Does sector matter?
For a junior analyst with about 2 years of experience looking to move into equity research, how much does the sector I wind up in matter in the long term? Or should I be focusing 90% of my attention on how much I would enjoy working with my senior analyst and the types of responsibilities I would be afforded? I'm tempted to gravitate towards "sexy" sectors like gaming and internet but suspect that basing my decision solely on sector is not a wise move.
In case it matters, I don't know for sure what I'd want to do 10 years down the road, although buyside is of course a seemingly attractive option. Should I be worried about being stuck in a less inherently interesting sector like cardboard manufacturing if that is what I end up choosing? It's never seemed to me like flexibility between covering different sectors is all that great in equity research.
Thanks for any help!
Hi, One thing to consider is that the more sexy the field, the more opinions have already proliferated, thereby increasing the likelihood of high trading volumes/number of participants for stocks in that sector, so while you'd be covering highly liquid securities, it's going to be very difficult to make recommendations that will beat the market. There's more of a "herd" mentality there. On the other hand, if you cover a less popular sector and really carve out a niche for yourself, you should be in much hotter demand when you decide to seek a job in the buyside - few people will have your expertise in this sector, and you'd be one of the better advisors for opportunities there. My $0.02.
Try to stay ahead of the curve. A lot of analysts of late tend to adjust their numbers after the fact...not before. In all fairness though...back in the day calls were made to a couple of analysts with the exact numbers before the release of news. That is how that semi analyst made his name regarding Dell.
If you know your stuff - you should be able to analyze any sector imho.
For any industry you cover or end up in, it all comes down to the numbers. The only difference is how they make it. If you have some an unrequited passion for the gaming industry and see yourself in that space for the next decade then do that. If not, I would focus on the senior analyst on the group because: * He will be the one you will be learning the most from and interacting with on a daily basis * If he is respected and well ranked then that means you'll have a lot more contact with the buyside and senior management at the companies you cover * You'll meet more of the sales desk (this is the lifeline of any sell side analyst) * If he is well ranked, then that only bolsters your stock with recruiters down the road.
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