9 Most Important Books for Equity Research: Stock Market Analysts

 “The more that you read, the more things you will know. The more that you learn, the more places you’ll go.

Dr. Seuss, I Can Read With My Eyes Shut!

How true is that?

My personal experience says, majority of experts in any field have one common habit – Reading.

From childhood till date, how have you gathered knowledge about anything?

The answer varies. From your own experiences to watching TV, listening to radio, the Internet and … ? Yes, books.

I’ve acquired most of my memorable lessons from reading books.

Here’s the picture of (some) my books on investment.

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By looking at the above books you’ll get an idea—of the kind of books I’m going to suggest.

I get emails- from people who are looking for jobs in equity research – asking me about the best books on equity research.

9 Suggested Books /Reading for Equity Research and Stock Market Analysts:

All these books are seminal in nature. They are trendsetters and have guided professional investors in the last few decades to build stunning investment portfolios.

Go and buy these now!

1. The Intelligent Investor (1949) – By Benjamin Graham: The book teaches value investing.

2. Security Analysis (1934) – By Benjamin Graham and David L. Dodd: The authors were the intellectual founders of value investing.

3. The Interpretation of Financial Statements (1937) – By Benjamin Graham and Spencer B. Meredith: The book teaches understanding and interpretation of financial statements.

4. The Essays of Warren Buffett: Lessons for Corporate America (1998) – ed. Lawrence A. Cunningham: It is a collection of letters Buffet wrote to the shareholders of Berkshire Hathaway that delivers sound knowledge of business practices.

5. One Up on Wall Street (2000) – By Peter Lynch: The author explains how average investors can be better than professional investors and improve their investment portfolio using what they know about the market.

6. Beating the Street (1994) – By Peter Lynch & John Rothschild: The author guides you on picking mutual funds and stocks for a profitable portfolio.

7. Learn to Earn: A Beginner’s Guide to the Basics of Investing and Business (1996) – By Peter Lynch & John Rothschild: The authors talk about business investment and stock market in great detail.

8. Buffettology (1999) – By Mary Buffett and David Clark: The authors shares Buffet’s, the genius investor, investment philosophy with really valuable inputs.

9. Best Practices for Equity Research Analysts: Essentials for Buy-Side and Sell-Side Analysis (2011) – By James J. Valentine: One of the best guides on becoming a top equity research analyst.

If you want to buy them online, they are easily available on Amazon.

Best Practices for Equity Research Analysts

All the 9 listed books are recommended but I would like to draw your focus to one book in particular, which is the Best Practices for Equity Research Analysts.

This book is one of the best books written so far, specifically for equity research analysts.

According to the author, James Valentine, there are some non-technical skills that every equity research analyst must possess.

The skills are:

  • Selecting the optimal universe of stocks
  • Time management
  • Influencing skills, and
  • Managing information flow

Read the preview of the book: Best Practices for Equity Research Analysts.

Are these books enough to become a stock market or equity research analyst?

No! It’s just the starting point.

You can and should research for more books on equity research analysis and start reading them.

Apart from the books mentioned above, you need to read books on behavioral finance too. A new field, behavioral finance is the study of psychological and emotional influences that cause people to invest in irrational or unpredictable ways.

The study combines psychological theories with conventional financial concepts to understand the reason behind people taking irrational decisions in financial investments. The conventional financial theories focus on ‘wealth maximizers’ in a rational way but combining psychological insights into finance gives analysts access to human logic and irrationality governing financial decisions. The purpose is to understand such anomalies.

The Importance of Annual Reports

One more important resource that you must read is to become an equity research analyst is the annual reports of companies. Read every letter written in these reports; don’t miss out on anything.

What’s there for you in an annual report as a stock market or equity research analyst?

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Reading Annual Report / Kozzi.com

Everything!.

The company annual report contains every details of the company you’re interested to research.

The annual report presents a clear picture of the financial situation of the company and other related factors, such as the company’s business model, operational efficiency, competitive scenario, the people who manage the company (i.e. company’s management), company’s future outlook, investor-friendliness of the company and lots of other things.

I read annual reports of the company before investing. For example, read my investment analysis report of Colgate Palmolive here.

Books vs. Internet for Equity Research Analysis Knowledge

I prefer using books to the Internet.

Why?

For the simple reason that my attention span is more when I read books (physical not eBooks).

Of course, I read on the Internet too, but that’s for research and analysis purpose, and not for core reading.

My observation is that books are always more in-depth and once you start reading a book, you’re more focused and less distracted.

In short, if you are wondering which books to read as a stock market or equity research analyst, you should start with core investment books and then read books on behavioral finance.

Don’t forget to read annual reports of the company that you’re analyzing. You can read the books in physical format or in electronic format, as per your convenience.

If you want to read online, finance investment books are available for both free download and paid options. Avail both the opportunities.

Did I Forget Anything?

How about starting to read a book in the above list from today? Read only 5 pages, take pleasure in reading and forget everything while reading.

There you have it, a complete list of best equity research books from my own experience.

I spent 5 hours for this post to give you the list. Even so, I’m sure there are a few that were missed. Or maybe there’s one on the list that you disagree with. Either way, leave a comment below!

“Books are the quietest and most constant of friends; they are the most accessible and wisest of counselors, and the most patient of teachers.”
Charles William Eliot

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15 Responses to “9 Most Important Books for Equity Research: Stock Market Analysts”

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  1. Amit Kanabar says:

    Hi,

    I have been an avid reader of this website and found it quite useful at times. Can you please suggest some books regarding security analysis for Indian Stock Markets & also some books regarding Valuation (if possible for Indian Scenario).

    Thanx & Regards

  2. Gaurav Singh says:

    Hi Sir,

    I want to become an equity research analyst . How should i start developing the skills required for this profession . I’m going to write CFA level in Dec 2014 . Additionally , can you please tell me the linkage between equity research & financial modelling. After Clearing which level of CFA , should i take up financial modelling course . & is equity research and Portfolio management same .

    Thanks,
    Gaurav

    • Hi Gaurav,

      Read all the posts (including comments below each post) on this category page. You will be clear about the skills required to become an equity research analyst.

      Excel and financial modeling are skills that you need for forecasting and valuation, which is used for equity research.

      You can take financial modeling course after CFA Level II if you are a graduate. If you’re a post-graduate, you can take up financial modeling course anytime.

      Equity research and portfolio management are two different things.

  3. Lya says:

    Hi Avadhut,

    Now I am working for a brokerage house as an assistant equity research analyst. I have finance background both from school and CFA level 1 exam. But the problem is I’m still struggling in writing. Do you have any suggestion for me which books to read to improve my writing skill as an equity research analyst. Massive thanks!

    Cheers,
    Lya

    • Avadhut says:

      Hi Lya,

      Great question :)

      For writing,you need to do 2 things – Reading and Writing – consistently .
      Read at least one equity research report a day. Notice the language and tone that they are using. Learn how to start a particular point and end it. Check verbs, jargon, data, examples, presentation that different equity research analysts are using.

      I’ve written a detailed post on this – How to Write Equity Research Report.

      Interestingly, I’m working on a course -How to Write Equity Research Reports :) It will be launched soon.

      Let me know if you need any other help.

  4. Rahul says:

    Sir
    I have an interview for the post of equity research analyst on monday
    I just have cleared CFA Level 2 but have no experience?

    What all things i should prepare for interview ?

    • Avadhut says:

      Hi Rahul,

      60% of the questions will be based on your resume. Other questions will be on your views and personal experience about equity. They will check your thought-process.
      All the best.

  5. Nagraj Pawar says:

    Hi,

    I am Nagraj pawar, B.com graduate & C S Inter. I want to learn all about equity research, so please tell me how i can start now. also i want to do entry level job in this industry so can i get job on the basis of my present qualification.?

  6. Alisha says:

    Hi,

    Today i cleared the interview at Reval Analytics for the position of Junior equity research analyst position. Apart from my educational knowledge (Masters in Economics and currently CFA level 1 candidate) i used your website to have an idea about what equity research is all about. Your work has been very beneficial for me, i thank you for that. I need you to guide me with which book i should start reading to further gain my knowledge and develop skills in equity research. Which to start with Security Analysis and Portfolio Management by Donald E Fisher or Best Practices for Equity Research Analysts – By James J. Valentine. Thank you.

    • Avadhut says:

      Hi Alisha,

      Congratulations :)

      Glad to know that FinanceWalk helped you in clearing concepts about equity research.

      If you haven’t read – Buffettology – By Mary Buffett and David Clark, start with that book. Then you can go for Intelligent Investor. Then go for One Up on Wall Street – By Peter Lynch.

      Once you complete the above books, then go for Security Analysis – By Benjamin Graham and David L.Dodd.

      Best,
      Avadhut

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