Hi all,
I am an undergraduate at a target school and interested in possibly working in equity research. The problem is that I am not an expert in any way on financial markets. Do any of y'all have recommendations of any resources (videos, books, publications) that should help me get started? I won't be doing recruiting for ER for another year, so I am ready to absorb and learn as much as possible regarding markets for these next 12 months?
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I like to listen to podcasts on my way to work, My line up of podcasts are: - Slate Money (hit or miss but its usually easy to tell if an episode is worth a listen or not) - M&A Views (short episodes so low investment) - Grants Interest Rate Podcast (I like this one a lot but it can be dry at times) - WSJ Moneybeat (earnings and general market news, one of the hosts annoys me but I still listen) - Exchanges at Goldman Sachs (really enjoy this one) - Motley Fool Money (General market commentary) - Deal of the week (M&A related) - EconTalk (very hit or miss for me but some very interesting episodes) - Odd Lots (I just subscribed to this one, not sure if I like it or not yet) - Pardon my Take (not finance related but I'm a big fan)
To each their own but these are the ones I enjoy and I think its a good way to keep up to speed and learn about the markets
I would also focus on the well known finance publications (intelligent investor, any aswath damodaran material including his youtube channel which I am working through now) and also if you have time some books that tell a good story. I read 'When Genius Failed' in college and found it so interesting.
thanks for clarifying. plenty of websites to get a sense of what is going on, and people may try to say "why" things are going on, but they're probably trying to sell an idea/strategy. here's what I pay attention to in order to make sense of the world:
credit spreads - how is risk being priced? are people thinking it's doom & gloom, or are people thinking there's no risk to be had in the market? look at not just HY, but all spreads.
look at FX, is your currency generally appreciating or depreciating versus major trading partners. you may be perplexed to see your stocks not doing well, but if you have a strong currency and own multinationals, FX may explain the story
valuation in various sectors, market caps, and regions. is DM ex US more highly valued than US, what about EM? what about small v. large? valuation is an awful short term indicator but it will give you a sense of how people are viewing things at the moment.
look at vol across asset classes. are we in a high vol, low vol, or medium vol environment?
watch earnings. are companies growing earnings, growing sales, raising dividends, etc? and not just earnings beats, growth year over year? are these beats lead by one sector (energy largely responsible for sales growth so far this quarter), or is it widespread?
market leadership & breadth. is the current rally/decline widely enjoyed or is it being lead by a few names (like 2015 and the FANG stocks)?
look at risk premia. the classic investor decision is whether they should own stocks or bonds. knowing risk premia (earnings yield - an interest rate like 10y UST or Baa corp) will help you understand how investors collectively view things. risk premia will not be a good guide to returns year to year, but it's important to identify large dislocations.
look at monetary policy. are we in a easing or tightening cycle? know how this affects markets and companies (many private companies borrow debt indexed to certain rates, so increases in rates directly affects their bottom line)
I could go on, but that will get you started. the investment markets are massive. if you want to know whats going on in commodities, I can't help you, but that's another giant out there. my advice for you is try to figure out whatever part of the market you're specializing in and know everything that affects it. where this will come in handy is times like february 2016 when credit spreads blew out because of the energy sector. if you were paying attention, you'd realize defaults weren't picking up and recovery rates were still high, so logically those spreads had to come down if you believed we were going to stay in an expansion. HY was a home run in 2016. that's just a small example that will help you identify opportunities.
beyond that, I listen to smart people and try to mimic them. howard marks is probably my favorite commentator, he mostly focuses on credit, but I'm a big believer that the bond market drives everything.
hope this helps
also curious to hear what Martinghoul and macro bruin have to say
The book that ignited my interest in finance to begin with was "A Random Walk Down Wall Street." It is kind of a strange hodge-podge of financial history, financial economics theory, and personal investment advice, so it gets a lot in there in a format and writing style that is meant for everyone but not totally "dumbed down." If you're already past that level of sophistication, I think it pays to start your technical financial knowledge with knowledge of fixed income. The concepts you learn are fundamental to almost all assets (like present value, interest rate dynamics, quantitative risk analysis, etc.). Read Frank Fabozzi for that. Then start reading the WSJ regularly. Their news is good, and most of the time they put in helpful explanatory bits in their articles when they are reporting on financial news (like mentioning that yields move inversely to prices in the case of fixed income securities). Investopedia is good to fill in gaps when you come across a term you haven't heard before. Wikipedia is also generally good for looking up financial concepts, since it often goes pretty in-depth and shows alternate methods of calculating certain numbers.
Read, read, and read.
Check out the firms that publish their research for free. You're getting an inside look at content which is written by the smartest people in this industry, so it's well worth your time. Citron, gotham, friendly bear, etc.
Gotham's short on EIGI was amazing IMO. Look at when it was posted and when the stock collapsed. They were very early and right for the right reasons. Great work.
https://gothamcityresearch.com/2015/04/28/endurance-international-group…
Echoing what others have said but just reading anything helps.
In re to ER, I've found that understanding business models is a very under appreciated skill. Every industry and company is different. But understanding the business model is one of the most crucial aspect to ER. It sounds obvious, but learning industries is much much more important vs learning financials.
With that being said, learn about what industry you want to go into. This is one thing I wish schools had more courses on.
Anyone can do the finance aspect of Ib, er or pe....but understanding the industry takes years and holds more value. This is where I think ER holds an edge on banking BC you actually have to be an expert in the industry. Get a head start and learn industries. Read trade journals or industry primers.