial Books That Made Me a Better Financial Professional” which may be found here: http://blogs.cfainstitute.org/investor/2013/10/23/seven-nonfinancial-books-that-made-me-a-better-financial-professional/
Best wishes for success!
Jason
Thank you very much 🙂
Amazingly insightful…made me really think!
Hello Jason Sir,
I Am from India and i am a CFA candidate with no prior finance work experience and no professional degree or qualification.What should be my way upto equity analyst.I am 30 years old.My long term goal is to start my own hedge fund. Can you please suggest me my path(without MBA).
Thanks.
Hi Davinder,
I would say that your first steps should be:
* Given the long years it takes to accomplish what you are trying to accomplish, I would spend some time contemplating why you want to start your own hedge fund.
* If after contemplating your reasons you still conclude that this is the right course of action for you then you need to do all that you can do to make tangible your money management skills. Unfortunately you do not have many of the obvious tangible things that reassure prospective investors: a professional degree, qualification, or previous finance experience. So clearly your best hope of making your interest in the profession tangible to prospective future investors is to get your CFA charter.
* The results of investment decision-making are objectively measured, not subjectively. So if you begin to manage some money – your own, a relative’s, friends’, and so forth – clearly document your investment choices and make sure that you measure your success using CFA Institute’s reporting standards. If you generate good to great results (such as high levels of alpha) then you will begin to attract assets.
You have chosen a very difficult pathway to success. Best wishes for success from me.
With smiles,
Jason
Thank you Jason Sir for the reply , but if you say my path is difficult then whats the better way out please suggest,if not my own hedge fund then at -least a portfolio manager in some asset management firm.How to start from zero to get an initial job.I don’t have money to invest and nobody will give me money to invest until i have a brilliant track record and for brilliant track record i need a chance in industry to prove myself. How to enter in as an analyst ?Everybody has Mba,s and experience ,what i should have to outshine others and get myself placed.
thanks.
Hello again Davinder,
I am not saying that what you are asking is impossible, just difficult. It will take a real commitment on your part.
Some of the things that an MBA indicates to an employer is that: you take your own career seriously; you can dedicate yourself to achieve something difficult; you have knowledge that separates you from other candidates; you are a committed professional; and so forth. So I would think hard about not wanting to get your MBA, or to achieve your CFA. Sans these badges and an investment track record all you have to offer an employer that is tangible is enthusiasm. Unfortunately, enthusiasm is not something in short supply. In short, you have to do something exceptional to be consider an exception.
My advice to you is based on the path of least resistance for an aspiring candidate, so I am not sure what to advise if you wish to deviate so far off of that path.
With smiles,
Jason
Thanks Jason Sir. I will complete CFA and and try getting a job offer by writing my own reports,while pursuing CFA.I will be a regular reader of this blog,really wonderful effort by you.Its very helpful.
God Bless You Sir.
Hi Jason, I enjoyed reading your very informative article.
I’m a CPA in my early 50’s with varied professional experience ranging from small startups to Big 4 Public Accounting (almost exclusively Corporate Accounting, minimal Tax). I currently work for a leading energy generation holding and utility company as Controller of a handful of renewable energy projects handling day-to-day accounting with some debt financing responsibilities. I have developed a keen interest in Equity Research specifically in renewable energy, and other technology-related areas as well.
ER, I believe, combines the career characteristics I’m interested in: analysis, writing research reports, and communicating cutting-edge ideas with investors and company managements. At this point in my life I’m looking at ER as my ‘next career’ once I retire from my current gig in the next five to ten years. I plan on working into my late 60’s and perhaps beyond; I think it’s a good idea to always be working on some level in order to retain your faculties as you age.
So my current hypothetical plan goes like this: attain the CFA over the next three years (I believe it is crucial evidence of professional credibility in Equity Research), at the same time transfer to the Project Valuation department of my current employer (gain hands on experience with modeling financial statements), upon retirement from my current employer start up my own firm with the following focus: establish, grow, and manage a boutique sell-side ER firm specializing in producing equity research reports on underserved and emerging companies in various (mostly technology) industries including: Alternative/Renewable Energy, Space/Aerospace Products & Services, and other Technology-oriented entities, with a specific focus on marketing to Individual (non-Institutional) investors.
I’m not trying to earn a million dollars in salary and bonuses, I just want to use my analytical and accounting skills to create a firm that produces high-quality long-term research in areas that I’m interested in and slowly and gradually grow that business into something that will augment my retirement time and financial position. I believe individual investors are a better market for me to enter into as institutional requires more demands of personal time and resources to serve it well. I just need a reality check on the plan, and also, while I’m not looking to take any shortcuts, is the CFA as critical as I believe it will be when marketing to investors?
Your thoughts? Thank you.
Hi Aaron,
Your background lends itself well to equity research. I think one of the skills in short supply among equity analysts is, believe it or not, a solid understanding of accounting. Furthermore, many aspiring and current equity research analysts lack any real world experience with businesses. Thus, they lack a firm understanding of how real returns with real capital are earned; all remains an abstraction.
If I had your knowledge and your background I would:
* Certainly get the CFA charter. Some investors value the CFA designation. At CFA Institute we firmly point the finger at ourselves for the lack of wider recognition of just what a CFA after your name means. I would get the CFA charter because it will increase your knowledge, and thus your intelligence. With more information and more understanding you are more likely to make more informed and more unique decisions for your clients.
* Project valuation, yes! I think your instinct of getting into your firm’s project valuation department is spot on. There you will learn the art and science of forecasting and valuation, that is: alchemy.
* Maybe contact a headhunter. You may be surprised at just how marketable you are within the buyside community. Buyside firms that are research intensive are always looking for folks with years of experience in industry that are also good at accounting. Your background would appeal to many, I think.
* Always try and chart your boundaries and then try and move past them one leap of faith at a time!
Best wishes for success, Aaron!
Jason
Hello Jason,
I was curious about site visits and how they are conducted by analysts/firms in different countries. So please answer the question below
[[I do realize the answer/assumptions of the information below vary to some degree from country to country, as well as from organization to organization]]
In order to analyze companies better which employee/s:-
Junior Analyst
Associate Analyst
Research Analyst
Fund Manager/Portfolio Manager (yes i realize that the Buy Side depends upon the Sell Side research to some degree)
or is it some other employee from some other department, either the PR, sales or risk (i know it is very unlikely but still, is it possible?)
Conduct company site visits and if they do so, what do they do during these site visits? Is it just a meeting to maintain communications or is it that they actually analyze the company on their visits? For example if it a manufacturing concern do they actually look at what is being produced and why (but to do that properly wouldn’t they need to have the same knowledge as ISO auditors and other details regarding the manufacturing process, materials, etc) and if it is a services oriented business then are the company’s processes analyzed, the culture within a company and their manner of management in terms of employee performance measurement, its impact on customer satisfaction, etc?
(I do realize that such detail is probably more of a consulting firm’s manner of analyzing a business [because I have done the same myself] or a Bank’s corporate relationship manager for loan approvals, but still i would like to know if similar activities are done by analysts and if they are different, then exactly how are they different?)
.
also, are company visits carried out by:-
Brokerage firms
asset management firms
Investment banks
or all of them
I am asking this because I read about it in an article once (cannot find it now) as well as on the websites of Morgan Stanley and KeyBank, I just want to understand the ground reality of these site visits by analysts in countries other than my own.
Regards
Jibran
Hello Jibran,
It is my opinion that the famous ‘site visits’ touted by many investment management firms do not occur with the frequency indicated by company marketing departments. That said, I have done my fair share.
When I was a junior analyst I accompanied a portfolio manager on our site visits. This usually entailed a meeting with management in their offices. Occasionally we would ask for a tour of their operations. Obviously what you would see on these site visits depended on what type of company you were visiting. Manufactures might show you one of their factory floors; a natural gas company might take you to the wilds of Wyoming and show you some of their working wells; a consulting firm would show you their state of the art IT facility; and so forth.
I don’t think it is possible to ever have the level of understanding of the people that do their work every single day (per your ISO expert question). Someone that has operated a metal press for 25 years will always understand nuance much better than the smart and diligent analyst. This makes investors particularly vulnerable to the claims of management. Which is one of the reasons that trust is so important in the investment business.
In the years that I did the site visits I never saw anything untoward. In part, that’s because the company knows that you are coming and you are visiting as their guest. So they can show you whatever they want to show you. In part, I think it is also the case that firms that lie, also lie about other things, and you can catch this in their financial statements, conference calls, press releases, and so on if you are shrewd. That said, on my various site visits the one time I was disturbed by the sumptuousness of the offices of a company that, at the time, had never made a single dollar of profit. This stark contrast was a strong indicator of hubris on the part of the company. Not surprisingly I caught that same firm committing fraud in their financial statements, too.
I cannot speak about other firms because I spent my career at the same company and the business is so competitive that competitors do not talk to one another about their advantages.
With smiles,
Jason
Hello again Jason,
Seems to be pretty much the same in most countries; but I was wondering though, since you have written one book already, why don’t you write a small guide on actually conducting equity analysis and report making.
A guide that describes the routine steps in data collection, an overview of the modelling involved, assimilating the all information and making sense out of it, making a connection between the company’s intangible, qualitative information and its quantified data, and so on; in some ways an extension of this very excellent article of yours.
And here are some links you can add to help aspiring analyst with their interviews (some of these links also have sample answers for their questions except for the LBS link)
http://www.lbsimc.org/content/index_5_2145523323.pdf
http://www.londonstockexchange.com/home/ir-apracticalguide.pdf
http://www.cgu.edu/Include/drucker/career/Vault-Finance%20Practice%20guide.pdf
http://vincer.weebly.com/uploads/2/2/9/0/2290177/finance_interviews.pdf
http://www.cgu.edu/Include/drucker/career/Vault-Guide%20to%20Advanced%20Quant%20Interviews.pdf
http://business.financialpost.com/2013/08/09/30-smart-answers-to-tough-interview-questions/
http://myfinanceinterview.com/
and of course, keep smiling Jason
Regards
Jibran
Hello Jibran,
My book, The Intuitive Investor, actually began as The Discerning Investor, and was a combination of the left-brain and right-brain skills that I think make for good investment success. When I shopped the book to publishers in the spring of 2008 none were interested in the left brain techniques that I was sharing with readers. They told me that no one was interested in that kind of material and that it was a crowded marketplace for those kinds of tools. I happen to disagree, by the way. So some of the proprietary techniques I used and use to manage money well remain just that: proprietary. I am awaiting the highest bidder for such knowledge!
Thank you for your enthusiastic contributions to this thread. I am certain that the mindsets, books, and links that you have shared will help young analysts everywhere! Nice work!
Still smiling, but bigger now!
Jason
Hello yet again Jason,
The publisher is right to say that because people pretty much everywhere, specially if we generalize human behavior, aren’t really interested in human behavior let alone human behavior in finance. Maybe my experience is rather not a good reference.
Well at least from what I have seen, is that marketing professionals and HR employees scoff at the idea of organizational behavior, could there be anything more weird than that (my experience is limited to my country only). So I think we can understand that people are not yet ready to understand human behavior from a scientific perspective, specially if it comes to actually applying it in our lives.
A professor teaching finance and laughing at the idea that research is being conducting for Organizational Behavior as a field (and this particular example is about an individual who has been educated via a well reputed university or so I was told)
Funny perspective people have in my country, and I quote “Oh, psychology? only crazy people study that!” (again a well educated person saying that) and if you have an interest in psychology you get branded as a “pop psychologist”.
So neuroscience and the biological determination of behavior can wait till it gets accepted in the mainstream, I think it comes down to the lack of an open mind.
For example I read in your post about stock listings, your comment regarding liquidity, I can bet that if I show this to people that I know in the field of finance, they will just not be able to comprehend the concept you put forward in that comment. So your idea of the brain’s right side/left side skills for investing might have to wait for a bit, but I hope not for long. Your book is definitely on my list.
All the best
Jibran
Hi Jason,
Thanks for your insightful advice on how to become an analyst. I’d like to seek you advices on my situation.
I did my bachelor degree in finance in China and then move to Australia to do a master degree in Accounting. During my pursuing my master degree, I complete all the three levels in CFA. Therefore, when I graduate, I have both Master degree and the “CFA charter pending” status back in 2010. However, those credentials didn’t help me much in pursuing a career as equity analyst. The financial market here in Australia is very small, compared with the US and China. There are not many opportunities, particularly for the graduates without much experience.
Starting from Accounting is easier than from investment analysis. So I started as accounts clerk in small company. The job is very lower level-it’s more about data entry. While doing the accounting job, I didn’t stop looking for the equity analyst jobs. Realizing that no matter how many resume I sent, there wasn’t any response from the recruiters, I started to knock the door-I went to every investment firm’s office, knocking the door and give them my resume.
Luckily, I got one response. A new started long-short equity fund investing in the renewable energy sector is just looking for an analyst. They invited me for an interview. The interviewer told me that he is just impressed by my extra-ordinary way of looking for job. In the conversation, I expressed my keen interest and enthusiasm to be an analyst. At the end, they assigned me a task to analyse a listed renewable energy company. This is a completely new area to me. However, I know this is an opportunity to demonstrate that I can do it. Therefore, I put in every endeavour to complete this research task.
After I submitted the research report, they invited me for an interview, to present my research report and answer their questions. Then at the end, they said they have another investment manager who was travelling overseas and would like him to have a separate meeting with me upon his return.
After three rounds of interview, they decide not to hire me because they think my experience is not enough for this very senior analyst role. I feel frustrated at that time- I believe I have the analytical competency, but just no company can provide me a platform to allow me to build up the required experience.
But to my surprise, a few months later, they called me again, asking if I want to do on a casual basis, primarily helping the business manager with the trading/reconciliation and daily fund performance pack and potentially some analysis if the investment team need. I am very excited to accept the offer. Though this is casual, I am very devoted to this role (at the meantime, I lose my part-time accounting job). But I feel it worth my effort.
Unfortunately, this role didn’t last long- 2011 is a very bad year for renewable energy sector, the fund didn’t make money. But the bigger reason is that the business manager didn’t see my value in supporting the trading/reconciliation and fund performance pack. In other words, she would rather do it herself (She taught me the process from the very beginning and after 2 or 3 month she feel she was still not confident to leave me alone to complete the task).
Therefore I lose the job after 4 months trying. So back to the end 2011, I have no job-no accounting, no finance. I come back to the normal job hunting process- searching from the internet and send resume for both accounting and equity analysis. I quickly find an accounts payable job-though I am not interested in this low level data entry job at all, I need to make a living. After two years since I graduate from my master degree, I find myself no progress- starting from the entry-level accounts clerk role again, but just a bigger company, a global company.
Now another two years past, I am still in this global company, doing a role which involves some financial accounting and analysis, but it’s still more about an administrative natured job. Meanwhile, I feel I still have the dream of coming back to the equities research area- I continue with my own investment in the stock market, but I always feel that as a freelancer, I don’t have the access to as much information as those work in this area- I don’t have the license to many research resources such as Bloomberg, nor do I have access to research reports from the sell side analysts (where you can learn from the professional analysts on how they conduct their researches). Also, because I am not in this area, I don’t have the chance to attend the industry/company meetings where you obtain the first hand information and exchange ideas with people in the circle. Therefore, my buy/sell decision in my own portfolio is very amateurish, without the rigorous research process to back it up.
So as time passes, I feel I am far away from my dream. I don’t know if I still have the chance to build a career in the equities analysis. Do you have any advices to me? Is CFA charter still matter to me?
Thanks Jason for your time. I am much appreciated.
Sincerely,
Ruthy
Hi Ruthy,
My advice is that you have to make your enthusiasm for this work much more tangible. You need to be creating research reports about a company each and every month to demonstrate your competency at being a research analyst.
When I was looking for work as a research analyst I did not base my research on a sell-side research report and I did not have access to Bloomberg either. Primary data sources are free and available on the Internet. For example, here in the US the Securities and Exchange Commission requires all US publicly traded companies to make their annual reports available. In turn, the SEC makes these freely available on their website. As a professional I never used anything other than primary data; so no sell-side reports were used. I occasionally used Bloomberg for things like yield curve data to help build costs of capital. But now that same information is available on Yahoo! Finance.
If you engage in the above process, you not only make your skills tangible to a prospective employer, you also will make yourself a better investor. You will learn more how to see the world in such a way as to take advantage of your innate abilities and your skill set.
The process described above can take a very long time. I have a friend who engaged in this very same process for three years before landing his first job as an analyst. When I began my quest I was a lower level employee than you are now – I was a customer service representative – and I had fewer credentials.
My next piece of advice is to ask your previous employer – the renewables firm – what you could have done to better demonstrate your ability. If they simply reply “have more experience” then investing for your own personal account and making your investment track record available to them should eliminate those sorts of questions going forward.
Best wishes for success!
Jason
This is a great article for someone coming from a non-finance background (I was a math-major), but with an interest in breaking into ER. Having never taken a finance or accounting class where would you recommend that I start when it comes to learning the material? I am hard-working and usually understand concepts/theories fairly well – just curious of the best place to self-learn the required skills
Hi Josh,
I am so pleased to read that you enjoyed the article. I have several recommendations for books that may teach you the skills necessary, and I would start with the accounting works first because accounting is the language of finance.
Accounting books:
How to Read a Financial Report by John Tracy
http://www.amazon.com/How-Read-Financial-Report-Wringing/dp/0470405309/ref=sr_1_1?s=books&ie=UTF8&qid=1390576594&sr=1-1&keywords=how+to+read+a+financial+report
This book is a godsend: concise, yet thorough, and very sophisticated in how it teaches how to analyze a financial report. Specifically, it shows the interrelationships between each of the financial statements and the various accounts on each financial statement. Indispensable.
Once you have mastered the skills in this book I would move on to something more complex, say:
***
Financial Reporting, Financial Statement Analysis, and Valuation: A Strategic Perspective (with Thomson One Access Code) by Stickney
http://www.amazon.com/Financial-Reporting-Statement-Analysis-Valuation/product-reviews/0324302959/ref=cm_cr_pr_hist_5?ie=UTF8&filterBy=addFiveStar&showViewpoints=0&sortBy=bySubmissionDateDescending
The edition of this book that I read 17 years ago is not available any longer, but this is the more recent edition. Note: this book has quite a few STRONG negative reviews on Amazon. Yet, there is one glowing review by a CFA Level III candidate whose views on the book echoed my experience with it. What makes this book very useful is that the author compares two similar companies to each other all the way through the book. Having the real live case studies makes the information much more applicable.
***
After you are comfortable with accounting I would move on to finance. I would not start with “high” finance. Why? If you want to be an equity research analyst then you need to learn to see financial management from the perspective of companies first. This requires learning corporate finance first. My favorite book here (and one of my favorite books ever, specifically because of its additional funds needed analysis) is:
Financial Management: Theory and Practice by Brigham and Erhardt
http://www.amazon.com/Financial-Management-Practice-Thomson-Business/dp/1439078092/ref=sr_1_3?s=books&ie=UTF8&qid=1390577255&sr=1-3&keywords=brigham+gapenski
Note: I read the fifth edition of this book, again way back in the day, and the co-author was Gapenski, not Erhardt. So I cannot vouch for the edition listed above.
After mastering the lessons in the above three books a whole world of possibility opens up to you in terms of future direction. Earlier in this blog post’s comment thread I listed a number of my favorite books that cover investing. I would start with the books I starred.
Best wishes for success to you!
Jason
Hi Jason,
Thanks for the insightful article.
When you initially started doing your own equity research for your website did you focus on a particular sector or industry or did you take a more broad brush approach?
Thanks again.
Kevin
Hi Kevin,
I chose very complex companies so as to demonstrate my breadth and depth of knowledge. The only company I can remember explicitly was Time Warner, alias TWX. Every data point in the model was calculated by me. So, for example, I based the terminal growth rate on an estimate of long-run US GDP growth; and I calculated the GDP figure in a worksheet within the Excel workbook. There is a discussion about how to do this in Graham and Dodd’s Security Analysis, 5th Edition. Put another way, these reports were chosen as a racetrack for me to show off the specs of my (hopeful) sports car.
Hope that helps!
Jason
Hi
Great Article. I am looking at becoming an equity analyst. One problem I have is writing detailed research report. I tend to get a mental block and struggle with structuring the report. The flow of ideas do not come naturally to me when it comes to writing reports. Are you able to suggest some ideas as to what should be included in the reports? Do you have a framework in mind when it comes to writing research reports?
Regards
Kamal
Hello Kamal,
Thank you for reaching out, I am happy to hear that you thought the this piece was great!
It is hard for me to attest to what your local market may include in a research report. However, here in North America the research report usually takes on the following approximate format:
* Page 1: Analyst’s opinion of “buy – hold – sell.” Current stock price. A one paragraph summary of the report and/or three to five bullet points highlighting the major data supporting the case. Missing from many research reports, but a sign of a sophisticated report is the analyst disclosing the time frame for which the analysis is assumed to be relevant. Here I am not talking about a “one year price target.” Instead I am suggesting the analyst says, “The story of XYZ company is at least a three year story, see ‘company overview’ section to see why.”
* Industry overview section: Here the analyst describes the industry the business operates within, as well as how that industry typically performs in different economic cycles.
* Company overview section: Here the analyst compares the business to other companies in the industry along the important variables unique to the industry. Next, the analyst highlights how the specific business under consideration is different than the other in the industry. Huge emphasis should be placed on competitive advantages. The analyst should also discuss the embedded time horizon assumption of the analyst.
* Valuation of the business. Analysts should model the performance of the business under various economic scenarios and discuss the key assumptions of the model. Excerpting the model in the report is key so that others can assess the quality of the work.
* The analyst’s opinion of the business.
This report is typically 15-30 pages depending on the complexity of the report. Such a lengthy format provides you with ample opportunity to demonstrate your full skill set. Further, it gives the prospective employer tangible proof of your knowledge and skills.
Do not overlook the suggestion I made in the blog post. Above I recommended that aspiring analysts call a brokerage firm in their local markets and ask for a sample research report. This can serve as a template for your own work. As always, DO YOUR OWN WORK. This last point may seem obvious, but my colleagues and I have all encountered analysts plagiarizing the work of other companies in their own analysis.
Best wishes for success!
Jason
Hi Jason
Thank you for this well written article . I do like your writing style & topic selection. with respect to the reading list you shared, I found many editions and the edition you recommend I guess written in 1996.
Financial Management: Theory and Practice; Brigham and Gapenski; Dryden
do you recommend this edition in specific or other editions suffice.
Regards,
Hello Mohammed,
Thank you so much for your praise and for your question. In answer to you, I have only read the 1996 edition so can only testify to its quality. However, several other people have bought other editions and have told me that they are very similar. I can only imagine that the quality of the material has gotten better over the many intervening years. If you are considering a new edition try and make sure that it has the excellent discussion of “additional funds needed” analysis. There are many other important lessons in the book, but this is an extremely valuable one.
Best wishes for success!
Jason
Hi Jason,
I have two questions –
Is it easy to retire at 35, particularly after putting in the hard work and efforts to get the CFA charter and the various job? Don’t you feel a vaccum and have a feeling of not being gainfully productive whilst still being young?
What would you advise someone with CPA and CFA professional qualifications, who has spent 15+ years in financial reporting and controller ship and wants to make a move to the investment field?
Hi Sam,
Thank you for your questions.
Retiring was one of the hardest decisions of my entire life. I am not sure in retrospect whether or not I would have done anything any differently. When I retired at 35 (I am now 44) I had literally dozens of important things I wanted to accomplish. I have many varied interests, and portfolio management is only one of those interests. Most days of my retirement were spent exercising, writing, studying, or traveling. There were very few unproductive days. It is the nature of productive people that they do productive things no matter the setting. Or at least that has been my experience. All of that said, retiring was certainly a difficult experience for the first 2-3 months. Primarily I didn’t realize how much of my identity was connected to being an investment manager. To go from world-beater finance pro to person whose opinion no one cares about was initially a challenge. But the freedom you have to determine the outcome of every day far outweighs this minor hurdle.
As for your second question…I am not sure how to authentically answer that question as I have never been in that situation or known anyone in that situation. I will say that your qualifications – credentials and experience – put you leagues ahead of most candidates. The question that people in an investment management capacity will have about you are: can he invest and does he have the temperament to invest? You can address the first issue by creating your own investment reports. This will serve as tangible proof of your skill set. It will also help you to identify any gaps in your understanding. The temperament question is a more difficult one to address. You either have “it” or you do not have “it.” But that same thing is true for those who have spent their careers as research analysts. As I discuss in my own book, “The Intuitive Investor” the difference between an analyst and a portfolio manager is the difference between aiming a gun and firing it. The full burden of responsibility is on the PM’s shoulders. Many analysts never get to the point where they are comfortable pulling the trigger. Last, I will quote one of my favorite homilies to you: the squeaky hinge gets the grease. If you are interested in a research position and you have the background that you have described (which is highly desirable) then tell someone at your firm or another firm that this is your interest. Do you belong to a CFA Society where you can network with other pros and let them know your interest?
With smiles,
Jason
Hi Jason,
When you say networking with others in CFA society, I have a concern. I find that CFA society has very limited resources to the CFA candidates. The local society only accept CFA charter holder. For people who are still on the way to attain the charter, the only networking opportunity is discussions round the exams-learning material, exam preparation. For people who have passed the exams will have no intersts in those stuff. In fact, as we want to set foot in the area, we would like the opportunities to get to know more people already in the circle. However,I can’t see such support from CFA society. The situation is people who are already in the circle tend to have more solidarity via the CFA society, whereas people who are outside the circle are casted off and see few chances to merge into the investment profession’s group.
Another question is how to make myself known by the potential recruiters. Follow your advices, I have started to write my own research report. I selected a few companies and did in-depth analysis( the companies I selected don’t have anything in common, not in the same industry, not in the same geographic region, not sweepingly high dividends stock, nor growth stock- could be either style. The only thing in common is that I believe they are good choices for value investors). I create my blog. The problem is how I can let other people, particularly the potential recruiters know? Do you have any suggestions on how to market myself?
Thanks, Jason.
Cheers,
Ruthy
Hi Ruthy,
I am sorry to hear that your experience with your local Society has not been beneficial. It is very difficult for me to give advice that works in every situation as there are very large cultural differences across countries. For example, in the United States it is considered appropriate for those wanting to advance their careers to approach more established professionals to seek mentoring and advice. I am not sure where you are living, but it may be that the culture where you live is very different.
If I were you at this point I would research investment professionals in your home country whose opinion you respect and contact them to ask for mentoring, or begin sending copies of your research reports along with a cover letter introducing yourself and letting them know why you are sending the report to them; and, of course, include a copy of your CV. Try asking for feedback on your research reports from old professors of yours from school. You might also ask some of the more established professionals to critique your research reports.
This process can take a very long time. In my case it took nearly 5 years from the moment I decided I wanted to be a research analyst until I was hired into that position.
Best wishes for success!
Jason
Hi Jason,
I am just going to join a new job which is related to in house construction for its group companies. MY job profile is basically more into feasibility studies of that projects. Please can you let me know which analytical skills should i start working on that will help me succeed in my new job.
Thank You.
Kind Regards,
Jay
Hi Jay,
Unfortunately, I don’t have a lot of experience with the skills needed for the job function you describe above. However, in general, you would want to have an expert knowledge of corporate finance. My favorite corporate finance book is Financial Management: Theory and Practice, Eighth Edition. Though, I am told subsequent editions are very similar.
Best wishes for success!
Jason
Amazing….Jason!!! A nice article to read on before starting a journey of research analyst.
Hi Dave,
Thank you for your endorsement. In the forthcoming months I will be writing additional content for the benefit of aspiring analysts.
Best wishes for success!
Jason
Hi Jason,
Eagerly waiting for such articles to read as it acts as a motivational factor for many such aspiring analyst like me.
Hi Dave,
Here is a link to the first of the articles I reference above:
http://blogs.cfainstitute.org/investor/2014/04/08/skills-that-separate-you-as-an-investment-manager-introspection/
Subsequent posts will be available on the second Monday of every month.
I hope that they help you to achieve your research analyst dreams.
With smiles,
Jason
Hi Jason,
I am 35, management graduate and worked in wealth management companies back in Asia. Now i moved here in USA, willing to set my foot in equity research field. Is this possible ??
Hello Annie,
Yes, of course it is possible. Your background with its client-centered orientation would make you an excellent candidate at many investment firms. I am guessing that a smaller firm would be more open to hiring you. But without knowing more about your background it is hard to say much more.
Best wishes for success!
Jason
Hello Jason Voss,
I first want to say that this post has been amazing. I can see the effort and passion you put into it.
So Jason i really would your advice and learn a thing or two. I really want to become a analyst or something similar related to investments. Im 18 and left school with poor academic qualifications which i regret since i didnt put much effort into.
I currently am a student learning engineering but I have no experience or qualifications you would usually see with most analysts. is there any way i can still ride the path to become a analyst without studyinga degree and getting a cfa or something?
I have been managing a virtual portofolio for half a year and that is about as much experience that I have. I also have read a couple of books on investing. Grahams book definately have changed me most.
Also you mentioned looking for a mentor. How would i go about this?
Sorry if im being imprudent
Thank you Jason
Regards,
Martin
Hello Martin,
The situation you present is very difficult. I think that your chances of getting a position are remote. Investment firms will evaluate you as you should evaluate investments. If you were evaluating an investment that had a poor track record and its executives expressed no desire to demonstrate a willingness to improve their skills (i.e. you not wanting to get a college degree or CFA), you would likely not invest.
Succinctly, you need to demonstrate a lot more drive, intelligence, and skill before someone is likely to hire you. This is especially true because the competition for investment management positions is extremely competitive.
Jason
Hello Jason,
Very inspiring and motivating for an aspiring reserach analyst as me..
The only concern i have is i intend to write my own reports and draw my own yield curves only to get stuck becozz i know alll thats textual and bookish…so how dl i transform my understanding and knowlege into doing thngs pratically??? Its like i sit down doing it..but thngs are so very different frm the book..that i am left amazed….let me state that i am graduate with no professional experience..plsee help me out!!
Hello Akash,
Thank you for your compliments and your questions.
It is very important that even though it is uncomfortable translating your text book lessons into the real world, that you do it anyway. Only by doing the thing that makes you uncomfortable can you get better at it.
Next, one of the best ways of getting feedback about your abilities is to invest a small amount of money (money that you can afford to lose) to see how it performs. For me, you need at least 6 months to be able to begin to gain insights into how your choices compare to actual performance. It is very important that you create an investment thesis and write down the reasons for your investment choices. Only be reviewing this document and evaluating your investment returns can you hope to get better.
All of this takes time. It took me almost 5 years from the time I knew I wanted to work as a research analyst until I was able to secure my job. If you are passionate about it then your chances of success in finding a job are much higher.
Best wishes for success!
Jason
Hello Jason
I appreciate ur effort nd thankfull to that u shared this topic. I have a huge interest in this field but don’t know from where to start. I have just completed my graduation and now don’t know what next, to do a job or to search a college for stock market degree.
Please help.
Hello Surendra,
Yes, these moments in life where we have come to the end of the paved road are always difficult. Paving roads is difficult work. Maybe as you consider options put preference on the chosen future whose reward makes paving the road seem less difficult.
Best wishes for success!
Jason
Jason,
First off, as many have done so, I’d like to thank you for your time and efforts in both writing this article and continuously responding on everyone’s comments.
I am a 30 yr old process engineer working in the personal care industry with an ongoing goal of one day being a great investment analyst. I love the idea of breaking down a company and finding its intrinsic value. Yet, saying that I love it and actually doing it, is much, much different, as you’ve touched on. When I realized I wanted to become an analyst, I began taking the CFA exams. I am currently a CFA Level 3 candidate – yes, I’m wasting precious studying time after work to bug you. The last three years I’ve spent January thru May studying for the CFA Level 1-3 exams. When I’m done with the exams in June, its summer, I’m burnt out from studying, and I’ve consistently failed at taking the next step – the real step – of doing my own real analysis and investing a small portion of my money based off that analysis. When I do sit down to do analysis, I feel extremely lost. So I turn to books. I’ve read a good number of books – though there are a lot more that I have to read. To name a few, I’ve read Peter Lynch’s books, Quality of Earnings, Common Stocks and Uncommon Profits, When Genious Failed etc. I’ve read some great biography’s – such as both of Buffets.
Bottom line, I’m one of those “I want to be a research analyst and I’m doing the CFA exams, but I haven’t analyzed or invested in squat” people. Your article and your responded comments are hitting right at home for me. It has made me realize just how important it is to stay focused and read, read, read, read, read, as much and as often as you can. I realize that the more I read, the more I learn, and the more likely I will be able to transition to the analysis phase, on my own time.
Once the CFA exam is finished in June, I plan to read Financial Reporting, Financial Statement Analysis, and Valuation: A Strategic Perspective (with Thomson One Access Code), as I feel confident I have the tools to learn from this book. After, I plan to read your other suggested book – Financial Management: Theory and Practice by Brigham and Erhar. Thank you for suggesting these to everyone.
And now for my questions:
1. These books (Financial Management: Theory and Practice by Brigham and Erhar and Financial Reporting, Financial Statement Analysis, and Valuation: A Strategic Perspective by Stickner) do not look like quick reads. How long would you suggest it should take to read and work through these books with a usual 40-50 hour work week schedule? Is company analysis suggested while reading, or after completing these?
2. You’ve mentioned on multiple occasions that it took you 5 years to gain the necessary qualities and to develop the tangible skills to gain a research analyst job. For those 5 years, how did you manage to gain these skills with work/school/social schedule requirements, assuming you had 40-50 hours of time obligated for work and/or school? You also mention keeping up with the markets from multiple sources (WSJ, FT, etc.). Could you share your daily and weekly schedule for managing your time to read the papers to a sufficient level, read text books to learn skills, and analyze stocks? Any suggested time management advice for those of use working a 40-50 hour work week and aspiring to become a research analyst? I feel like I went to the Derek Zoolander School for Kids Who Can’t Read Good and Want to Learn to Do Other Stuff Good Too when I read half the WSJ and it’s an hour later. If I did WSJ and FT completely, I’d need 4 hours every morning. How many hours per week should an aspiring research analyst be spending in addition to a 40-50 hr workweek on market reading, learning skills, and/or analysis? How much time did you spend per week during those 5 years analyzing stocks, learning and reading? Do you keep a strict schedule in terms of wake up time? What’s your favorite color?…just kidding
Sorry to fire off so many questions. There’s just so much to ask to learn from you.
Thank you for any feedback on any of my comments or questions. And again, thanks for your contribution to all of us for giving us a few bricks to build or own path.
Sincerely,
John C.
Hi John,
Good questions all. I am going to answer you in a way you probably did not expect. I sense in your story and questions too great a movement away from your innate skills. I have an exercise in my book, The Intuitive Investor, entitled, “Your Cousin Vinny.” The exercise goes like this: imagine your iffy cousin Vinny approaches you to invest $50,000-$100,000 in a coffee shop he wants to manage; you provide the monied equity and he provides the sweat equity. What questions do you want answers to before investing with your cousin Vincent? I have done this exercise with hundreds of people over the years and you know what (?), they never fail to list out the relevant questions. Because you grew up in a capitalist society – I am guessing either North America or Europe based on your English – you already know what it takes to understand businesses. The reason that you read, read, read, read is to begin to develop an understanding of how individual mosaic tiles (GDP of Spain, price of rubber, demand for cacao, unemployment in the US, and so forth) contribute to form one big narrative picture, as well as many smaller images within the big picture. It is from your view of the mosaic that pictures begin to emerge; i.e. investment ideas worth pursuing. Then, and only then, do you apply your tools.
When I was an investment manager I spent 90% of my time reading, 5% on administrative stuff, and 5% on analysis. Though, in earnings seasons, the time spent listening to conference calls was a high percentage of my time. Maybe, 6 times a year did I ever go to the trouble of developing a model for a company. My goal was that if a picture emerged from the mosaic – i.e. a possible business worth investing my shareholders’ capital in – I wanted to wage intellectual war on the idea. That is, I put myself in the shoes of a competitor company. If I could not imagine a way to ‘defeat’ the company then, and only then, did I break out the company’s 10-K and/or annual report to learn more about the business. In your questions above it seems that you have forgotten your innate capitalist instincts which is what frequently happens when the words and ideas stock and stock-market enter into your mind. Those two words are distractions. Your focus should be to understand the business and how it is vulnerable to competition, economic head/tailwinds and so forth. You go to the trouble of doing financial statement analysis to see if your understanding and vision of the company is reflected in its financial statements and as a check on the authenticity, candor, and honesty of management. If the company makes it past that gantlet then you go to the trouble of valuing the business. The only thing standing between a great business and a great stock is price. If you overpay for a great business you likely have a lousy investment.
How did I do all of the stuff you ask about? I spent almost all of my time working doing something. To me it did not feel like work most days as I was singularly interested in elevating my future, my future pay, and opening up my life to bigger possibilities. The most important thing here is not to just blindly read, read, read, read, but to build a permanent context into your consciousness: How does this relate to the world of investing? Then any activity, including taking a break to watch a TV show, or watch a movie, or read a leisure book, or going for a walk, or going out to dinner with a loved one, becomes related to investing. Example: after changing my world context/lens to that of an investor, I remember going to the grocery store and buying tortilla chips. I noticed that for the first time in my life there was more than just Doritos available. This meant to me that consumer tastes had permanently changed, that the Hispanic population finally was catching the attention of food manufacturers, and so forth. Each of these observations, in turn, had relevancy for other parts of the mosaic.
When I used to give talks to undergraduate and graduate students a common question was: how much time do you spend working? What most of them meant by the question was: how much time are you in the office ‘doing?’ I would always answer, “I work all of the hours of the week, but only 45 in the office.” This is a true statement. By the time I retired, I was only working 45 hours in the office, but even a casual night out dining was an opportunity to build my mosaic. If you eat at a hotel restaurant, what is the traffic like in the lobby? What does this say about occupancy rates at hotels? Are those trafficking the lobby in suits? What does this say about business travel? What does this say about the state of business and of the economy? Is your waiter an unemployed PhD? If so, what does that say about the labor market? And on, and on, and on.
All of this to say: you need to begin thinking actively with all of that knowledge you are accumulating.
My last words to you: forgive yourself for not being perfect or for not walking on water. You are a human being with emotional needs, including time for rejuvenation, reflection, and creativity. So relax a bit, and you will be surprised how much better you become at all of the tasks you are trying to master. I promise.
With smiles,
Jason
Jason,
Wow. Powerful advice. Thank you for giving such helpful advice in such a timely matter.
Your advice is really making me reflect. I’m not even sure I can fully process it all in just the few minutes after reading it. But I’ll be sure to copy your response and look back on it again and again in the future.
Great call on forgiving myself. The competition of this field (ha – which I’m not even in…yet) makes you forget your innate abilities and skills. I need to get back to the core of why I began pursuing the CFA charter in the first place. Then harness that passion and let my creative, intuitive abilities take over. Your book sounds like it’s worth the read as well. Thanks for taking an example from it to help me out.
Forgiving myself, putting back on my “Investor Cap,” and looking for investment opportunities through creative and intuitive thinking at every turn. Simply, great advice. Thanks again.
John
Hi John,
I’m so pleased to hear that my advice was useful : ) Most of us understand what makes for a good or great company. All of the reading is meant to help identify more of them and also to better understand the issues that will affect those businesses positively or negatively. Stuff like what is in the CFA program is the toolkit used to understand those good or great businesses better, and then to craft a portfolio of such enterprises.
Go John, go!
Jason
Hello Sir…..it was indeed best article i have come across so far..i am 29 and awaiting L2 result…i have been reading annual reports and recently i have downloaded research report as well…but the only problem is I don’t know from where to start..i want to forecast and want to check whether it matches with report or not..but cant find any clue….can you throw some lights on it..i will be planning to re read it…i am unemployed so have plenty of time…i would be indebted if you can be of any help..
Really Really Thanks from the bottom of my heart
Hello Darshan,
Thank you for your question and best wishes for success on Level 2.
In answer to your question about forecasting…I recommend checking out a library book or purchasing a book on corporate finance in which they teach you how to forecast a company’s financial statements. If you look in the question thread above you will see a list of my recommended finance books. To find it quickly simply type < CTRL-f > and search on the name ‘Gapenski’ as that is my preferred book on corporate finance. My understanding is that the author has updated the book many times since I first read it; and I am guessing the book is now even better than before.
Once you have forecasted financial statements then you can use your CFA Institute skills to value the business. I recommend four valuation books but many like Aswath Damodaran’s Investment Valuation.
With smiles!
Jason
Dear Jason:
This is an amazingly practical and at the same time inspirational article and series of followup posts. Is it possible to be paid for doing ER if one has Level 2 cleared? What about Level 1? I am talking about generating reports in one’s own time. I live in one of the top financial markets in the US but am not connected to the industry at all (physician). I love your idea about starting a website with my ER and other writings posted there (any ideas on how one goes about getting started there?)
Awesome article and ensuing comments section too!!
Lawrence
Hello Lawrence,
Thank you for your praise, I am so pleased to read that you find this practical and inspirational!
Yes, it is possible to be paid for doing equity research if you have passed Level II – that was my own story. I had only just taken Level I when I was hired as a research analyst. Obviously every firm has their own hiring practices and some may insist on you having your CFA charter. Your work as a physician gives you a massive advantage over most aspiring analysts because of your depth and breadth of knowledge of a particular industry.
I was a bit confused by you asking if you can be paid for equity research pre-attainment of the CFA charter and then saying that you are ‘talking about generating reports in [your] own time.’ In my experience, getting paid for your equity research without having an analyst position would be very difficult. Just as you getting paid to do another form of medical practice would be very difficult outside of your specialty (e.g. osteopathy vs. oncology). Once you have several research reports created I would approach your local CFA society (i.e. attend an event) and see if one of the kind folks in your local market would consider reviewing your research reports and make recommendations for your next steps on the research analyst pathway.
As for your website…you can create a free blog on Blogger in about five minutes. All you need is a unique URL and a place to publish your thoughts, and Blogger provides all of these things. If you want your own website I would think about an inexpensive webhost (there are too many to name) and use a website template (of which there are many) to create your site. If you get very serious about it you are looking at about a US$2,000 expense to have someone create a site for you.
Best wishes for success!
Jason
Hi Jason,
I was very fortunate having stumbled on your article. I genuinely think that what you have written will be the inspiration and motivation to a lot of budding investment analysts.
I have successfully gotten an internship offer at an asset management firm that focuses on Asian equities and will be starting next week. My boss asked me to read up on the Indonesian cement industry and the publicly listed cement companies in Indonesia.
I am wondering if you could tell me your approach to doing research when you’re given a task. How should I do the preparation before the start of my internship next week?
Thank you very much in advance.
Regards,
Yong Jeffrey
Hello Jeffrey,
First, and most importantly, congratulations on your internship! Yea!
In an attempt to answer your question…Here in the United States I always began with the annual report filed with regulators. Here in the US this is known as the 10-K. Unfortunately, I am not familiar with the equivalent document in Indonesia. But this document in the US has a description of the business, a thorough listing of business risks (drafted by a company’s paranoid legal team!), a discussion of competition, a review of the last several years of performance, the financial statements, and the footnotes to the financial statements. I am guessing that massive and important Indonesia must have an equivalent document. After the 10-K I would look for any industry trade associations created by the industry as they frequently issue white papers and provide public comment on issues important to the industry. Because you are young in your career it may also serve you to look at the research reports issued by sell side firms that cover the cement industry in Indonesia. However, after my first year as a research analyst I stopped using sell-side research reports completely because I saw them as biased and a bit lazy.
Again congratulations, and best wishes for success!
Jason
Hi Jason,
First up let me appreciate the guidance that you are providing to a lot of individuals.
Although I am fortunate to be working as a Research Analyst for a large hedge fund as a offsite associate, but i am not particularly enjoying my job (I accept that it has been barely 3 months into the job). At the moment I am covering emerging market equities whereas my true interest lies in Indian equities (Midcap and small cap to be particular). I have been tracking and investing in Indian markets since the age of 12 (10 years now).
Could you please advise me as to how to increase my chances of getting hired in a Mutual fund or asset management company given the fact that their annual hiring is very less and most of the jobs don’t reach job search portals. They are mostly filled through referrals .
Thank you very much
Hello Srijan,
Thank you for your feedback and for sharing the details of your situation. I am not sure that I am very well equipped to advise on how best to make a ‘horizontal’ move from the hedge fund industry into the mutual fund industry. Usually the path is tread in the other direction: mutual fund to hedge fund industry. So the best I can do is to answer how I would try and address your challenge if I were you. However, I have no record of success of accomplishing what you are trying to accomplish, so please recognize this large caveat.
If I were you I would begin participating in your nearest IAIP chapter and try and meet research analysts and portfolio managers at mutual funds. I would begin here because personal relationships are often the pathway to the best job opportunities. Another thing I would attempt would be to do my own analysis of Indian equities and to create research reports for those businesses. You can then pitch your ideas to mutual funds with whom you feel a close alignment of investment philosophy. Last, I would attempt to contact a recruiter in the Indian market to see if they would represent you in your attempt to find work at an India-focused investment company.
Best wishes for success!
Jason
Thank you, Jason for great advice. I am currently in corporate accounting, and eventually wish to move into investment industry. I will be taking your advice, and attempt to utilize my accounting knowledge and develop equity research reports/stock pitch to tone my financial analysis skills.
I saw that you have recommended using zacks research reports as a template. Just an off-topic question, do you recommend subscribing to their service for just reason ability test to see if your estimates are on par with the professional analysts?
Hi Dan,
It’s nice to read that my advice has been useful for you!
Regarding Zack’s…I don’t specifically endorse Zack’s, but what I do endorse is using their research reports as a useful first blush at what a research report looks like. Regarding ‘reasonableness’…that is a natural inclination when you are first starting off creating your own research reports. However, to my mind it is a two-edged sword and one that should be drawn from its scabbard carefully. Why? On the positive side, you can use another’s research report as a measure of reasonableness as you suggest. This helps ensure that your views are grounded and not crazy. However, on the negative side of things, relying on another source as a check on your own thinking can lead to a highly detrimental dependency. Namely, that you come to rely on the opinions of others to inform your own. I consider this to be one of the deadly sins of Wall Street. Most important is for you to develop tools in accord with how your mind works. Markets themselves provide amazing feedback for whether or not you are discounting reality accurately. So my advice would be to barely utilize others’ research as a check on your own. I would barely glance at it.
If you are looking for a way of measuring your investment success take a look at this post I wrote: http://blogs.cfainstitute.org/investor/2014/05/26/how-to-measure-your-success-as-an-investor/ There is advice here that you can use to improve your performance.
Hope that helps!
Jason
Hello Mr. Voss,
I just read the article and I found it very helpful, mostly because I am a software programmer trying to switch to the finance field without experience. The little experience that I have is of the analysis of financial tools because I contributed to the development of a migration tool which could help users use their old data for the new application.
I gave my level 1 exam on December 2012 and at present I am a CFA level II candidate. I am actively looking out for jobs but haven’t got any luck yet.
It would be great if you could advice me on something that I should focus on and something on which I should work upon.
Thanks,
Ratika
Hello Mr. Voss,
I just read the article, and needless to say it is a great one!. It helped me a lot in getting an insight as to how to approach for a research analyst job when you have little or no experience in the concerned field.
I am a C++ programmer and I decided to make a jump into the field of finance by taking the CFA Level 1 examination in December 2012. The little experience that I have related to the finance field is the development and analysis I did for my finance client. I developed a migration tool between two financial software solutions so that the data created in the old software could be used in the new solution. This work involved in doing analysis of the both the old and the new application and to understand how best we can minimize manual processing and how accurate and maximum possible migration we could give to our client. It involved a thorough and great deal of analysis and helped me in creating my base concepts.
I completed the Level 1 exam in December 2012 and I am a CFA Level II candidate for 2014. I am actively looking out for career opportunities that can serve as a breakthrough for me in the finance industry and I can gain hands on.
It would be great if you could give me suggestions on how to approach my career path and what is it that I should be focusing on.
Thank you,
Ratika Kapoor
Hello Ratika,
Much of the information you need is in the many comments that precede yours. However, I want to point out (as do you) that analysis is a mental process that can be deployed in many different domains. In your case, you already are well down the analysis pathway having done analysis as a computer programmer. While it may have only been slightly tangential to financial analysis, the skill set is very similar. This gives you an advantage over those who have never been paid to do analysis. Given your strong computer background and your familiarity with programming, I would think one way to make yourself a competitive candidate for a research analyst position is to begin to use your computing skills in your analysis. Specifically, you should be able to write programs that allow you to digest large amounts of data quickly. Alternatively, you may be able to systematize many analytical functions, such as data retrieval.
My other advice is the same as above for many others: 1/ Contact a local CFA Society (see http://www.cfainstitute.org for a list) and attend meetings. You want to meet someone that does what you want to do and see if they will mentor you through the process of improving your skill set; 2/ create research reports; 3/improve your knowledge; 4/ start investing personally to familiarize yourself with the emotions involved in investing.
Best wishes for success!
Jason
Hello Mr. Voss,
Good Morning!
It has been a wonderful opportunity to have been able to take advise from you and I hope to do the same as i proceed further with my career goal.
There are a few questions that are in my mind and it’ll be wonderful if you could throw some light on them.
Q1. Although I was developing and analyzing financial software, I do not have a proper finance background. I am good with finance concepts that I learned while studying for the CFA exam. Do you think its a rough process for me to get into the finance industry with no experience and background? If yes, what should i do further as I am determined to make the change? Should I pursue a degree in finance such as a graduate course or masters in computational finance or so?
Q2 – I plan to start up my research work by analyzing businesses across multiple industries and do an investment write up. Do you think its a good way to start with?
Q3- I am also trying to understand as to what should be my first step to the analysis and how exactly to give it a start.
Q4- What all should I be focusing on when doing the analysis?
Thank you once again for taking out time and replying to me.
Ratika
Hi Jason,
First, let me reiterate the comments made above on what a great article you have written. I have found it a very rewarding piece to read, so thank you!
I just wanted to get your advice on my current situation and what you would recommend as the best way forward for me to go from here.
I am a hydrogeologist and have been working in the mining industry for over 6 years now, mostly in Australia (I am a UK national living in Australia). I have been involved in numerous mining projects for many different mining companies and many different mine types (gold, iron ore etc). My main role is to dewater ore deposits in order to allow open cast mining, source groundwater for mining use, model groundwater use by mines etc…. anything relating to water really.
So, that is my professional experience, but also in my spare time, I have been researching and trading stocks to invest my own money for several years now. I absolutely enjoy the whole process of developing my own ideas about a particular investment story, researching it, and making investment decisions. It also really helps that my husband is equally interested, and together we read a plethora of investment related books / research articles / biographies and bounce across ideas with each other about our next potential investment narrative and possible ways of capitalising on this.
Being involved in the mining industry, I have had chance to see from the inside how investors money is spent, how businesses are run, and just how feasible some projects really are. I have been shocked and surprised to see that on the whole, the investors who undertake the due diligence research interviews at mine sites, really don’t understand the nature of the business, they don’t ask the important questions, questions which I would expect them to ask.
I really would like to change tactic somewhat with my career now, and attempt to combine my professional experience in the mining industry, with my passion for researching and investing in companies.
So, my questions are:
1) Are there entry level positions available for people like me who are engineers first and want to move across to the finance/investment side? Surely people with my experience would be valuable to an equity research / investment fund?
2) If these positions are available, what would you recommend I do to prepare? I have been researching the CFA charter exams, but am a bit confused as to whether my qualifications would be ‘financial’ enough (I hold a BSc in Geography & Biology & MSc in Hydrogeology). Would you recommend I take an MSc in applied finance or something similar prior to the CFA exams? I already feel I have a good knowledge of financial accounts & reporting / economics / finance industry from my own research, but perhaps this will not be enough?
I am absolutely prepared to work hard to make this career move, so any advice you could offer me would be greatly appreciated!
Kind regards,
Tina
Hi Tina,
I think that you are leagues ahead of most candidates for a research analyst position. Your skill set is exactly for what investment companies (called mutual funds here in the US) are looking to hire. For example, at the Davis Selected Advisers, my employer, we had several people on staff with almost exactly your career trajectory. We preferred folks that came from industry. Your skill set is the rarefied one, whereas the financial background is pretty vanilla.
My advice to you would be to contact a recruiter/”head hunter” and discuss your desires with that person. Relative to most candidates looking for work in the investment management business, I am guessing it would be fairly easy for you to land work (i.e. 6-12 months of looking). But of course the market for labor and your performance in interviews determines your actual success. To demonstrate to a prospective employer your financial (as well as hydrologist) skill set, I would craft a research report per the advice I have stated above. In your case, a report highlighting the why and how of your statement, “I have been shocked and surprised to see that on the whole, the investors who undertake the due diligence research interviews at mine sites, really don’t understand the nature of the business, they don’t ask the important questions, questions which I would expect them to ask.” would be enormously instructive. This is especially true in Australia where mining is such an important part of the economy. I am guessing that your skill set would be valued in Canada, too (also part of the Commonwealth).
As for applying for the CFA charter. It is open to people of any university background. In other words, you may complete your charter without a finance degree. However, to be awarded the charter you need to have the requisite number of years of experience working in finance. However, we have thousands of charterholders that work in corporate finance roles, usually in capital budgeting or in pension fund management. The CFA charter would absolutely give you the necessary financial chops to take on the world and would serve as a near perfect complement to your hydrology/mining background.
I hope that helps!
Jason
Hi Jason,
Thank you so much for your prompt response.
This is a very exciting and helpful reply for me, and I will follow your advice straight away!
Kind regards,
Tina
Hi Tina,
You are so very welcome. My fingers are crossed for your ultimate fulfillment and success!
With smiles,
Jason
Hi Jason I liked your topic and I finally got a clear Idea of what makes a good research analyst.
Let me tell you something about myself I worked as an accountant for more than 6 years and I didn’t liked it was too boring, then I manage to work in corporate finance, then as financial supervisor and loved making projections, and report. I´m introverted, so sales are not for me. Right now I´m planning to take the CFA test level 1.
But since Finance is such a broad topic is there any book that could guide you and may help you to find what is the area more suited to be, I could be working in an area that I like but what is there is another area I could love. If my question is not clear enough please let me know so I can rephrase it, Thank you for your time.
Hello Jose,
Thank you for your kind words. Unfortunately, I have not read any books on careers in finance since about 1992, so that would not be helpful. But if you do a basic search on Amazon for “Careers in Finance” many such books are listed.
Best of luck in your search!
Jason
Hi Jason,
I was just doing some browsing and stumbled upon your article, which peaked my interest as I currently work as a research analyst just under 2 years now, having made the switch from the accounting field and always looking for practical advice on how to really develop these skills further. This article was really helpful…especially the bit on intuition. However, apart from this awesome article, I am really impressed with your attitude and the ease and helpfulness with which you responded to each question and comment, even though its almost a year later. Thank you for being so open and helpful. This is what we need in the industry, people who are truly willing to share knowledge and help develop those coming up in the profession. Will be an avid follower of all your articles now. Best wishes to you!
Hello Subira,
Your comments are very meaningful to me, thank you for taking the time to share them!
With a big smile!
Jason
Clearly spoken from the perspective of a man who’s been in the same trenches as most of us are (in search of the very elusive investment role, especially the research analyst role).
As I was finishing up my preparation for the last CFA exam, it dawned on me that without any research analysis experience, it is a mere impossibility to have even the “Entry level research analyst” roles. It occurred to me that I have better start researching and writing a report on any firm (preferably a small firm with sufficient public data) to help build up my credentials and create some form of a “synthetic” experience for myself. To create a portfolio as in other industries or a website that is verifiable. Yet, I still wondered whether it will help.
Jason, thank you for this incredibly helpful, and non-self-serving article! For one, it confirms that though I’m sure it may not be enough to just write reports, it helps to learn that it can eventually payoff. Secondly, your experiences are very helpful in knowing how well or how much more needs to be done to inch our ways closer.
Question on writing a research report, how detailed an analysis would you suggest for a beginner to start with?
Having read your article, and observing the clarity at which you convey your message, I can’t wait to see what you wrote in your book.
Hello again, Mohamed,
I think a beginner can likely get away with a 5-10 page research report. There needs to be a summary of the business; how it relates to its industry, to the national economy, and to the international economy; expectations going forward; doubts about the business and the business model; an evaluation of the quality of management; and last and most importantly for you getting work as a research analyst, you need a valuation model of the business with the default being discounted cash flow analysis.
Best wishes for success!
Jason
Thank you a ton for all the advice!
Welcome.
Hi Jason,
It took me a half a day to read your entire response on this thread and it’s very bad on my part to tell you with mere words that it was just Helpful or great ..!! But Each and every active responses of yours is a new horizon and avenues to Deep Career Insights to any.!
I too have a very few things to ask you to get a perspective,!
My Education & Professional background :
** Am 32 now and single..:)
** Commerce Graduate(good university) and MBA finance in India (not a Top institue)…:)
** 8.5 Years professional experience in Retail Banking – sales (2yrs) ,Wealth Mangaement & Financial Planning (6.5 yrs)
Passion :
Reading, reading, readingg..
Photography, photography, abstract, imaginations,…
Researching n analysing, analysing, analysing any datas or informations..
Investigating, Inquiring any kind of stuffs…
Aspiring…:
I did try my CFA L1 and didn’t able to complete it in first shot.. Due to work in retail banking and managing clients assets, did not able to give quality time.!
Now am seriously thinking to restart CFA L1 in dec and take it up.
Am well versed with finance topics, and having experience in Market, economy, Invesments advisory and products, I don’t find it’s very tough.!
only dedication with quality time is needed.
Now I got into Midsize firm and got a good time to focus…
My questions are :
1. Having the vast experience in Invesment advisory and Indiviudal portfolio management… (Which are all pure family office and sales driven…:(
What are my scope to a career transitions in Pure Non-sales avenues..:). Like research and products of any financial services, fund houses, Or buy side to sell side … But with leveraging my past experiences also I can transition easily to any new roles after CFA….
So that I don’t have to start from scratch(since I don’t have ER or Reseach experiences)
2. Since I am like a Ambivert, I mostly spend on researching, reading and coming up with new solutions for any investments issues to clients,…and get to the clients table in a simple manner, I am able to be more successful in my current career area.. With managing some sizeable Asset Size….:)
But I feel there is too much of rat and race run for this in the market,… You either got to be with a big brands to attract clients or Start your own Family office setups to do what you like to do for clients as your own business of doing fiduciary works to clients in ethical manner…. But I don’t see that quickly happening or rather it’s not visible in my aspirations..!
3, Aspirign to retire in next 13 years, (by 45 before) I mean retiring from working for someone or someone’s profit or aspirations….
Then do something on your own, ( complete spiritual life, yoga, creativity and involve in new ideas in society to part in humane change in society… Travel globally to learn new experiences in life)
These are the list I have it close to my heart…!
4.So in this juncture I am hanging between choosing CFA to restart, if restart what would be a best bet for me to aim high in next 13 years to grow and elevate to different higher levels..
5. I don’t like to be Head of Sales or a Sales director of something or some sort…hence am not looking to grow in that direction at all….
6. What would be you best suggestion in this situation which you can give me.? Where I don’t start my new career from junior role or something… At the same time can leverage my experience in a best possible way to ladder up quick.!
Await your valuable perspective.!
Cheers,
Neeraj
Hello Neeraj,
Thank you for your praise for the post – I am so pleased that you found it useful. I have copied and pasted your questions below…
1. Having the vast experience in Invesment advisory and Indiviudal portfolio management… (Which are all pure family office and sales driven…:(
What are my scope to a career transitions in Pure Non-sales avenues..:). Like research and products of any financial services, fund houses, Or buy side to sell side … But with leveraging my past experiences also I can transition easily to any new roles after CFA….
So that I don’t have to start from scratch(since I don’t have ER or Reseach experiences)
My background was somewhat similar. I exited my university education and took a job as a stock broker, which I was terrible at doing. I determined at the age of 24 that I wanted to be a research analyst. I then got my MBA and had completed Level I of the CFA program when I got my job as a research analyst. On the cover letter submitted with my CV for job applications I said something like, “As my CV demonstrates my knowledge of finance runs the entire gamut, from the back office, to the front lines of customer service, to research.” In other words, I turned my weakness into a strength. Your interactions with customers is very valuable experience for research analysts because it ensures that you have an ethical focus because you have the end customer in mind. I would most certainly pursue a CFA charter. Also, spend time thinking about how your work experience ties directly to research analysis. No one is ever ‘starting over’ because all of life’s experiences in your 32 years contain lessons and therefore knowledge that can be applied to the job of being a research analyst.
2. Since I am like a Ambivert, I mostly spend on researching, reading and coming up with new solutions for any investments issues to clients,…and get to the clients table in a simple manner, I am able to be more successful in my current career area.. With managing some sizeable Asset Size….:)
But I feel there is too much of rat and race run for this in the market,… You either got to be with a big brands to attract clients or Start your own Family office setups to do what you like to do for clients as your own business of doing fiduciary works to clients in ethical manner…. But I don’t see that quickly happening or rather it’s not visible in my aspirations..!
I don’t see a question in what you wrote above. I think you are commenting on the nature of the asset management business and that you find it frustrating. Only you can answer this question for yourself: What do you want, and what are you prepared to do to get it?
3.Aspirign to retire in next 13 years, (by 45 before) I mean retiring from working for someone or someone’s profit or aspirations….
Then do something on your own, ( complete spiritual life, yoga, creativity and involve in new ideas in society to part in humane change in society… Travel globally to learn new experiences in life)
These are the list I have it close to my heart…!
These are worthy aspirations and they require tremendous amounts of work, intelligence, focus, and wisdom. If you make your work spiritual then you can work on the spiritual life simultaneous with investment management. For example, when I was a portfolio manager I saw myself as the custodian of my shareholders’ dreams. I saw this as a sacred duty and a high calling.
4.So in this juncture I am hanging between choosing CFA to restart, if restart what would be a best bet for me to aim high in next 13 years to grow and elevate to different higher levels..
The CFA charter is a big help because its lessons focus on the skills needed by research analysts. You also need to begin marketing yourself so that people are aware of your skill set and your passion for investing. My own mindset when I was a candidate for a research analyst job was: “If people knew what I know about myself then they would hire me.” I truly believed that statement. There is one very large implication of that statement, too. Namely, the task then is not just about acquiring skills but effectively communicating to others that you have the skills.
5. I don’t like to be Head of Sales or a Sales director of something or some sort…hence am not looking to grow in that direction at all….
Again, only you get to say “yes” or “no” to job opportunities.
6. What would be you best suggestion in this situation which you can give me.? Where I don’t start my new career from junior role or something… At the same time can leverage my experience in a best possible way to ladder up quick.!
You will have to start your career in a junior role. At the Davis Funds where I worked we had analysts join us with 10 years of experience of serving in the corporate finance department of oil and natural gas firms and they started out as junior analysts. This is the nature of the industry. If you happen to find a firm that hires you into a non-junior role then you must be congratulated : ) Another part of your mindset should be: Getting my initial job as a research analyst will be the hardest thing I ever do in my life and I MUST succeed.
With smiles,
Jason
Hello Jason,
Your pragmatic perspectives are valuable to ask more deeper questions to myself.!
That would only clear my roadblocks to get a clear sights on my ways.!
Yes I agree with your thoughts on highlighting oneself and staring with junior.
I will muddle over your comments and keep it pinned in my Desk…:). Until I reach some target.!
On the one of question I was trying to ask :
In India asset management and wealth advisory has became more of competitive industry. There are too many advisors for very less number of wealthy Clients.! One cannot make his life like in US, Europe you can have 10 wealthy Clients to make your career.!
In this above context & relying on my strengths in analytical n research capabilities I would rather transition myself to RA or ER or Fixed Income or Alternatives… I mean any investment products… You can be on Creating product side or rather Investing side to either for a small firms or in a corporate.
So what are the other opportunities area one can really try in coming days of this modern changing industry ? I know corporate finance has less exposure with CFA…
What about Venture capital Investing and Behavioural finance…?
What is your general reading and suggestion would be? I know as a finance & investment profession, I can choose what I love doing it within any gamut.. !!
I am very clear that I don’t wants to aspire to became a head of asset management or head of advisors..:)
Rather I love to focus on Process, compliance, custodian., products & research rather then selling them to stakeholders or Ultra High networth clients…
What is your views? It would help me ask more questions to myself to reach clarity.!
Greatly Appreciate your time again,.!
Thanks
Neeraj
Hello Neeraj,
I think that the future of finance is very much in private wealth management and individual advising. The skills that you seem to want to use most are in analysis. Venture capital will always be a relevant industry for analysts because they fulfill an important function. Behavioral finance is not yet a separate role at the overwhelmingly majority of firms. I think one role that does not exist but where there is large opportunity is in performance measurement (i.e. CIPM) coupled with portfolio analysis. In other words, there is a role for the person who can work proactively with portfolio managers to evaluate their performance, note where the manager has done well and well she has done poorly, then make recommendations for how to improve that performance. In other words, they serve in a counseling capacity.
I hope this helps!
Jason
Hello Jason,
I was wondering if you could expand on your daily routine when you were an equity analyst. Maybe a post on a typical day of an equity analyst? i.e:
– wake up at 6:00am…catch up on news
Also, is it possible to touch on certain setups/tools/data source/process that you stuck with? Or at least the basics that you think are MUST for inspiring or amateur investor i.e:
– excel, access, vba, computer programming?
– news subscription (FT, WSJ) vs free source (bloomberg, reuters)
– computer (mac vs pc, laptop vs desktop, both)/doesn’t matter
– stock screeners?
Thanks in advance! Because I have no experience, it’s hard to imagine and grasp the routines and daily grunt of an equity analyst.
Hi Dannie,
What a great suggestion for an article…consider it done. You will see such a post on The Enterprising Investor in the next 4-8 weeks. I will give you credit for the suggestion, too.
As for the other questions…I am happy to answer for how I did my work. However, what I consider to be PARAMOUNT is to experiment with many different tools and news sources. Why? What matters is your mind. Different minds call on different memories, knowledge, mental models, and so forth. Therefore, the tools must exalt the individual’s consciousness, as opposed to the consciousness exalting the tools. So I offer up my thoughts on this subject cautiously. This is the stuff I used…you WILL use different tools if you are aware of the ways that your mind works – and that (i.e. self-awareness) is much more important.
Here are the tools I used, mapped to your framework:
– excel, access, vba, computer programming? Excel, yes; I consider myself to be an Excel master. Want a tip? Learn the keyboard shortcuts as you can sextuple to septuple your productivity with Excel. Want another tip? Get an Excel Worksheet Function book and continually peruse it so you learn what is possible to do with Excel. Want another tip? Yes, take a computer programming class so that you understand how to use worksheet functions in a way that speaks the language of computers. VBA? A wee bit. My spreadsheets tended to be custom-made for each business I examined…but more on this in another blogpost. Access? No, I tried to learn it multiple times, but my process was not intensive enough to require a database’s functionality. I used Excel as my clunky database. Want a final tip on this section of your question? You might want to learn Matlab, which many analysts, including my successor whom I hired, use. You also might want to learn a stat package like SPSS.
– news subscription (FT, WSJ) vs free source (bloomberg, reuters)? At the Davis Funds I had a WSJ subscription, but not an FT subscription. I read about 35-40 news sources per day. We had a Bloomberg terminal which was used sparingly, and FactSet, too. But one of my top secret weapons, and no longer available as it was absorbed into the vast AOL edifice, was Relegence. But for my model building I (and I CANNOT EMPHASIZE THIS ENOUGH) used ONLY primary data sources. I NEVER read sell-side or third party analysts research…we are talking maybe once every two years would I read an analyst’s report. I only read reports if: I was looking at a complex business and wanted to see what factors seemed to be important, or, and more often, to understand what ignorance an analyst was peddling to the Street and that was negatively affecting my suite of businesses (i.e. my portfolio).
– computer (mac vs pc, laptop vs desktop, both)/doesn’t matter? I have owned both PC and Mac and I prefer PC, especially for finance. Why? Mac’s version of Excel didn’t used to support keyboard shortcuts so you had to laboriously use the mouse to execute commands. #pathetic. I once taught a young man in the secrets of my analytical methods and he used a Mac and it took him literally many hours longer to do what I was doing with keyboard shortcuts. By the way, I should give props to Javier Sanchez my fellow research analyst when I started at the Davis Funds for insisting I learn the shortcuts. Thank you Javier. I would argue that this allowed me to add a year of productivity on to my career. That kind of WOW is difficult to come by in the investment business.
– stock screeners? I never used a formal screener…meaning someone else’s off-the-shelf package. Instead I used a simple PEG ratio once a quarter to sort the entirety of US stock listings. But this was just to get an idea list going. This maybe generated 2 ideas that were actually bought into the fund in the whole length of my career. In other words, screeners were not a big part of what I did. By the way, if I had it to do over again I would never use the PEG ratio. Why? Check out the article I wrote for the Journal of Private Equity about the Fallacy of the PEG Ratio…they are very, very unreliable.
I hope this helps!
Jason
Thanks Jason.
I can’t wait to read your new article!
Hi Jason,
Thanks for significant input.!
We will be keep bothering you with some more clarity…:)
Thanks
Neeraj
Hi Jason,
That was a great idea by your friend to send his own reports to investment firms monthly. I am going to start doing that however how do you know who to send that report to in a company. Especially if it is a large company.
Thanks
Hi Ryan,
Great question! He sent it to analysts and portfolio managers of the mutual funds for which he wanted to work.
Hope that helps!
Jason
Hi Jason,
Yes that does help and I appreciate you taking the time to answer my question. One more question as a follow up would your friend send monthly reports to the same mutual fund companies month after month?
Thanks
Hi Ryan,
Yes he did. Month after month after month after month for two years until he got a job interview. He tended bar in the meantime.
Best wish for success!
Jason
Helo Jason,
very nice article…thank you for the information 🙂
Hello Priya,
Thank you, and you are welcome!
My best!
Jason
Hello Jason,
Thank you so much for sharing this beautiful article. It’s truly inspiring!
I have a background in engineering and have recently received my CFA charterholder. I currently work as an engineering consultant (demand forecasting and business analysis) and is hoping to get into finance as a research analyst if possible.
I have been applying to opportunities and trying to participate in my local CFA events. However, interviews are difficult to come by…is there anything I should do differently?
If it’s not too much trouble, how do you think I should proceed in my situation.
Any advice will be greatly appreciated.
Many thanks,
Qian
Hello Qian,
Thank you very much for your praise and for your question. I am not sure of how many job opportunities for which you have applied, so forgive me if you have already engaged at this level.
When I left graduate business school I sent out over 550 CVs and cover letters to prospective investment management firms. Of that 550 I received approximately 50 replies, around 40 of which were “thanks, but we are not interested,” and I had 10 job interviews. From those interviews I had 3 job offers, with an additional job offer coming after I accepted my position as a research analyst at Davis Selected Advisers. As you can see that is a very low percentage of interviews, 10 of 550 or 1.8%, and the number of offers is a meager 0.54%. Also, this process took almost exactly one year. An acquaintance of mine sent examples of research every single month for two years to various money management firms before landing his dream job as a research analyst.
Your candidacy is already far ahead of mine because of your industry background and you already have your charter. In other words, it is tough, but not impossible. So if you love the investment business please know that there are rewards for diligence.
With smiles,
Jason
Hi Jason,
It was wonderful reading your article and getting a deep view of your insights. Thank you so much for taking the time for such a thankless job.
I’m a student from LSE pursuing the MSc Accounting & Finance program, and have completed 2 levels of the CFA program. The only “relevant” work experience I have is a 10 week internship at one of the Big 4 with the M&A and PE team. Prior to that I was a working partner in my own business in the garments retail sector for 5 years, which was alongside my Bachelors degree in India (from where I belong).
I have a few questions as follows:
1. How favorably will my 5-year work experience play out while looking for a job in the UK?
2. How much of an edge does “2 Levels of CFA” give me?
3. (most importantly) What kind of roles/banking divisions should I apply to to leverage the CFA part on my CV?
I would be really grateful to you if you could reply to my comment via an email.
Regards,
Naman
Hi Naman,
I just sent you an e-mail.
With smiles,
Jason
Hi Jason,
Thank you for your time to help us all! Very nice of you!
My story: recent Top 20 US MBA graduate and a CFA level III candidate. Experience in FP&A in natural resources industry. Passionate about ER, have sample work. Applied to 80 jobs in US, with 0 responses. Targeted large BB and independent research companies.
Questions:
1. Am I doing something wrong?
2. What are key things I should focus on?
Hello Sam,
First, your credentials set you far ahead of most candidates, so this likely means you are having a communication problem. Namely, how do you communicate your outstanding qualities to a stranger so that they have a strong impression of who you are?
I would guess without knowing more about you that your cover letter is not expressing your unique qualities very well. Writing a fantastic cover letter is essential to a job search. I spent a month crafting mine and scrutinized every word. Unfortunately, how to do this is way outside the scope of what I am prepared to do. But safe to say there has to be something in that cover letter that is so irresistible to the reader that they put down the page and go to the web to try and find out more about you. That’s your goal: to be remembered and engaged with in a deeper way.
Next, are you using those irritating online e-submission mechanisms for your package? If so, you are sending it directly to a computer and not to a human being. My advice is to locate the name of a portfolio manager at the firm you are trying to reach as well as the mailing address for that PM. Mail rooms are trying to solve a different problem than the HR department. Mail rooms are simply trying to route traffic, whereas HR is trying to gatekeep. If the PM receives a nice cover letter and CV that is well drafted, expresses enthusiasm and insight for the business, and is compelling in its packaging then they are likely to read it. I can tell you that in my career I received less than five such letters directly sent to me and all of them received phone calls when we were in a hiring round. I can’t make promises for people I don’t know, but if they are kind, and most on the buyside of the business are kind, they will remember you and some may even be open to further discussions. Also, here is a dirty secret of the business, most HR departments have no idea how to hire for a PM or research analyst job – they are terrible at it. So they are likely to overlook the important distinctions of a candidate.
Next, invite a mentoring relationship with this PM or feedback from them if they aren’t into mentoring in your cover letter. Here on the wild world web you have found someone willing to give back to his community by proffering free advice. I can’t be the only one : ) If no PMs take you up on this, try approaching head hunters for the asset management industry. Some are willing to offer feedback on cover letters and CVs.
Last, be patient. It took me a year of looking to get 3 offers out of 550 packages sent out. A pal of mine took two years to find work. Are you able to do something else while the process grinds on? For example, work as an analyst at an E&P, minerals, or commodities firm? Usually the buyside recruits from industry.
Best, best wishes for success!
Jason
Hi Jason,
First, thank you for such a detailed letter. I think I am indeed marketing myself poorly. My cover letter is generic, boring even to myself, as I’ve been thinking no one probably cares to read it.
Second, I am using those irritating online e-submissions, which make me feel miserable. Never worked for me.
Finally, I am currently working at a small mezzanine finance company in entertainment industry doing waterfall financial modeling and simulation. I am not sure whether this experience is going to hurt me but I need to buy myself time to put together another plan of attack on the ER career. I wasted six months on a job hunt and can not afford to do that anymore.
Thank you again for your time! I enjoy reading your other posts on investing.
Sam
Hello again,
You are welcome…I hope that all comes to fruition.
Jason
Hello Jason,
What are your thoughts on the training programs such as BIWS, WSP, TTS? And which of these are used at Financial Institutions for training their employees? Though all claim to be used by major Banks, Asset Management Firms, Brokerage Houses and even universities.
Regards
Jibran
Hello Jibran,
I am not familiar with any of those training programs, sorry.
With smiles,
Jason
Hello Jason,
I liked your Article, I just wanted your insight as i have noted that most of the advise is geared towards young people. I am in my late Thirties, have worked in the Banking Industry for 17 years, I am Financial planner right now but want to get into analysis, I have a CIM, CFP. I have started my CFA. What do you think my chances will be in the industry.
Hello Sabiha,
Hard to say exactly because you did not include very many details. What I can say is that at Davis Selected Advisers our analysts, when hired, had a number of unique backgrounds, ranging from: just having left graduate school (me); to having worked as a journalist; to having worked as an analyst within a specific business (multiple such cases); to having graduated from with a liberal arts undergraduate program, but being very persistent in the hiring process; to working as an accountant for a number of years; to having been a childhood friend of one of the officers; and so forth. My main points are all contained within the original post. Most important of which is to know yourself and what you want. Number two is to develop a skill set that would lead you to hire you if you were the one doing the hiring; and number three is to make those skills tangible for strangers.
I hope that helps!
Best wishes for success,
Jason
Hello Jason,
My self Ravi Kumar and I would like to ask you a favor, please suggest me any of the books which explain in detail about the sectors/industries of an economy and their role in taking the economy forward. Your suggestion is highly valuable as I did take a few in the past from you.
Thanks in advance.
Best Regards,
Ravi Kumar.
Hi Ravi,
The books that I have about specific industries are pretty North America-centric. But they include: “Money in the Ground” about the energy industry, and “Entertainment Industry Economics.” CFA Institute also publishes a series of Industry Guides that help analysts learn how to analyze specific industries but you must be a member to access this content. Here is a link to that content: http://www.cfapubs.org/action/doSearch?AllField=%22industry+guides%22&field1=&startPage=&SeriesKey=ind
Yours, in service,
Jason
Hello Jason,
Thank you so much for your valuable suggestion. You have been simply outstanding to reach out to have best suggestions & so I will in the future as well.
With Smiles,
Ravi Kumar
Hi Jason
The above article is mind blowing, this has made me read and learn more about becoming an equity analyst , in turn i realized my dream to become analyst.
As i am 27 of age can u tell me how many years will take a person to complete CFA? to become an equity analyst is it necessary for a person to do CFA or just an MBA finance would do good.
As i understood a person to become an analyst he needs to be well versed in Bond Valuation and Security Analysis and know few models like BOTP etc…
Kindly let me know which are the good websites or books require to refer for the above mentioned topics it will be of great help.
Hi Jason
I am so happy to have found your blog¡
I am 26 years old. I have audit comercial experience in one of the Big 4. Now, I am interested to become a financial analyst. The think is that I feel lost. I do not where to start. I am thinking to take a MSc in Investment and Finance in Queen Mary U London.
What should I do first?
Look forward to hearing from you.
Regards,
Laritza
Hello Laritza,
I believe the place to start is to examine why you want to be a financial analyst. The next thing to do is to spend a long time thinking about what type of an investor you are. Once you have deeply felt, inspired opinions about what kind of an investor you are it will help shape your future. One you know what type of an investor you are then you need to spend time researching the aptitudes and skill sets that investors of that kind possess. Then compare that to your inventory of skills. If you have gaps in your knowledge then you need to fill them. After that you need to make these skills tangible for employers [in other words, then you can pick up at the start of this blog post : )].
Best wishes for success!
Jason
Hi Jason,
Amazing article, please accept my heartfelt gratitude for this piece and all the advice within! There couldn’t have been a better time for me to come across this, especially since I am just starting my career in finance. I was a bit confused about the approach I should take to develop the skills required for research & analysis but this article certainly brought things into perspective.
I would be thankful if you could help me with a quick novice question -You have mentioned that when you started out, you used primary data sources like the 10k for the analysis. Could you please give me a few pointers on how you went through the the statements and any specific information bits you looked for in the report? Any blogs, books, articles, etc on this would be helpful too. I am currently trying to analyze a pharma company by going through its 10k and things get a bit confusing from time to time! I am an L2 candidate and have no experience with investment research, so my knowledge is very limited. It would be great to soak up any piece of info I can get my hands on at this point 🙂
Thanks again for the article and look forward to hear from you!
Kind regards,
Gaurang
Hello Gaurang,
How nice to read your kinds words. You have asked an important question. In the many answers to questions to this blog I listed my favorite finance books. In that list are several financial statement analysis books that are both excellent. That said, my very favorite is John Tracy’s “How to Read a Financial Report.” I believe you will love it.
Importantly, read more than one book because each time you discover the information through another author’s eyes helps inculcate these teachings into memory.
Best wishes for success!
Yours, in service,
Jason
Dear Mr. Voss,
I will echo the sentiments of the previous comments—outstanding post! I am very glad to have stumbled onto your blog after countless Google searches of “How to Become a Research Analyst”. I am also very impressed with the dialog you maintain with your readers; over one year since your blog was first published and you still actively reply to the comments you receive. On behalf of everybody, thank you.
If I may, I’d like to give you a little background and then ask for your advice on my personal situation. I am a 25-year-old MBA graduate trying to break into the realm of equity research. My professional experience is comprised of 2 years of retail banking and 5 years of restaurant management. While I have no background in finance (at least on my resume), I have been a “student of the market” for over five years. I consistently follow the market news, maintain my own individual trading account, and I spend much of my spare time learning about and researching various companies for pure enjoyment.
After careful thought and consideration, I have decided to pursue a career that is aligned with my passion for equity research. I recently became a CFA Level I Candidate and will sit for the exam in June of 2015. I live an hour outside of New York City and that is where I intend to begin my new career. However, I am having a very difficult time getting the attention of Wall Street firms (both big and small). Unfortunately, I attained my degree from a small state school in New York and do not have a powerful alumni network I can leverage to help me break into the industry.
I fully intend to follow the advice you outlined in your post and comments. I am in the process of creating my own website to display my research work (“making the intangible tangible”). I also plan to join a local CFA society to continue building my professional network.
Here is my question. What would be the best use of my time while I am studying for the CFA exam(s) and building a name for myself on my own? Many of the entry-level Research Associate openings I find require “1-2 years of related experience”. How can I improve my resume and become more attractive to potential employers down the road? Is there another an area of work I should look into while I am going through the CFA curriculum that can provide me with valuable, relatable experience? How can I get my foot in the door?
If you’ve made it this far, thank you for reading. I am seeking all of the guidance and direction I can get. I just want to be sure I am on the right track and doing all I can to one day become a research analyst.
Thank you again for all you do.
Kind regards,
Joe
Hello Joe,
I have copied portions of your e-mail into my response so that I can answer your questions directly.
Regarding: “I will echo the sentiments…On behalf of everybody, thank you.”
You are welcome, my pleasure. Having been through this process before I know that there are few resources to help people deep interest in becoming a research analyst.
Regarding: “If I may, I’d like to give you a little background and then ask for your advice on my personal situation. I am a 25-year-old MBA graduate trying to break into the realm of equity research. My professional experience is comprised of 2 years of retail banking and 5 years of restaurant management. While I have no background in finance (at least on my resume), I have been a “student of the market” for over five years. I consistently follow the market news, maintain my own individual trading account, and I spend much of my spare time learning about and researching various companies for pure enjoyment.”
Your MBA gives you an advantage in the investment space. Most specifically, you can think like a businessperson when analyzing businesses. This is very important, because many analysts have no actual work experience so everything remains abstract and remote to their thinking. Therefore, they are gullible and vulnerable to sensation, rather than fact, when assessing a business and its prospects. This goes for your restaurant experience, too. I would utilize this experience and write up an overview of ‘Top 10’ things to consider when investing in a publicly traded restaurant chain. Something to that effect has a better chance of getting your foot in the door, so to speak.
You are smart to create your own website. This is the best platform for employers to learn more about you. If your returns beat a well known benchmark, such as the S&P 500, then I would use CFA Institute’s GIPS standards to calculate your rate of return relative to a benchmark to demonstrate your aptitude for investing. You can put your rate of return on your website vs. the benchmark. Next, you want to say the paperwork to back up the returns is ‘available upon request.’ If you haven’t beaten the benchmark (after at least two years of effort) then it may be a signal that you need to become more proficient at investment management.
Separately, you could provide commentary on news flow on your site to demonstrate your ability to comprehend the business ramifications of the news on your names.
Regarding: “After careful thought and consideration, I have decided to pursue a career that is aligned with my passion for equity research. I recently became a CFA Level I Candidate and will sit for the exam in June of 2015. I live an hour outside of New York City and that is where I intend to begin my new career. However, I am having a very difficult time getting the attention of Wall Street firms (both big and small). Unfortunately, I attained my degree from a small state school in New York and do not have a powerful alumni network I can leverage to help me break into the industry.”
I am not surprised about the difficulty of getting people interested. This is normal. Most people, even those that graduate from Ivy League schools find the investment management industry a difficult one to enter. Your attitude needs to be: I can leave no investment stone unturned. Really, this must become an obsession. You have to be demonsrably different and good to break in. Not impossible by any means, but difficult. With the rock solid backstop of badassedness in place then your attitude needs to be: if they knew about me what I know about me, then they will have to hire me lest I get hired elsewhere and destroy them. Seriously. If you can say that honestly to yourself then the problem switches from one of ‘do I have the goods’ to ‘how do I communicate that I have the goods.’ This latter problem is one of communications and much easier to solve.
Website gives you platform and nexus point for all things Joe. If it is a communications game then your resume and cover letter have to be good enough, a) not to put down, and b) to leap from the resume and cover letter to your website, where you can engage in a more comprehensive conversation. This also means that the game become a numbers game. There are thousands of people working in the investment management industry globally, but they are respresented by a much smaller cadre of human resources departments. So it behooves you to send hard copies of things DIRECTLY to the investment managers and analysts and circumvent the HR department. This is harder, but it increases the optionality of your search tremendously.
Regarding: “I fully intend to follow the advice you outlined in your post and comments. I am in the process of creating my own website to display my research work (“making the intangible tangible”). I also plan to join a local CFA society to continue building my professional network.”
Good choices all.
Regarding: “Here is my question. What would be the best use of my time while I am studying for the CFA exam(s) and building a name for myself on my own? Many of the entry-level Research Associate openings I find require “1-2 years of related experience”. How can I improve my resume and become more attractive to potential employers down the road? Is there another an area of work I should look into while I am going through the CFA curriculum that can provide me with valuable, relatable experience? How can I get my foot in the door?”
A great series of questions. I was asked in my in-person interview at the Davis Funds: “You don’t have any experience at this, so why should I hire you?” I replied, “I don’t have paid experience, but I was an analyst intern at a pension consultant, and in graduate school I analzyed well over 50 companies. Would you like to see an example of my research?” We then went to my website, downloaded the analysis I did of Time Warner, and preceded to talk about the work I had done. You have two main jobs right now: one, becoming a good analyst, and two, marketing that you have become a good analyst. A part of this is imagining yourself from the perspective of a future employer. Whatever crazy concerns they may have you need to be able to overcome.
Regarding: “If you’ve made it this far, thank you for reading. I am seeking all of the guidance and direction I can get. I just want to be sure I am on the right track and doing all I can to one day become a research analyst.”
If you’ve made it this far, remember this process takes a LOT of time. These positions are rarefied and you must be good at many things, not just one. Those things: analysis, communications, persistence, knowledge, memory, intuition, lack of bias, and so forth. You’ve got a lot of work ahead of you.
Regarding: “Thank you again for all you do.”
You are welcome!
Yours, in service,
Jason
Such an inspiring guidelines not only for CFA candidates but also for others who are pursuing their desired career. I really enjoyed reading your article.
Thanks for sharing!
Hello Jason,
Its me again and this time its regarding bloomberg terminal usage tips. Could you please suggest any books where I could find bloomberg navigation with examples. Your suggestion matters a lot for me and it has been always.
Thanks in Advance.
Hello Ravi,
I am not aware of any books that can help teach you how to use a Bloomberg terminal. If you have access to a terminal Bloomberg has really upgraded their support for the device. That is, there are tutorials embedded on the machine that can teach you how to use it. For what it is worth, when I began my career I had no experience with a Bloomberg terminal and that did not seem to hurt my chances. Better experience is to be expert at Excel and its functions. To really separate yourself then knowing how to use Visual Basic is a big plus. Does a local university have access to a Bloomberg terminal?
Yours, in service,
Jason
Hello Jason,
Firstly thanks for replying, I completely agree on what you said. Hence considering my case as I am a starter, which books help me in getting fair knowledge about excel and visual basic.
Thanks in Advance
Hello NN!
Thank you for taking the time to provide feedback to me. I hope the piece helps you and your life!
Yours, in service,
Jason
First of all i would like to thanks for your support in the field of finance. I am a final year student of INSTITUTE CHARTERED ACCOUNTANT OF INDIA & i have completed 3 years of of my articleship and appearing in CA FINAL exam in NOV-2014. I want to become financial analyst but i have no idea that how to start my career in research as finance analyst, which kind of can give me opportunity to work with………please let me know how and where i should start my first job as analyst………..
Hello Bibhash,
Thank you for your kind words. Your question has been asked several times here in the comments section, even within an Indian accounting context. Please spend a little bit of time reviewing the many questions about career advice and my answers. I am happy to answer more specific questions unique to your situation after you have reviewed the existing information.
Yours, in service,
Jason
Can I make an Equity Research Career without MBA finance, since I have MBA IT with Business Analyst experience in IT firms. I have enrolled for an Equity Research program from NSE. I need your advice, whether I am on right track to start an equity research career.
Hello,
Yes, of course. But at the end of the day all of your very informed insights about the world – and, in your case, especially about the IT world – have to be filtered into the mindset of an investor. This latter skill set is the one that you have to be able to demonstrate to a prospective employer.
Because of your specialist background you actually have an advantage over many other candidates that have a generalists’ MBA.
Yours, in service,
Jason
Sir,
Thank you so much for all the information..I am currently doing my Chartered Accountancy course in India and I have just one group of Final level left to clear..I am also doing the financial modelling certified course of National Stock Exchange.. Actually what we are taught in this course is basically that the assumptions taken for any item other than sales, purchases and a few items the prediction of which is made by the directors in their report, is constant..In real world do we do it in the same way?? I dont know but I feel that something is missing..I mean that dont we need to know regression analysis for future prediction?? Sir,I will be really grateful if you can tell me what other aspects or techniques or any mathematical techniques that I should improve my knowledge so that I can get into a good company..Another question is do investment banks and other financial institutions give value to Chartered Accountants?? Kindly reply.. Thanks
Hello Rezwan,
Thank you for your feedback and for your questions.
In answer to your question about how to create a financial model for a business…You are correct that most of the variables do NOT remain constant, even as a percentage of sales. What you need is a good book on financial valuation and there are literally dozens. To me, the best book on this subject for a layperson is Brigham and Gapenski’s book on corporate finance that is fully referenced above in this article’s question stream. The section on valuing a project is what you want to focus on. Take a look at some of the other books I recommended.
Regression analysis can be used, but in my experience it is too mechanical in its approach to predicting the future.
Regarding investment banks and financial institutions giving value to Chartered Accountants. Sure, of course; many of them do. The investment company where I used to work hired an analyst specifically because of her accounting expertise. You should ensure that you understand business accounting very well, and most importantly financial statement analysis. This is the key skill for investors.
Best wishes for success!
Jason
Thank you sir..
Rezwan you might want to try Wall Street Prep or Breaking Into Wall Street, you buy these programs once and keep them for life they are pretty good. Breaking Into Wall Street is more user friendly in my opinion, there are others like WST and TTS but they are okay. Just forget books, after having read quite a few I know that these modelling programs are easier to use for learning how to do modelling and valuation. However, for more in-depth theoretical knowledge (might be useless depending upon the valuation practices of the firm concerned) you can always read books. Here are a few books I can recommend for Financial Analysis & Valuation:-
1.Investment Valuation 2nd or 3rd Damodaran
2.The dark side of valuation: Valuing Young, Distressed and Complex Businesses – 2nd – Damodaran
3.Financial Shenanigans – Schillit
4.Creative Cashflow Reporting
5.Valuation of companies in Emerging Markets – Luis Pereiro
6.Equity Valuation – Models from Leading Investment Banks
7.The Handbook of Business Valuation and Intellectual Property Analysis – Reilly & Schweihs
8.Valuing a Business – Pratt
9.Cost of Capital: Applications and Examples – 3rd/4th – Pratt
10.Valuation Techniques – CFA Institute – Jason Voss
11.McKinsey Valuation 5th
12.Reading Financial Reports for Dummies
13.How to read a Financial Report – Tracy
14.Accounting: The Financial Numbers Game Detecting Creative Accounting Practices
15.The Bank Analyst Handbook – Stephen Frost
16.Wiley – The Valuation Handbook
17.Integrated Bank Analysis and Valuation: A Practical Guide to the ROIC Methodology
18.Bank Valuation and Value-Based Management: Deposit and Loan Pricing, Performance Evaluation, and Risk Management
19.Quantitative Business Valuation – Jay B. Abraham
20.CFROI – The Total Systems Approach
Enjoy
Hi Jason,
What you think of some one giving cfa level 1 who works in technology sector of oil and gas and want to move in to equity research.
Also I am 34
Krishna
Really Useful
Hello Shruti…I’m glad that you think so! Jason
Hi Jason,
I did my B.Tech in electronics, and MBA in finance and both from not so renowned institutes.
I have working in wealth management since last 5 yrs. in Indian retail banking.
now I have my inclination towards investment banking and mostly on fixed income securities.
what is your suggestion:
1. to go with CCRA by NSE
2. CFA
Hi Jason,
Thanks for the invaluable information you’ve provided! I recently started a blog to track my progress and I’ll start posting content online within the next few weeks.
Can you recommend a professional excel template for analysis, perhaps the one you used while working?
Once again thanks for the information you’ve provided 🙂
Regards
Andrew
Hello Andrew,
For each company I analyzed I created a unique spreadsheet. The secrets contained in those spreadsheets are proprietary 🙂 However, if you go to the site Thinknum you can see examples of analysis, including one from my days as a portfolio manager.
Hope that helps,
Jason
Had to ask! Closed mouths don’t get fed 🙂 Will have a look at Thinknum…Off to start building these models.
Regards
Andrew
Hello Jason,
Myself Ravi and I am currently working as Analyst in Equity Research. This is regarding your expert suggestion to write research reports. Could you please provide me with the sources (any books) where I could understand the steps in writing research report as how to start the report and what all attributes I should consider while framing a report. Your suggestion means a lot.
Best Regards,
Ravi Kumar
Hello Ravi,
Take a look at this extended comment thread as I have been asked this question several times and have provided the answer to this question.
Yours, in service,
Jason
Hello Jason,
Many thanks for your advice. I has grouped some friends in order to establish a blog like you suggest. I remember you said your friend used to send his researches to investment firm for two years. How can I find who to send my research papers to? Thank you in advance
Hello Tran,
You are welcome for the advice : ) and thank you for your excellent question. I would send the research reports to firms where you would like to work as an analyst.
Yours, in service,
Jason
Hey Jason,
First off, I would like you say thank you for this wonderful post on equity research. More specifically, I have been personally wondering the best way to break into the industry myself. Furthermore, I have taken your advice and after reading “The Intelligent investor” I purchased your recommended book list in the comments. I am currently half through Graham & Dodd’s “Security Analysis” Brigham’s “Financial Management” and Clyde’s “Financial reporting books, which should give me a good foundation. Also, my next step would be to order WallStreet Oasis “financial modeling courses” to cover valuations and the necessary modeling skills. Furthermore, I reach out to local equity researchers at Raymond James for a template report and companies covered by their teams. Interesting enough, I just signed up with Dream Weaver to create my own website and plan on sitting for the CFA level 1 in December. Also, I plan on sending these reports to the new researchers I have contacted until I have secured a position in equity reseach. I was wondering if you mind answering a few questions for me?
Background info:
– Senior in College about to graduate for a non-targeted school in Finance with honors.
Questions:
1. What do you think about my approach to breaking into equity research?
2. What do you recommend putting on my website? I was thinking the companies profiles, different leading indicators I make excel files for “Real GDP,ISM,Non-manufacturing report on business, building permits, University of Michigan Consumer Sentiment Index.” Plus, some confirmation indicators such as Durable goods, ESR, Industrial Production and Jobless Claims. Also, I read a lot of books, so I was thinking of doing book reviews on there also.
Thank you so much for your time and personal knowledge,
Adam Al-Khouri
Hello Adam,
You have done an impressive amount of work – wow! Most find what you are doing daunting. You clearly have a passion to change your life : ) I believe your approach is, of course, to be commended. All of the things you are doing will help to make you a compelling candidate for an investment firm.
On your website I recommend that you put up examples of your research; book reviews – they demonstrate that you have a passion for the industry, and that you can think critically (don’t be afraid to write a negative view of a popular book); a more complete version of your CV; any other interests that you have that demonstrate that you are an interesting person who strives to improve his life.
Best, best, best wishes for your ultimate success!
Jason
Hello Jason,
Thanks, for the speedy reply! I will follow your path and see how it plays out. Also, I know your busy man, but do you have two more secs to spare? Checking out your credentials, which are very impressive I must add, I noticed you acquired your masters also. Which, brings me to my next point, do you think that route would be superior to the CFA in the short run? Then acquiring the CFA once employed in my desired profession.
Thanks again, I plan on updating you on my progress!
Adam Al-Khouri
Hello again, Adam,
I believe that an MBA is the surest way to learn about how businesses operate. With that understanding your analysis becomes richer and more complete because you start to think like the companies you are trying to understand. The other benefit of an MBA as taught in most programs is that you work in teams and this teaches many of the interpersonal skills necessary to succeed in the business world. These are skills not taught in the CFA program.
Also, if you attain your MBA (or another Masters in another field) no one can ever take that credential away from you. It is a permanent part of your package. To me that has tremendous appeal.
I consider an MBA and a CFA to be highly complementary of one another.
Go Adam, go!
Jason
Hey Jason,
I just built my website, but I haven’t created any reports or video book reviews yet. However, I have created the actually website and uploaded my leading and confirmation indicators. I was wondering if you would mind taking a look at the website and giving me an honest opinion?
Thanks
Adam-Khouri
Hello Adam,
Yes, of course, I would be happy to review it.
Yours, in service,
Jason
Hello Mr Jason,
First of all, lots of thanks for your guidance.
I’m pursuing CFA L 2. I have read one of the books you have suggested to me and got really good grip on how to forecast Balance sheet and Income statement. Thanks a ton.
But i have tried many time to write research report on a Company but can’t write beyond one paragraph. I have searched on internet and This forum as well regarding tips for how to write research report but of no use. I would be indebted if you can give me any reference on how to write research report.
Again Mr Jason, you are making our lives a lot esier. THANKS A LOT FOR YOUR HELP.
Hello Darshan,
Thank you for your comment and your question!
My advice is to ask a local investment firm for a copy of one of their research reports so that you have an example of a real research report in hand to use as a template.
You can also take a look at Jeffrey Hooke’s book, “Security Analysis on Wall Street.” In it he describes many of the elements of a good research report.
Another book is James Valentine’s “Best Practices for Equity Research Analysts.”
These three all provide a good framework for how to write a good report.
Yours, in service,
Jason
Thanks Sir for such a prompt reply.
Sir one more question i forgot to ask…Which one is better SAP or SAS? i have been getting mix reviews regarding the same and said SAS is better for CFA or financial analyst. Sir what’s your stand in that?
Thanks a lot Sir.
Hello Darshan,
These are statistical packages, yes? If so, I have no opinion as I do not use either SAP or SAS.
Sorry that I could not be of more help.
Yours, in service,
Jason
Thanks Sir
You’ve always been kind.
Hi Jason,
I have seen your blog, it’s highly informative and quite impressive. Iam in my 30’s, earlier i was in IT and now planning change my career in finance and quite eager to know more about this field. I have passed my CFA Level 1 exam last Dec.
Right now i am quite beginner in this field, i am feeling as if i am not being able to understand anything and don’t know how to start and from where to start.
Can you please tell me that if i want to become research analyst than how should i start with it?
Regards,
Nidhi
Hello Nidhi,
In this article, along with its many comments, and in my series Skills that Separate You as an Investment Manager, I have answered your question already. I encourage you to take the time to read these pieces. If you then have a more detailed question I will try and answer it.
Best wishes for success!
Jason
Hi Jason,
Thanks for replying back. As suggested by you, I have found my answer from the previous post on the thread. Actually i was curious as how i can start with making a research report (i.e step by step procedure).
I would say that it’s really a very nice thread, got a lot of information about how to start with, had seen the template attached by you and got the reference of books i should go through to start with.
I am sorry the question i asked was really very generic. As it’s starting of my journey in this profession so i was confused.
I have got the starting point, thanks for your support and providing us with the forum which every beginner will ever need.
Regards,
Nidhi
Hello Nidhi,
My pleasure. I am glad that the thread was useful and that you found answers to your questions in it : )
Yours, in service,
Jason
Hey Jason,
Wow, wow and wow! I cannot stress it enough! This article was written just for me!
I am a recent Economics graduate and CFA Level 2 candidate. I have been looking for a job for the past 8 months and had no luck! I had tons of interviews at the big banks and financial services companies but nothing has happened yet!
For days, I have been always wondering what’s wrong, why can’t I get a job in the field?
Then I have decided that perhaps things happen for a reason and I can spend my unemployment period for actually “know the job” inside out! which means, reading investment books, creating my own equity research reports and building kind of portfolio for myself, even though I don’t invest yet, just to show my employer that I did something fruitful while I was sitting at home (except from completing the CFA program and reading books)
So, I have started with reading the book “The Warren Buffet way” which I really like and my next ones would be security analysis, the intelligent investor, interpretation of financial statements, and the theory of investment value.
In addition, I have picked some well known companies on which I would like to write my reports. However, I don’t know how should I start! I have never seen an equity research report and was wondering how does it look like, to use is as a pattern for my own reports.
When I was reading about your website that you have created with your own portfolio, I was happy to know that I am not alone and some other people in the world are dealing with the same problem as I am!
Is there any chance to get the address of that website, to take a look on your analysis and then try doing it on my own? How did you build it?
And again, thank you so much for writing this article! I wish everybody who aspire for this kind of job to be lucky enough to read this page.
Looking forward to hear from you!
Thanks in advance,
Yvette
Hello Yvette,
Thank you for your positive feedback. In answer to your questions…
Alas, my research has not been available on the web since 1998-ish. If you look in this thread I have referenced several books that help teach analysts how to write a research report. I have also shared with people the rough outline of the elements such documents should include. Last, I am not sure where you live, but it is very likely that there is a CFA Society near you. If you approach your local CFA Society I am certain that someone there can get you a copy of a research report. Here is a link to our ~140 global societies: http://www.cfainstitute.org/community/societies/Pages/index.aspx
Best wishes for success!
Jason
Hey Again!
I am from Toronto and there is a CFA Society here but the membership costs some money, and in order to get a mentor I have to be a member, right? Do you know someone who will be willing to do it for free? just communicating via emails.
In regards to publishing my own reports, what do you think if I will post them on my Linkedin page? There would be so many of them so you perhaps will recommend to get my own website. I will try to look if I can build one for free.
Also, the template for the report from Zacks that you have posted is about Apple, should I use that same one? how can I get this kind of template? I also saw here that you sent someone here one of your own spreadsheets, please send it to me too.
Thanks,
Yvette
Hello Yvette,
I will try and answer your questions as best as I can…
* I am not sure of the unique policies of the Toronto CFA Society, you would want to ask them directly. Most Societies around the world are more than happy to help CFA candidates. Mentoring usually is done for free. Unfortunately, while I know several people in the Toronto Society, I am not sure who is willing to serve as a mentor. You need to approach them on your own.
* LinkedIn is likely a great place to publish your research. Are you able to upload a spreadsheet of your model? If not, I would include language in the analysis that says something like, “Supporting models available upon request.”
* The Zacks report was included as an example of what a research report looks like. Namely, the elements included, the nature of the language used, format, and so forth. Your report should be a reflection of your unique skills as an analyst. I built my reports in Excel.
* As for sending you one of my spreadsheets. I will be happy to send you one of my spreadsheets once I trust that you have advanced a bit further in your quest. Right now you are looking for me to do too much. You need to take on some ownership of this process.
Yours, in service,
Jason
hallo jason …
thanks for this excellent article…
i am a student of MBA & i got a very constructive ideas from your article…
Hey Jason,
thanks for your reply!
last question, does your report, and in general the reports made during the work experience, similar to the one that you provided, Zacks? it’s only one page, compared to the other ones that I saw which are more like a booklet.
I would love to start to write reports and I want it to be as much as similar to the ones that I will be required to create in my job.
You have a solid work experience, that’s why I would love to get your sincere opinion.
Thanks again,
Yvette
Hello Yvette,
Yes, the one at Zack’s is one-page. I have seen one-pagers up to 120-pagers. I think a good range is around 5-12 pages, with a sweet spot of around 8 pages. The reports I created were entirely embedded in Excel. My workbooks began with a summary worksheet that looked like a Zack’s-type analysis. The data in that summary was pulled from the other worksheets in the workbook. So individual worksheets handled one major calculation. For example, a worksheet to calculate a GDP forecast; a financial statement analysis of annual results; a valuation; comparisons with competitors; and so forth.
Yours, in service,
Jason
Hi Jason,
A great article, I have learned something new about the concept of transforming intangible skills to tangible.
Currently, I am pursuing MBA in Finance in Canada, right now I’m in first year. My school isn’t the top one but many graduates have got jobs in Toronto specifically in Finance. I also have nearly 4 years of work ex. in software development, I have worked with Wipro Ltd..
I have received scholarship for CFA Level 1 and I am going to write it in Dec.
I would like to know your view about transition from IT industry to Finance. What sort of activities except which you mentioned in your article, I should pursue to make my profile stronger, any networking advice or any piece of advice would be a great help.
Atul
Hi Atul,
You are extremely fortunate because you live in a financial capital, as well as in the city that is home to one of the largest, most active, CFA Societies. CFA Society Toronto is extremely energetic and helpful in helping young candidates and aspiring financial professionals.
Separately, writing computer code provides a solid underpinning for logical, analytical thinking. You need to emphasize this skill set in your recruitment package. Also, the ability to write computer code is also a sought after skill in finance, ranging from creating financial models that interact with financial databases, to creating sophisticated trading algorithms. Once you know more about what you want to do, then you can begin to recognize which of your current skills finds expression in finance. Then you can adjust your messaging to reflect that understanding.
I hope that helps!
Yours, in service,
Jason
Hey Jason,
I have just completed my bachelors in Economics & Finance from University of Strathclyde,Glasgow in around November 2014. I also have some experience in this sector as I was working as an intern in a Stock Broking Firm in India as a Junior Research Intern. I have enrolled myself in for CFA Level1 Examination this June 2015.
Now I used to basically use relative valuation methods like Price to Earnings and others as my major tool for valuations and am not very sure whether this is the right Valuation method to value stocks.
I also have very limited knowledge about Financial Modeling and next to that have no clue about Analytics or Analytics based softwares. I would like to know whether having a good set of skills in analytics do help in Equity Research and if yes then how . Also which Analytics Programme or Software is the most relevant or considered for in Equity Research Industry.
Further how should I develop my Financial Modeling skills apart from doing a Financial Modeling Course.Any particular course/books or anything I could gain skills from.
I have been applying for entry level positions in Companies in India for the past 6 months and haven’t had any success yet though I have not given up.
Any advice in this matter would be very helpful.
Thanks
Raghav
Hello Raghav,
I self-taught myself the skills of valuation by buying resources and then building my models in Excel. In this article’s question thread I have highlighted my favorite books on valuation. I highly recommend this “hands on” approach because you must directly relate to the material in order to understand it. In other words, if you take a class, the knowledge remains in the mind and mouth of your instructor. You have to do the work yourself in order to develop understanding.
If you are unable to make your financial modeling skills tangible to employers then you are unlikely to get work in the field. This is a necessary first step and is why I so emphasized tangible skills in this article. If I were in your shoes I would make significant efforts to learn financial modeling – including valuation – before applying for additional work. It is after demonstrating these skills that you can separate yourself as a competitive candidate for research analyst positions.
As for the correct valuation model…I have very specific views on that topic that remain part of my proprietary edge. By involving yourself intimately with valuation you will learn which model or models best compliment the way your mind works and best exalts your skills.
Yours, in service,
Jason
Good day Jason
I hope this email meets you well.
I have probably spent the last two hours reading all the comments and replies. I find them very insightful,however my question is a little outside of the box. I am not trying to be a research analyst but rather a Commercial and Retail property evalutor or property specialist and eventually build my own property portfolio. I am 26 years old and I am currently completing my Honors in Bachelors of Commerce. My undergrad qualification obtained is a Bachelors of Business Admin majoring in Business Management and Communication science. I am confused as to whether I should persue my MBA after honours or obtain a new degree majoring in Property science?? I am not sure if the MBA will be to general . However do notice that most of our fund excs do have it.
Hello,
I am pleased that you found the article engaging enough to have waded through the full comments section. Impressive (!)…and I am sure exhausting, too!
Unfortunately, I do not have any expertise in property science, or commercial and property evaluator/specialist. I cannot, in good faith, provide advice to you. All I can do is to attest that I enjoyed my MBA experience very much and found it to be a robust grounding for the business world. Put another way, I have utilized almost everything I learned in graduate business school at some point in the real world. To me, that is a pretty strong endorsement.
Yours, in service,
Jason
I really enjoyed reading on this article. I hope that other readers will also experience how I feel after reading your article. Thank you so much.
I am pleased that you enjoyed the piece.
Yours, in service,
Jason
your advices were really useful to become a research analyst.Thank you.
Hello Ramesh,
Thank you, how nice to read this comment : )
Best wishes for your continued success!
Jason
Hello Jason, Can you just tell me. 1) How is accounting usefull in doing equity research? 2) which area of accounts should one work in doin equity research?
Hello Mayuresh,
That is an excellent question (#1) and a complete answer would take a very long time to compose. The basic answer is that there are both qualitative and quantitative ways of evaluating the performance of businesses. Accounting is the quantitative grammar that allows the language of business performance evaluation to be communicated to analysts. If you don’t speak and understand accounting then you cannot speak and understand the quantitative language of business.
In answer to your second question, it is important to understand both of the major aspects of accounting: preparation of statements, and analysis. Many analysts focus predominately on the analysis of statements. Unfortunately, when you understand how accounting statements are prepared then you also know the possible abuses that preparers can engage in. It takes a long time to get comfortable speaking the language of accounting, just as it takes awhile to speak any language.
Yours, in service,
Jason
Thank you Jason !!! But, i am just a graduate and il b appearing for cfa level 1 in dec …so as a fresher which area of accounts would help me in becoming an equity research ?
Hello Mayuresh,
Same answer as before. This will take time, just as this article says it will.
Yours, in service,
Jason
Thank you so much Jason
This is a well written article. Thank you for such introspective insights
Hello Obert,
Thanks very much for your feedback! I’m especially pleased that you resonated with the introspective insights I shared. See other comment for my feedback.
Yours, in service,
Jason
Hie Jason
Once again thank you. I am a Zimbabwean with a background in Economics and Treasury Management. I have been finding it difficult to break into the Investment Management Industry. I have strong passion to become an Analyst and looking forward to enroll for CFA in upcoming openings. If you could assist with advice: I have strong passion to be an analyst with special focus Financial Econometric Modelling. What would be your take on this perspective and how best can I develop in this limited scope
Hello again, Obert,
I was just in Zambia and Zimbabwe (Vic Falls)! What a beautiful part of the world, and what lovely people! My take on your chosen career path is, as follows:
* Many people do not like, or understand, econometric modeling, or complex statistics. Consequently, there is little supply of these kinds of credentials in the marketplace.
* Increasingly, econometric/advanced statistics are in demand by the most desirable of investment management firms.
If I were you I would spend time learning how to model non-linear phenomena. This particular subset of econometric/stats modeling is not often pursued and is something that would set you apart. Also, and you probably already know this, do not neglect computer programming skills. If you can build your model in multiple software platforms it can only benefit you.
As for providing advice for how to get hired in Africa, Zimbabwe, in particular, I am uncertain of the on-the-ground realities. I do not know what are the opportunities or obstacles. I really wish that I could be more helpful with regard to this part of your question. So sorry.
Yours, in service,
Jason
Hello Jason,
Very interesting article ! I need your help ! I’m currently in top ranking business school in France (CFA institute partner), I’m actually intern for the first time as credit analyst assistant for a french bank. But I don’t know which intership is the best for my second years. In a brokerage firm ? IB ? Asset Manager ?
I’m CFA candidate for the level one !
Thank you for your article !
Qualem
Hello Qualem,
My answer is for you to spend some time thinking about who you are and what you like to do. What is your personality type? Are you deliberate and like to take your time to understand things deeply? If so, you will probably enjoy working as a credit analyst, or as a long-term value equity investor. If, on the other hand, you like excitement and dynamic, ever-changing environments then you likely enjoy working as a trader, or as a short-term, growth equity investor. While you are t the French bank this summer you should ask if it is possible for you to visit other departments to see what their jobs are like. This will give you pretty good feedback for what kind of an internship you want next year.
Best wishes for success at school, with the CFA program, and in life!
Jason
Jason,
This has got to be one of the most insightful and instructive pieces of advice I’ve seen regarding this career route I’m aspiring toward.
After figuring out that the sell-side wasn’t for me, and passing Levels 1 & 2 so far, I’m trying to find out how to actually break into the buy-side and work my way up as an analyst.
Your article just reminded me that I don’t have to actually be physically working in an IM firm to consider myself as an ‘analyst.’
I especially enjoyed hearing about your tips to start a blog and write your own research reports. With respect to this, is there a certain way to get started, particularly for someone who’s inexperienced with both blogs and practical (non-CFA-curriculum-related) research analysis? Or, is it the more just start somewhere and “follow” your ignorance, as you mentioned?
Also, do you think it’s wise to apply for “low-hanging fruit” type jobs in the industry that may not involve analysis, but can provide an opportunity to get noticed by management and get promoted to a role that actually fits under the CFA scope?
And finally, what are your suggestions for approaching someone as a mentor? I left for almost two years the financial industry to help my family’s business, and I’ve been a bit rusty with networking and contacts. Is it just as simple as going to the CFA chapter meetings and offering to buy a senior member a cup of coffee or is there more tact and adroitness required?
Anyways, I will have to get around to checking out your book, as well. It’s amazing how in a world of complexity and imbalance, you can still manage to inspire a quantum of stillness.
Please continue writing.
Hello Najim,
I really like how you characterized my advice as considering yourself as an analyst, even if you are not working at an IM firm. That was exactly how I felt prior to getting work as an analyst. I would never of characterized this article as that, but you summed it up very well, and that is genius advice to everyone: think and act like an analyst until you are an analyst.
How to start? That is a very difficult question to answer. I would say follow your curiosity and your ignorance. I began by reading “Security Analysis on Wall Street” by Graham. However, I did not have a good foundation at the time, and it really pushed me intellectually, and required that I learn accounting along the way, along with valuation. Tom Brakke has a wonderful book for aspiring young analysts. Just execute a web search for his blog. Also, the comments section of this article has similar questions asked, and answered.
Regarding “low hanging fruit” type jobs. I would say aim to shoot your career arrow as close to the bright and shiny star you want to land on as you can. In my case, I got a job as an analyst intern at a pension consultancy. I was then offered a job by that firm. However, I leveraged that offer into a research analyst job at an investment manager. I avoided a “back office” job at an investment manager. In the U.S. you get quickly labeled in the industry: “Well you can analyze midcap stocks, but what do you know about large caps?” This is ridiculous. If you have the intellectual firepower to analyze, the specifics of it are easy to pick up. Duh! Not sure how the industry is where you are living. But ask a pro in your part of the world this same question. Which brings me to…
You nailed it regarding the mentoring. There is no elegant way to do it. You are at the tender mercy of whomever you ask, and they know it. But most people in the industry like to counsel people about how to enter the business. Yes, go to your local CFA chapter and ask as many questions as you can…and listen…and evaluate. This is likely to lead to your best compass headings, navigational charts, and course corrections. Also, why not approach investment managers you admire that reside not in your local CFA Society. Find a way to contact these folks and ask for their assistance. In all likelihood you will never hear from them, but if you do, it could change your life. To borrow from your quantum riff…collapse the wave. You want to be in superposition, and have someone collapse your wave…become real in the office of the firm of your aspiration.
Yours, in service,
Jason
Hi Jason,
Thank you for responding to my comment so quickly. I’m not sure my characterization of “think and act like an analyst until you are an analyst” was consciously constructed, but it does echo a refrain I commonly hear in the industry: “fake it until you make it.”
I have been flirting with the idea of finally picking up Graham and Dodd’s tome, but I’ll take your suggestion as sort of the “direct cue” I’ve been looking for to get started on reading it.
You mentioned an interesting point about being “labeled” a certain way in the industry. That’s certainly what I’m trying to avoid, but since there is no clear and definite route to IM, as there is in other professional careers, whether it be law or medicine, it’s sometimes hard, as an aspiring analyst, to determine what possibly could be a springboard to developing the qualities necessary for successful equity research, and what is a complete and utter dead-end.
In any case, thank you for your guidance in all areas, especially with regards to mentoring. I agree, it helps when you’re aligned with people who’ve already crossed the Rubicon.
Best,
Najim
Jason
I liked the article. I am struggling to get into an analyst role, would it be a good idea to start working alongside financial advisors and to pursue the role of research analyst on a longer term basis. My main concern is getting experience in order to progress forward. I would appreciate a response a lot.
Kind regards
Amie Botes
Hi Amie,
It all depends on the nature of the work done by the financial advisors. Many do not do much analysis. Instead, they log investors’ goals, risk tolerances, and demographic data into a computer program that then generates an asset allocation strategy. That asset allocation blocks are then filled with that firm’s preferred mutual funds or ETFs to fulfill the investors’ strategy. Most of the day is spent on customer meetings and trying to secure new business. You will likely develop a good map of the finance industry.
Some financial advisors, more like private wealth managers, actually do their own analysis, or have some sort of proprietary model they deploy. If you go this route I would suggest you try and identify ahead of time the percentage of time spent by the financial advisor developing their own unique opinion of the economy, asset allocation, markets, individual assets, and so forth. You want people forming their own opinion and doing their own work, and not just plugging in data to create a cookie cutter result.
Good luck to you!
Jason
Thank you for this authentic piece. Many of us are trying to get the obvious part and the process is just rigorous enough. You answered the questions straightforward and sincerely. Sharing you personal experience is really encouraging and gives me hope. I really appreciate. I promise you, I share mine too, one long day. Once again, thanks for sharing. Cheers!
Hello KA!
Thank you for your kind words. Best wishes for success on your path…and I truly look forward to hearing your story in the future!
Yours, in service,
Jason
Hello Jason,
Thank you so much for your article. It was very inspiring and definitely gave me a clearer idea of what I should do to try to train myself.
I am hoping to become a research analyst. I find the work very simulating and interesting. However, I do not have any finance experience. I graduated with an economics and statistic degree. I have done some administrative work at different companies but none of them are in an financial setting. Unfortunately because of personal issues, I am very late at getting started at transitioning into my career choice. I read articles that there is an age limit for finance. Is there an age limit to break into the industry and become a research analyst? I am 27 with zero experience and a very limited knowledge of the finance industry. I am currently study everything I can about finance and investing as well as the CFA. It is dream beyond my grasp at this point? It will probably take me a couple of years before I have the knowledge that is required since everything I am doing is going to be self-taught.
I see in the above comment that you do not suggest back office work and I have read numerous articles suggesting that it is impossible to break into the investment industry with more than 2-3 years of experience. I have been working in administrative roles (nothing glamorous, mostly entry level positions) for the last 2 years and I might take another administrative job as a data entry clerk. This is not exactly what I want to do but it does pay the bills. So is this another strike against me? I do not want to do something that would make me lose out on my dream of becoming a research analyst but I am at a complete lost of about what a person like me should do in this situation. Are the doors completely closed? What type of position should I look for that would help me move towards becoming a research analyst? I feel my degree and experience will not get me an intern position as I do not have the necessary experience or a degree in finance.
Thank you so much for the article once again. It was really informative and give me a direction on where I should take my education. I would really appreciate your insight to my situation. Thank you once again.
Best Regards,
Rosa
Hello Rosa,
Thank you for your kind words…I am happy that the article is useful to you : )
As for your question…it isn’t that you cannot break into investment management having worked in the back office, it is just that it is more difficult. The reason is that people in the investment business begin to compartmentalize you – incidentally, this is very similar to the behavioral finance bias ‘mental accounting’ – and once you are in a compartment it is difficult to escape. There are three ways to escape the compartment and all of them require a drastic on the narrative that is forming around your career. The first is to get your CFA charter, which allows a new story to be told about you and your potential. The second is graduate business school or an equivalent (Masters in Finance or Economics, for example) where you have achieved at a high level (think: high grade point average). The third is to be able to demonstrate that you have the skills necessary as demonstrated by your personal research examples, a website, or something else. Best of all? All three. In my case I chose to go to graduate business school, achieved much; had a personal website with my research examples; and had passed Level 1 of the CFA.
In terms of what type of a position to look for…any work, including internships that requires you to do analysis of some sort, even if this is not securities analysis. In my case, I was an intern at a pension consultancy while in graduate business school. My undergraduate degree was in economics, and by the time I secured my internship I had already demonstrated to my fellow classmates that I was hungry. This meant that I could utilize my school’s alumni connection to get the internship.
Best wishes for success!
Jason
Thanks for your reply, Jason! It really gives me hope and something to work towards. I was wondering, what about the age limit? Is it the same thing? It’s hard but if I can show what I can do, with my CFA, MBA and personal research, I will still have a chance. Or is it the case where it’s next to impossible and not something they overlook? Thank you again!
Best regards,
Rosa
Hello Rosa,
You are welcome; it is my pleasure to try and help the earnest seeker of a career in analysis!
Regarding age limit…the investment business is always driven by talented individuals that can help earn money for their investors/shareholders. So long as you can do that and to demonstrate it then that is the most important thing possible. I have seen young analysts in their late 20s get their first position, and others getting their first position in their mid-40s. I think if your goal is to become a portfolio manager then the sooner, the better, just because it takes many years to establish credibility within an investment firm.
Yours, in service,
Jason
Hello Jason,
Having learnt about “Regression & Time-series analysis” and their importance in financial world, I wish to make use of them for projections.
Request you to please suggest me the way how could I make use of those concepts in reality as I currently don’t have any specific software package in place related to them.
Thanks in advance
Best Regards,
Ravi Kumar
Hello Ravi,
Thank you for your question. Those tools are so general that they can be applied to almost any data series. I used regression analysis in many ways. From estimating future revenues, to discriminating what portion of a company’s income statement was fixed costs (the intercept) vs. variable costs (the slope). The answer also depends on what type of investor you are: value, growth, quant, options, etc. There is a well known primer for applying statistical analysis to finance by Simon Benninga entitled, “Financial Modeling.” It may be worth the effort to find a copy.
Yours, in service,
Jason
Hello Jason,
Its immense pleasure to have suggestions from you. Thanks for citing the book. I would look forward to go through it and try to enhance my ability in applying statistical skills.
Thanks a lot,
Best Regards,
Ravi Kumar
Hello Ravi,
You are welcome!
Best wishes for success,
Jason
Hello Jason,
Thanks a lot for the article. This article had a lot of answers to the questions I was looking for after passing level 1 of my CFA exam. I had two questions for you.. I was wondering if it is possible for you to share a link of the wensite that you started, since I want to start my own blog about equity research and investment book reviews. I just wanted an idea of how your first few posts looked like. Also on the concept of extending out to mentors. Do you think using linkedin to connect to successful cfa charterholders would be a good idea. And any suggestions on the best way to go about this?
Once again I wanted to thank you for the great article. It really helped immensely.
Thank you.
Hello Moody,
You are so welcome for the article. I made a vow years ago that I would try and help as many passionate people as possible help attain their dream jobs in finance. There are shockingly few resources available other than alumni networks. My personal website that contained my research from ages ago has not been LIVE for many, many years. I am afraid that the content is also dead. The versions of those old Excel files are soooooo old as to be unopenable by current versions of Excel, or even specialty programs that allow you to open old versions of Excel. My research reports looked identical to those you would find issued by a major brokerage firm. I created a worksheet within my analysis workbook that was tailored to look like a research report. I stacked the pages so that when it printed it looked like a 5 page research report.
I think that a “cold-call” reach out on LinkedIn is probably not such a good idea. You really want to have a minimal personal connection to the person before you ask them to mentor you. One way around that is to ask questions of CFA charterholders on LinkedIn. A good example is, “Hey, I am very interested in attaining a position similar to yours in finance, would you mind answering a few questions for me?” Start there. If that works and a good relationship develops then I would say ask them to be a mentor.
Yours, in service, and best wishes for success!
Jason
Hi Jason,
Thanks a lot for such an enlightening article! A little background about me: education in physics, nuclear engineering, and mechanical engineering; now a full-time technical employee in the steel industry; part-time MBA student with a concentration in finance, and CFA Level III candidate without any investment industry experience.
I have two main questions:
1, I plan to do equity analysis and write reports myself. But I have interests in covering a wide range of business sectors, such as metals, oil/gas, renewable energy, banking, technology, sports, and etc. Should I leverage my education background and work experience to focus on nuclear/steel industry and related industries (e.g., energy & aluminum)? Or, should I simply choose what I am most interested in and perform good equity analysis on them?
2, How do you like the idea of putting equity reports on Seeking Alpha or similar websites to look for comments to improve analysis skills?
Thank you for the time!
-Jim
Hello Jim,
You find yourself poised in an excellent position. First, your curiosity is evident in your questions. This means that you have ample force of will for learning more about the job. Second, your background is likely to be coveted by an investment management firm seeking to understand the industries you describe above. So, in answer to your questions:
1. I think in this instance your resume is going to communicate your background very well to a prospective employer. However, in order to cement this idea in the minds of someone that may want to hire you for your previous expertise it would be my advice to create one research report that makes tangible your previous experience(s). Once that is done your resume is going to do the talking for you. Then you can focus that curiosity on to learning the ins and outs of other industries and companies. Letting both your interest and ignorance guide you is a potent way to develop the important analysis skill set.
2. This is an excellent idea on your part. Seeking Alpha is read by many, and it may be possible that you find an audience there. SumZero is another site you may want to take a look at, as well as Thinknum.
Best wishes for success,
Jason
Thank you, Jason, for the detailed replies!
Really appreciated!
Best,
-Jim
Hey Jason,
As per our conversation in the past, I have completed the first page of my own report and would like to share it with you and ask you couple of questions.
Would truly appreciate if you would send me your email to send you the excel sheet.
Thanks in advance
Thank you for the article.
It is a wonderful article. I am right now in my final year of B.Tech and going to apply in a firm, named Innoplexus (http://www.innoplexus.com/), as a Research Analysts. So can you please specifically tell,
how should I prepare for this interview?
Hello Shashank,
Unfortunately, I do not have time to review the specific opportunity for which you are applying. In general, though, you want the opportunities for which you are applying to be places where you can be supported being you, and learning how to get better each day. Often this means that work that pays less money is initially a better opportunity. Questions you need to know good answers to: Who are you as an investor? Who are you not as an investor? What attracts you to investing – money, prestige, or that it is a good match for your aptitude and your attitude? How do you think? What mistakes do you repeat? Why this firm? Why this firm right now? Can you make tangible all of the things you claim on your cover letter, CV, and other marketing platforms? Etc.
Best wishes for success!
Jason
Hello sir
Its an excellent article and very helpful. I am an Indian CA Final student and going to register for CFA level 1. Wish to start my career in treasury and derivatives.
Got the right way to start
TY
Dear Jason ,
I just stumbled upon your post , and would in all seriousness like to thank you for taking the time from your work or personal commitments to put your thoughts out for people aspiring to be research analysts , and putting a proper context around. Arguably, you can say I am late in thanking by nearly 30 months but her better be late than never.
Just like millions of your commentators, I am an aspiring research analyst who is an engineer by profession, and loves to problem solve. Been putting my thoughts on investment ideas since last several years on platforms such as VIC, Seeking Alpha , but the decision is getting more perplexing than I thought in light of the paths one has at their disposable.
Path 1 , certainly a proven path, go back to B-school on a part-time basis while continuing to work on generate and sharing investment ideas on VIC, SA. However, I can’t start B-School until Fall 2017 given the work required related to admissions and session schedule. Assuming one gets through, sometime during 2019 seems likely when I am able to switch. Costs nearly $120-$130K
Path 2 – Enroll for CFA , Finish Level I by Dec this year , and work progressively on remaining two levels. A big undertaking – no doubt, but costs too little when compared to a B-School. But the dilemma emanates when one assesses the opportunities available subsequently. A MBA certainly provides a nice platform , leverages b-school brand name to re-launch your career , whereas CFA is more of self-driven endeavor and landing into a job as such is completely dependent on your efforts to network as such.
On surface, risk appears to be low with CFA but returns could be erratic as well , and on other hand, MBA is a bigger financial commitment but rewards seem more probable.
I certainly plan to reach out to local cfa chapters to seek some help but I figured i start the question with you
Hello Nitin,
I have answered that question once before in this big stack of questions and answers, but recognize that it may take some time to find the answer. In my opinion, both the MBA and CFA have both important overlaps, as well as differences. I have both my MBA and CFA. Lots of data shows that a CFA is more valuable to prospective employers of financial pros than an MBA, and as you pointed out, it is also cheaper. Also, your local CFA society provides a very valuable network that is comparable to your MBA network. However, if you do want to be a research analyst (either on the buyside or sellside), an MBA really helps you to understand businesses and the concerns they face on a daily basis. This is invaluable as an analyst (to know and understand a company from a company’s perspective).
Best wishes for success!
Jason
hello sir,
whether i have to learn VBA in addition to excel to become a good equity research analyst or to enter in Research sector???
pls guide sir….
thank you sir
Hello and thank you for your question!
In my opinion knowing how to program computers is one of life’s essential skills, like knowing how to type on a keyboard. Once you know how to program in any language then you learn the logic of computers, and then learning another language, like VBA is easy. Whether VBA is the language you focus on, or Matlab, or whatever, is going to be up to your employer. I, myself do not know how to program proficiently in VBA. But I do know (and I am showing my age here) BASIC, PASCAL, and LOGO. I have done a very minor amount of coding in VBA. So if you have the time, then yes, I would recommend learning to program a computer.
Yours, in service, and best wishes for success!
Jason
mns it is going to help me in research career……??
Hello again,
I am sorry that I did not address your question well enough the first time : ). Yes, in my opinion it will help your investing career, because it will give you much greater flexibility in your ability to analyze data and to create models based on data.
Yours, in service,
Jason
Actually, i want to be research analyst. I have already analyzed on some projects. I would like to apply your tips!
Jason,
First of all, thank you so much for the wonderful content in this article! Its very motivating and inspiring to be hearing first hand about what ER Analysis really pertains to.
I was hoping you could offer some individualized advice for me in my pursuits on beginning a career in ER analysis. I recently graduated (less than 1 year ago) from a mid-tier school with an Economics degree and am currently working in wealth management as a financial adviser at one of the major banks. I have a strong passion for investing, but as I get more immersed in the securities business I am realizing that being a broker isn’t my goal – it is in equity research in an analysis position.
In order to improve my chances and strengthen my resume I have registered to sit for the CFA Level 1 exam. I also plan on taking many online courses to familiarize myself with Excel and other programs used in financial modeling. Additionally, I realize wealth management is unrelated to the work required of an analyst, but would the experience within financial markets at least help in some fashion?
My “idea” is that once I pass the first CFA exam I will gain an understanding in some areas of Finance and Accounting that employers are looking for which I lack due to my degree in Economics. Ultimately, I am hoping that my experience in financial planning as a broker combined with (at a minimum) a CFA Level 1 designation at the time I begin applying could be sufficient to be given an opportunity as a junior analyst.
Could you possibly lend me any advice? My fear is investing so much time into the CFA to come to the conclusion that my resume isn’t strong enough to land a position. Thank you so much in advance for any help you can give me.
Thanks again,
Carter
Hi Carter,
Thank you for your kind words.
Regarding your question…You have a long road ahead of you. Your economics background is useful as a complement to the skills of a research analyst. However, as you stated, on their own they will not land you a position. Instead, once you have your CFA charter it will separate you from other candidates. There are two primary benefits to an economics degree, most folks only have one of the benefits. Those benefits are the deep appreciation of benefits vs. costs, and the other is econometric modeling. Most undergraduate economics programs do not teach econometric modeling, though. Your current work as a financial adviser has two primary benefits, as well. First, you are learning the ridiculous jargon associated with investing – this is no small task. Also, you are learning about the issues confronted by many clients in their personal finances.
The above skills are also garnered by attaining your CFA charter, though. So these are not big differentiators. I can think of no more beneficial things for you right now than attaining your CFA charter. It is an extremely low cost way of attaining a credential that is more valued than a MBA. As I outline in this article (and in the many comments answered), you also need to make tangible your skill set to a prospective employer. Your daily question of yourself should be: if I knew what I know about myself, would I hire me? If the answer to that question is ‘no’ then you need to keep plugging along until the answer is a ‘yes.’ In my personal case I was in exactly the same situation that you describe: economics degree and aspiring adviser wanting to be a research analyst. That was in 1993, and it took me another 5 years to acquire the components necessary to be a compelling candidate.
These components included: MBA, Level I of CFA passed, a year of work as an analyst intern at a pension consultant, having read 100 or so books on investing (including lots and lots of accounting), and having developed my own research reports as described in this article. Along the way there were many existential moments about whether or not I believed in myself enough to persevere. There was no guarantee on the other side of all this work, just a dream. But on a daily basis I navigated toward it.
Best wishes for success!
Jason
Hi Jason,
Thanks for the great article!
I am hoping if you can offer some advice for me to pursuit ER career.
As for my background, I have a statistics degree and ACCA (accounting professional qualification).
Currently, I am working in a mid-tier audit firm as an auditor (approaching 1 year of experience). For job scope wise, most of the time we are testing if the financial statements are “done” accurately.
Is it wise to stay on as auditor for the next few years to get the chartered accountant qualification? Cos from what I sense, there seems to be no transferable skill from auditor to ER analyst. And what really worries me is that after 3 years, I might be pigeon-holed as an accountant/auditor.
Thanks in advance!
Hello Jun Xiang,
I think your background is excellent for a career in equity research. Very few research analysts or portfolio managers have a deep grasp of accounting. Here is a post I wrote entitled “Top 5 Accounting Mistakes Analysts Make” https://blogs.cfainstitute.org/investor/2015/05/12/the-top-five-accounting-mistakes-analysts-make/ where I discuss this in some detail. Also, just last week I was the moderator for a panel on misleading accounting at the New York Society of Security Analysts (NYSSA). Before we started I asked the audience of experience investment professionals how many felt they were excellent at accounting, and no one raised their hands. Your background as an auditor opens you up for an extended career as a specialist. In order to really increase your chances I would highly encourage you to attain your CFA charter, or a graduate business degree. This is an unbeatable combination. Then when you are marketing your candidacy I highly recommend that you feature your accounting background and your understanding of how financial statements may be manipulated.
As for getting pigeonholed…I think that is unlikely given that your background as an auditor is a perennially important skill set.
Best wishes for success!
Jason
Heartily thanks to you for share this golden post and many ideas or tips is available on this post to related to share market.
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retiring at 35 is not really relevant so not sure why you mentioned that…..i also see the author began as a research analyst in 1998. both these statistics are a little off base for this article no? 1998 was an extremely different time in the markets to get into Equity Research.
i’m not discrediting your recommendations. but as a fellow charterholder here i think its more realistic to write to an audience with a realistic outlook.
Hello Not Applicable,
Thanks for taking the time to comment.
In the intervening years since my retirement from investment management I have continued to mentor people and have helped many attain positions as research analysts while promulgating the very advice offered here. In reviewing the post, most of my suggestions are perennially relevant. Things, such as, ‘know yourself’ seem just as relevant now as they were 3,000 years ago. So help the audience out here and let us know which parts are out of accord with the current practice of being a research analyst.
Yours, in gratitude,
Jason
Jason – There is one thing you forgot to mention in this article and that is to be a White male. I have earned my MBA from one of the top-ten B schools and am also a CFA charterholder, yet I couldn’t find a position as a research analyst despite having done all the things you mentioned above. Currently 93% of research analysts are White males even though they represent only 65% of the total applicants. If you are not a White male, your chances of being hired as a research analyst, even if you have a degree from one of the top B schools and an industry-leading credential such as CFA, is less than 20%.
Hello RA,
Thank you for your comment. Sadly, what you say is true if you look at the demographics of the industry. I wish that it weren’t so. In fact, if you read my post entitled, “Alpha Wounds: A Lack of Diversity in the Human Resources Portfolio,” you will see that not only do I agree with you, but that I take your argument even further. Specifically, you should be a North American white male that went to an Ivy League school.
All of that said, I also recognize that this issue is more complicated than implied by you…and here I may be assuming too much about your meaning. I take as your meaning that there is a conscious effort to keep non-white and/or females out of the business. In short, I have not seen such a formal effort put in place. What I have seen is a finance industry on auto-pilot in terms of how it recruits and hires people on the front end, and also about its white male “bro” culture. This is a different issue than active prejudice, and sadly therefore it is more difficult to change as it falls into the category of unconscious bias.
Next, all of that said, I remember that when we sought to hire research analyst interns that we very specifically would look for non-white and/or female recruits. Yet, out of hundreds of candidates we would receive maybe 2-3 women, and maybe 10 or so non-white folks. To be blunt, our job was to hire the best candidate for a position. When you receive such a low number of applicants who are non-white it means that the levels of competition faced by non-white males is even higher. At the end of the day, the skillset is what is hired, and when 397 of 400 applicants are white males, there is statistically a higher chance of that skillset being in the 397 than in the 3.
What this means is that no one firm is responsible for the outcome of the industry being dominated by white males and makes the problem even more intractable.
I conclude by saying that if you are qualified there is a position for you in investment management. At our own firm, Davis Funds, we had a much higher proportion of non-white and/or non-males than at other firms. This is evidence that what truly matters is qualifications. Yes, I may be naïve about this. But if you want it very badly then continue to look for work.
Yours, in service,
Jason
Hi Jason, I love your posts. Very helpful. One quick question though. how did you choose what company you were interested in doing a research report on? Was wondering if you ran some type of screen. With such a large universe to choose from it’s daunting where to start. Thank you.
James
Hi jason,
Thank you for sharing your experience via this article. It is very helpful as well as inspiring.
Hello Fairy,
You are welcome. I am pleased that it inspired. Yea!
Yours, in service,
Jason
jason thanks the article gives me a view about research analyst and i need to know what are the thinks i need to prepare to attend an interview for this post any sugg…
Mani,
If I may, I’d like to recommend this webinar-https://www.cfainstitute.org/learning/products/multimedia/Pages/117179.aspx- that CFA Institute hosted on interviewing.
Dear Mr. Jason,
First of all many may thanks for sharing your experience & publishing this article….
It will be my pleasure , If you advice me to be an Equity Research Analyst, I am facing some problems as follows:
I am 31 ,an MBA(PGDM) from a below average B-School in India.Graduation is B.Sc(Maths). After MBA I started job in Non finance profile(Revenue Generation) as we know the effect of recession around 2007-11. But I was continue on job hunting for the same but today 6 years are over and the challenge is my Experience is irrelevant , I am Over age(30+), not form a premier B-School …!..!..!
Kindly suggest me the ways so that I will get job as an Equity Research Analyst ..
Regards
Rajiv
(India)
Hello Rajiv,
It is very difficult to advise about your situation because there are differences cross-culturally. I am not sure to what degree the obstacles you described above are insurmountable in India.
However, there are always ways of demonstrating and making tangible your investment management skills. That is one of the major points of this article. In your description of your circumstances you did not describe to what degree you have sought to acquire the skills of an investor, or to what degree you have made these skills material to a company. Have you created your own research reports? Do you have an investment philosophy? What is your favorite investment book? Which investors do you admire?
Yours, in service,
Jason
I had been using MarketXLS. It really works for me just fine.
Hi Jason,
I am a student from India doing my undergraduate course . I am very interested in finance and want to be a successful analyst .
Would love if you guide me to which course to choose and fulfill my dreams
Regards
Ashutosh
Very helpful, thanks. Don’t think the quant trading side of things appeals to me as much as deep, long-term analysis. Right up my alley and along the lines of what I was thinking. Everything interests me. Science, history, technology, philosophy, etc. That’s why I see that the fundamental analyst can make a kind of synergy between all things that we humans know about. Then profit from it! And so will the world.
Hello Matt,
I agree with you 100%. The capabilities of human consciousness are profound, and they are unseen, misunderstood, or denigrated. I believe the future is the combination of people’s information gatherers and sorters (machine learning Big data sifters), and the ineffable of people to provide context, creativity, and intuition to asking the right questions, and to seeing the correct answers.
Good luck with your quest : )
With smiles!
Jason
Hello Jason I saw the title of this post, without realizing it was yours, and thought that whoever wrote it I should point out that there is no more seminal work for thinking about fundamental analysis than your book, the Intuitive Investor. No book that I have read on Fundamental Analysis, including Benjamin Graham, talks about the art of observation and connecting the dots, such as to wristwatches, public advertising, and new arrivals at airports, better than you do. Or your description in this blog of the stakeholder view of the income statement. If I was a fundamental analyst these intuitions would I am confident help me deliver a superior service to my clients. On that note I will return to my ultra tiny holding periods. Kind regards Savio
Money is only a tool. It will take you wherever you wish, but it will not replace you as the driver. –Ayn Rand
Hello Rich,
Thank you for sharing the quote. My own version is: The formula for success is inspiration, imagination, thought, word, and deed, in sequence and in equal measure. If your dreams are not being realized then it is likely that your sequence or balance is off.
Yours, in service,
Jason
Hi Jason,
This is a really great article and reassuring for me! I’ve just started working in investment management as an administrator for a investment portfolio team but am looking to become a fund research analyst, maybe portfolio manager down the line (however I really do feel that a research analyst is more in line with my skills, how I like to work, and my personality). Its helpful to hear that it took you five years to get to the role you wanted to be in from deciding you wanted to be a research analyst. I’ve had some stints in PR and marketing and now have found my happy place in finance but feel dreadfully behind (despite being only 23). Having graduated with an undergraduate degree in law from UC Berkeley I am extremely driven and willing to put in the work – all I need to do is be patient (this is where I struggle) and work to the best of my potential to progress in my role. I am looking to take the IMC as soon as I can, upon approval from my employer, and look forward to attending CFA events upon receiving my membership. In the meantime, I would appreciate any advice (additional self study websites on research basics/anything useful for a beginner in the finance world!) you may have in addition to the above article and wish you the very best!
Yours sincerely
Simone
Hello Simone,
Thank you for your kind words about the article.
Per your question about self-study websites on research basics…there are some. However, if you read through this extended comments section you can see my recommendations for how to proceed from here on out. In short, I recommend you spend some time getting to know who you are as an investor. Said another way, “How do you see the world?” One way to explore the answer to this question is to read books by some of the great investors and see which ways of viewing and seeing the world are close to your own. You are trying to find a solution. Namely, what skills may I develop that exalt my unique consciousness? And what tools can compensate for my weaknesses? After you have an in-depth understanding of the answer to this question then you can begin to self-teach yourself some of the necessary skills.
I hope that helps!
Jason
Hello Sir,
After going through your convincing article,especially that what really an Analyst requires,I felt great!From the very beginning I have been the person who was keenly interested in knowing the Market and the way it functions!
This was the first step of My Immense curiosity that made me took Commerce at graduation level!Today,when I’m about to end my final year,I had been working in getting the Nuances of Financial Market and its behavior!I have already assured with this fact that I’m a good Analyst even in my day to day life!Although with this reality that I have so many things to learn yet!Being not prosper and from good financial background it was really tough for me to have A high qualification background from High Professional Institutions!But the Subject of Finance and analyzing the same have been like my inbuilt quality!
After ending my final year,and on having good knowledge about tech-factors,I’m gonna have to earn some experience in corporate world may be as a Rookie..and looking forward for CFA! My only question is that even having low profile due to financial reasons do I have any chances with CFA?although I believe I can do this!
Hey, it was very informative … thanks for sharing.
Hello Jason, I found this article today on LinkedIn. I have to say that it is really informative and thank you for sharing it.
Being a finance student and an aspiring CFA charterholder, I have been searching for articles that can guide me on how to prepare myself for this industry and this article is literally the type I was hoping to find; Clear and Concise.
If I could make just one small request, I would love it if you could maybe share your views regarding the type of practical / technical skills required in this industry.
Once again, thank you for sharing this article.
Kind Regards,
Priya
Thank You For Sharing
The blog is very interesting and will be much useful for us. Thank you for sharing the blog with us. Please keep on updating
Business degrees are a popular option for those who have experience in a business. There is not always a clear answer to this question
Is a Business Degree Worth It
Awesome post and very informative!
Any books you can recommend?
article is fantastic and provides in-depth insight. And it genuinely works for me.thanks for sharing.