There are many characteristics that an equity analyst must have in order to even perform the necessary requirements of their job. However, those analysts who become highly successful must operate at a higher level and often posses these 10 traits. These attributes are what distinguish them from the status quo and ultimately stand out to potential employers and excel in their career.
1.) Highly Intelligent with Strong and Extensive Financial Modeling Skills
Successful Equity Analysts have lengthy and comprehensive industry experience and have gained extensive financial modeling skills. Employers want to know you have proven abilities that can be demonstrated with your SAT or GMAT test scores and industry background. Given the intense competition, top analysts will undoubtedly be able to substantiate their capabilities and intelligence through their strong test scores, certifications and industry experience, many of whom pursue further technical training and professional courses to enhance their knowledge.
2.) Time-Management Skills
James Valentine, a former Morgan Stanley equity analyst says, “From my perspective there are three things analysts need to be successful: intelligence, a reasonable amount of firm-wide resources, and to use their time effectively. The only one of those variables they have control over is how they manage their time. You can’t research every aspect of a company. So how do you best manage your research time? The answer is to focus your research only on those factors most likely to move a stock. This sounds obvious, but I would say 75 percent of the colleagues and clients I worked with over the years analyzed information in a reactive way—reading emails, listening to voicemails and presentations as they came in, rather than be proactive by seeking just the key information they need. When responding to the agenda of others, it’s tough to identify factors outside the consensus view”. Valentine goes on to say that it is important to identify 2-4 factors that are most likely to move a stock within a given time period and ignore any other factors not critical to those components.
Oftentimes high intelligence and an analytical mind can only take a successful analyst so far; relationships have becoming increasingly important in the industry. The Wall Street Journal says, “this has been especially true since 2000, when the Securities and Exchange Commission adopted Regulation Fair Disclosure, requiring companies to publicly release material information at once, rather than selectively to stock analysts and other market pros. Suddenly, access to exclusive information was out the window”. They go on to say, “To build the necessary contacts, top analysts must be committed to their clients and their covered companies. Analysts can spend upward of 100 days on the road each year, attending industry conferences, meeting investors and visiting their companies’ plants, outlets and headquarters. The trends they spot, the problems they see, the vibes they get when talking with management are often the difference between a good pick and a survey-winning pick”.
4.) Ability to Work Under Pressure and in a Fast-Paced Environment
Beyond being highly intelligent and having an innately analytical mind, time management becomes even more important since many equity analysts work under intense pressure and in a fast-paced environment. Successful analysts will need to remain focused under these conditions in order to continue and finish their work to present to their client.
5.) Compelling Communication
Equally important to the detailed work of an analyst, it is essential to be able to communicate your findings in clear and concise terms your client can understand. “Oftentimes, the result of research and analysis comes in the form or jargon-filled reports and complicated graphic representations. As a professional research analyst, you need to sum up and interpret your findings to clients without leaving out important features. This requires a certain expertise in the field, a comfort in translating technical terms into plain language, and the ability to answer questions about your findings. Additionally, you need to translate your work into a prescription for action” says The Houston Chronicle.
Attention to detail, concentration and a profound focus, make patience a necessary analyst attribute. Also, as outlined by Finance Walk, “one small mistake or formula can upset an entire model and make finding that mistake next to impossible”. It is for this reason that a successful equity analyst, exhibit great patience and focus while uncovering their findings.
7.) An Inquisitive Nature
It is fundamental for an analyst to be inquiring, constantly learning and absorbing new information. Equity-Research.com says that Equity Analysts are innately inquisitive. Furthermore, they say, “As children, their parents may have complained that they were asking too many questions or taking apart things that weren’t broken. Friends ask, “Why do you want to know that?” Great analysts are always asking why in an effort to determine where consensus could be wrong”. A successful analyst loves to read and absorb new information, especially investment reports and company press releases but also novels and autobiographies. .
Equity Analysts need to be able to filter a vast amount of information. The Houston Chronicle says, “A primary trait that a research analyst needs to be successful is the ability to look in the right place for information. There is an astronomical amount of information available to the public, but very little of it is relevant for the purposes of the analyst on any specific project”. An accomplished analyst will be able to take an almost endless amount of data and channel it into an accurate conclusion.
Quora says that the market punishes sheep mentality and an analyst who demonstrates independence “are more likely to change directions quickly, especially when it’s totally necessary, when you don’t have other voices in your head conflicting with your conviction on what you think is right. The less clutter in your mind the better, the more nimble you are likely to be”. This requires you to be an independent thinker who can stand alone with your findings and conclusions.
10.) Niche Understanding
While an equity analyst needs to have a deep understanding of markets, many successful analysts have niche experience. Since an analyst will generally focus on a small set of stocks, they can become experts with that industry, company or even geographic area. This specialized concentration in a particular niche makes top analysts authorities in their industry focus and subsequently sought after.
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