Analysing a Career in Stock Market Analysis

Stock market analysis is the evaluation of a particular trading instrument, an investment sector, or the market as a whole which facilitates investors and traders to gain an edge in the markets by making informed decisions.

Stock market analysts attempt to determine the future activity of an instrument, sector, or market. They are mostly hired by banks, stock-broking firms, government agencies, insurance companies, and mutual funds companies.

Types of Stock Market Analysts

Buy-Side Analysts

Buy-side analysts work for hedge funds, as fund managers at mutual fund brokers or financial firms, and as other institutional money managers. They specialize in a few sectors and do research on companies in their employers’ portfolio and other potential company investment opportunities. Buy-side analysts generally have broader responsibilities, such as researching larger industry topics like employers’ portfolio of the company, technology, calculating the risk and gain before buying a stock, and advising the firm’s employees on what to buy, sell or hold.

Sell-Side Analysts

Sell-side analysts work for large investment banks and brokerage houses. They do intensive research on a list of companies and provide reports to the firm’s clients. They construct models projecting the firm’s financial results and interview customers, competitors, and other sources with industry knowledge. They provide a research report with financial estimates, a price target, and a recommendation about the stock’s expected performance which is used to “sell” an idea to individuals and institutional clients. While buy-side analysts often research on larger industries, a sell-side analyst will do more focused research within an industry.

Independent Analysts

Practitioners not employed by either brokerage firms or mutual/pension funds are known as Independent analysts. They provide research that is “untainted” by investment banking deals.

Skill Set Required

• Research skills: Detail-oriented with the ability to use primary and secondary data sources to scrutinize investment opportunities across multiple sectors and study stocks of companies and other variables that may affect the profitability of the proposed and existing investment.
• Self-starters: Motivated to work on their initiative without needing direction
• Analytical skills: The mental capacity to examine balance sheets, parsing footnotes, and value companies, for generating investment and trading ideas, and apply logic and data analysis to analyse complex issues and make sound decisions.
• Quantitative skills: Technical and Mathematical skills
• Problem-solving skills: The ability to logically think and reach solutions in a difficult professional situation.
• Knowledgeable and ardent about the stock market, equity investment strategies, and valuation methodologies
• Strong financial acumen and working knowledge of investment banking
• Computer skills: Proficiency in Microsoft Office applications like Word and Excel

Job Responsibilities

• Research and scrutinize financial data on stocks and companies to advise investors/organizations on how best to invest their money
• Analysing and tracking the performance of companies, industries, and sectors in which they have investment interests, and sharing insights from analysis to the relevant authority/management
• Using historical market trends, current information, and company-specific data to build modelling information and predict the movement of the markets and the economy, the future earnings of the company, and advise clients if it is wise to buy or sell stocks in a particular business. Thereby, serving as a financial investigator and trading ideas coming from watching trends and looking at past performance records of the profit and loss data of individual companies.
• Interpreting analyzed data on market, economic and political events that may affect the portfolio of companies
• Work with team members to collect essential data to prepare, update, and maintain presentation materials, and also make reports on companies owned or under consideration for purchase
• Supporting deal origination and performing with due diligence, including networking with financial advisers, lawyers, and industry experts at external private equity firms
• Developing, reviewing, and updating financial models, investment appraisal and valuation, and reporting the performance of portfolio assets owned by the organization
• Having a keen eye for analytics, sifting through spreadsheets, and looking at detailed factors that could impact stock prices
• Advising and communicating (preparing reports and memos or answering emails) with clients to help clients build their portfolios, sell off stock before it declines, and intimating about changes in the market that may impact portfolio earnings
• Examining companies that are included in client portfolios and creating models and writing positional papers to inform clients of quarterly earnings and changes.

Educational Qualifications Required

Candidates who are looking for a job as a stock analyst must possess an MBA degree in Finance, Economics, or Statistics stream.

Online Courses

1. Advance Diploma in Financial Market Management (ADFMM)
2. Language and tools of Financial Analysis by University of Melbourne
3. How to analyse a wholesale deal in real estate

Companies that Hire Freshers

1. TresVista Financial Services
2. Jobmirror Consultancy
3. Spectrum Softtech Solutions Pvt Ltd.
4. BidBox

With firms investing in stocks in times of increasing economic certainty, the demand for analysts and job growth in this sector depends on the health of the economy. Stock market analysts have been the guardian angels of trading for accurate stock market advice.