How to Prepare Yourself for an Equity Research Analyst Job?

1x1.trans How to Prepare Yourself for an Equity Research Analyst Job?

The biggest challenge I think today’s youngsters find is to decide what they want to follow as a career and how to get that most coveted job.

I have observed many times that young graduates see that their seniors from college or older friends are following certain high profile careers such as equity research analysts, private equity analysts, investment banking analysts or hedge fund managers.

Seeing that these guys are doing well in their jobs and earning very attractive compensations the youngsters these days also want to follow them blindly.

But many times they are confused as to how to get these most coveted jobs or how to prepare themselves before approaching these high profile jobs for opportunities.

Many times these youngsters, who are just out of graduation colleges or are at the ending phase of their graduation program, look around for information which will help them prepare themselves in various places and try to put these bits together.

Some youngsters do succeed in doing this effectively but many get confused because information is coming from various sources (many times not the correct or reliable sources) and it’s difficult for them to bead it together in an effective way which will really help them train themselves before approaching say, an equity research company for a job.

Because of this I thought I should dig deep into my experience of the financial sector and write an article which will really explain what a youngster or a fresh finance graduate can do to prepare themselves before approaching an equity research company for an employment opportunity.

I am not saying that I have some magic wand which will make you the best candidate out the in the market but I can promise you that if you follow all the steps I have provided in this article, it will definitely help you enhance your skill sets, improve your confidence and confidently approach your dream company for a job opportunity.

I would like to divide this article in 5 parts which I feel if you follow meticulously and diligently will definitely help you groom yourself nicely for that coveted position of an equity research analyst:

  1. Obtain a finance degree from a reputed educational institute
  2. Attend various additional professional training courses
  3. Understand macro and micro economic indicators
  4. Enhance research skills
  5. Look for internships

I will explain each of these above points individually in detail so that you understand exactly what you need to do and there is no confusion at all.

1. Obtain a finance degree from a reputed educational institute

First thing that you have to remember properly is that if you are looking for any long term and successful profession in the field of finance, you need to get a professional degree.

For becoming a successful equity research analyst, you should ideally have a degree or a diploma in finance, business or accounting from a reputed and recognized university or school.

Remember just having any degree from any university or school is not enough.

You should always aim to graduate from leading and reputed universities or schools.

Top companies always give preference to candidates from top notch universities as the standard of education there is much better than mid-level or lower rung universities.

Remember you are going to be spending three to five years of your life in these universities or schools!

Please consider this as an investment for your future successful career.

Make sure that you aim for the best possible university or school and get an admission there.

Once at the university, please try to give your hundred per cent and score amongst the top.

This is very important as this score will stay on your CV (curriculum vitae) forever till you are trying to get a job in the market! So make sure you don’t get satisfied with mediocrity and always aim for the best.

Once out of graduation, always look out for professional courses which will give you that edge when you are looking out for your dream job.

There are various finance related professional courses that you can choose from.

In USA, the different professional courses that you can pursue could be:

  • Certified Public Accountant from American Institute of Certified Public Accountants
  • Certified Management Accountant from the Institute of Management Accountants

In India you can pursue professional courses such as:

In Europe there are also various professional courses that you can consider:

  • CIMA from the Chartered Institute of Management Accountants
  • ACCA from Association of Chartered Certified Accountants
  • ICAEW  from the Institute of Chartered Accountants in England & Wales

You can also consider taking up a management course such as MBA (Masters in business administration) or PGDBA (Post graduate diploma in business administration) from a reputed business school.

Again remember MBA is a lot of investment – financial as well as time and efforts wise – so make sure you only choose the best available option and not an ordinary lower rung business school.

Remember all these courses are not easy and you will have to invest a lot of time and efforts in pursuing them. But once you have any of the above degrees, it will definitely give your career a jump start and will make it very easy to approach your dream company.

2. Attend various additional professional training courses

Just getting a professional degree is not enough.

Apart from your formal education, it is always a great idea to discover other opportunities where in you can augment your technical and financial knowledge.

There are numerous supplementary professional training courses where you can be present at either classroom sessions or virtual classrooms and where you can hone your equity research skills and learn various new financial and statistical techniques.

Maximum of these training courses encompass all the basics techniques of equity research report writing such as – evaluating sector desirability, financial modelling, equity valuation methods, and equity and investment report writing.

The courses also cover things such as understanding financial markets, advanced financial accounts, securities and stock analysis, micro and macroeconomics, portfolio and wealth management, corporate finance and asset management.

These supplementary professional certification courses will certainly escalate your odds of getting employment as an equity research analyst with your dream company after concluding a formal graduate degree program from a reputed university or school.

Again choose these programs prudently as they will demand both financial as well as time commitment.

Don’t choose a program just because your friend has chosen it or just because you are too lazy to look out for other better options.

Spend time to understand advantages and disadvantages of each program, do a cost benefit analysis and only then decide which program will fit you the best.

3. Understand macro and micro economic indicators

It is very important to remember that the economic environment around you is affecting every industry in one way or the other.

You have to make sure you understand the meaning and implications of all the economic indicators, both micro level indicators as well as macro level indicators.

Macroeconomic indicators means the indicators that effect to general overall economy as a whole while micro level indicators means the indicators that affect the industries or companies within the industry or sector.

You can learn about these things by increasing your reading appetite.

Read as much economic or financial literature you can lay your hands on.

You can start by reading various easily available financial newspapers such as The Economic Times, The Financial Express, The Finance Weekly, The Wall Street Journal, The Economist, The Financial Times, etc. which will help you understand various economic factors and their effect on various industries.

This will actually help you pre-empt many things such as effects on various industries just by looking at how macro-economic indicators are panning out.

You have to make sure that you understand how these economic indicators affect the different industries so that total clarity on the functioning of the market as well as various industries.

4. Enhance research skills

I have already written this in one of my earlier article – GIGO, which means garbage in garbage out.

If you are evaluating sub-standard data, your analysis will definitely be not good. So you have to make sure that your data is of good quality.

And how do you do that?

By having good research skills!

In an equity research job, you will have to do both primary as well as secondary research to gather latest and verified information or intelligence.

Secondary research is gathering something that is already out there – something that is already published in the public domain.

It could be published in company annual or quarterly reports, press releases, company’s websites, sector reports, reports by associations, newspaper reports, etc.

On the other hand, primary research includes getting the intelligence straight from the horse’s mouth!

By that I mean by talking to various important industry participants, interviewing them and getting information about the company and the industry.

While secondary research seems quite simple, it makes a lot of sense to make sure that you become an expert at it and are able to mine the Internet efficiently and optimally to get the maximum possible information available out there.

Primary research on the other hand can be a bit challenging as you have to first find out the people you would want to talk to, then somehow convince them to talk to you and then interview them in detail.

This does need a lot of skills.

So do make sure that you try and improve your research skills (both primary as well as secondary) as a part of your preparations for the job of an equity research analyst.

Other important skill sets mandatory to flourish in this financial career comprise decent communication skills (both written as well as verbal), analytical mind set, conclusive thinking, and brilliant investigation skills.

If you can mix both – exceptional communication and data analysis skills successfully, you can be quite successful in this arena.

5. Look for internships

Finally I can’t impress more on the importance of internships in good and reputed organizations.

Apart from formal education and extra courses, a very important element of your learning will be ‘On the job’ training.

Just having theoretical knowledge is not enough, it will not help you climb the hierarchy faster.

You will almost instantaneously find yourself networking with portfolio managers, hedge fund managers, the company’s in-house salespeople and traders, as well as communicating the senior analyst’s investment philosophy after the company publishes its financial statements.

Important thing is to keep your eyes and ears open and absorb as much as possible.

Most top and reputed companies always look for good and successful internship records when they hire new employees.

An internship gives you direct access to the corporates and help you understand how they work or function.

Getting an internship with a reputed equity research firm is a sure shot key to your dream of getting the most coveted equity research job!

I think I have tried to be quite detailed in this article where I have provided some tips as to how to prepare you self before approaching an equity research company for a job.

1x1.trans How to Prepare Yourself for an Equity Research Analyst Job?

Do let me know if this has been helpful to you.

I wish you all the best in your quest to become a very successful equity research analyst!

18-Point Equity Research Checklist: How to Seduce Your Readers to Invest

1x1.trans 18 Point Equity Research Checklist: How to Seduce Your Readers to Invest

At last, you’ve finished your next equity research report.

Another hectic week.

You quickly look for a financial snapshot on Bloomberg or your financial database. You format your report in Word.

You wait with converting the report in PDF, so you can proofread one more time. You’ll do that tomorrow. With fresh eyes.

Equity report writing is hard work.

And sometimes you wonder … does all this writing pay off?

Do you need to keep going to win more clients? Are you fooling yourself? Are you wasting your energy?

You wonder sometimes whether you’re missing an important trick – that you can use to seduce more readers to read your report and buy the stock?

Follow today’s checklist to turn more readers into investors.

Sounds interesting?

Use this checklist to sneak into your reader’s head and entice him to read your report.

How to Make Your Report Irresistible

This checklist gives some tips and tricks which you could use while writing an equity research report.

Please remember these points as they are extremely useful and will guide you in writing a very effective and high-quality equity research report.

Now that we have understood the structure of an equity research report and learnt how to go about writing all the different segments of the report, here are some tips that will help you throughout the report.

1. The KISS principle

First thing that you have to follow is the KISS (Keep It Short and Simple) principle.

Remember that though it may seem obvious, the readers who read your report do not want to read something that they do not comprehend.

Keeping the message simple and easy to understand is an important aspect of writing a good and effective equity research report.

If your analysis has identified a trend or an opportunity, put across the message clearly without patronizing it.

2. Timing is the key

Another most important thing about equity research reports is that you should always publish it at the right time.

Remember, that no one is interested in delayed investment advice, and such ill-timed reports do not stand any value. So make sure you time your report correctly.

3. Cover page should be very specific

Next, the reader should be able to easily identify what he will obtain from the report. Hence, the report cover must contain the basics of the report, and the investment conclusion should be very clearly highlighted.

You can have a distinguished segment which provides the client a reason to read your analysis. Your report stands value only when you are able to distinguish it from the several other reports available freely on the internet.

4. Length of report

Following the KISS principle, your report should never extend to more than 15 – 20 pages.

No one is interested in reading an essay. Be precise and clear about what your opinion is.

5. Formatting is essential

Your report should always be well formatted. Example – you can make use of paragraph headings to bucket your paragraphs, so that the reader can quickly read through.

Make reading easy for your readers, so that they keep on coming back for more.

6. Use graphs and charts

Remember that graphs and charts will speak louder than a thousand words; hence their relevant use makes the report more interesting. They will also help the monotony of the text and make the report interesting to the reader.

7. Use simple but effective language

The language and jargons that you use should be simple and effective. It should clearly drive across the point you are trying to make, rather than compelling the reader to sit with a dictionary all along.

8. Focus on key areas

Like we had mentioned in the previous chapter, you will need to focus on five key aspects while writing an equity research report.

Firstly the company on which the equity report is being written, secondly the industry to which the company belongs, thirdly the government interest, next the market interest, and lastly the investment conclusion for the client.

9. Try to be different

Differentiating your work from several others is very important; hence the more you know about the company, the better you can present it.

Most equity reports do not come across as good communication documents, for the simple reason that they do what everyone else is doing.

10. Don’t beat round the bush

You might come across loads of information while you are doing your research.

The most common mistake that analysts do is to try and include everything they know in the report. And with this you will definitely miss the boat.

Your equity research report must not look like an encyclopedic report. You need to filter data, and stick to being crisp while writing. Remember that the conclusion is usually the focus. Keep the discussion specific and to the point, and defend it effectively.

What Should Form a Part of an Equity Research Report

You know the feeling when you talk to your best friend?

He listens to you, smiles and  asks questions.

He gives his full attention and that makes you believe that he cares for you.

What about creating that same feeling with your report readers?

Follow these 8 points checklist to make your readers comfortable about the investment opportunity, get them to email you their queries and inquire you about your services.

Here is a checklist for things to follow when you write an equity research report.

Make sure you check all the below points while writing the report and we promise you that you will be able to write a very effective equity research report.

11. Company highlights

Does the report clearly state why the report should be read?

12. Investment summary

  • Does the investment summary expand upon your recommendation?
  • Does the investment summary make clear assertions as to why the recommendation is being made?

13. Valuation

  • Does the valuation section clearly justify your price target?
  • Did you include a sensitivity analysis that identifies the possible effects of risks to your price target?

14. Business description

  • Did you describe the business model?
  • Did you describe the financial position of the company?
  • Did you describe what the business strategy is?
  • Did you highlight the important assets and liabilities present?
  • Have you addressed how the company is positioned to navigate through a downturn?

15. Have you provided an Industry Overview?

16. Have you provided an assessment of the company’s competitive position within its industry?

17.  Historical Financial Analysis

18. Risks

  • Have you mentioned all the probable risks that the investor might face?

I promise you that if you remember all these tricks and tips that I have given above and follow my training manual properly, you will be able to structure and write a very effective and high quality equity research report.

I request you to go through all the topics in great detail before you start writing an equity research report. Understand the importance of each segment, plan your research properly and only then start writing the report.

I wish you all the best in your quest to write the perfect equity research report and hope that this post has been useful to you.

Do feel free to touch base with me if you need any further guidance or help in writing your equity research report.

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