How would you learn to model if you had to do it all over again?
Saw a post like this about pitches, thought I'd ask it about modeling + building an initial fundamentals based understanding. Am a student so any color would really be appreciated.
how to model if i had to do it over again?
dont
Ask ChatGPT.
Seriously. Create a project with a specific prompt sharing what your goal is and what you want to learn. I.e. you’re a PM at a L/S hedge fund and I’m a junior analyst looking to learn how to build detailed models of public companies. Help me iterate on my process to build highly detailed, logical models for different companies and gut check my assumptions.
Create a chat for each company you want to model and feed it SEC filings as a starting point. Then start asking questions to help build a model. Like “based on the Filings what metrics should I use to consistently model revenue”.
Once you create a draft, upload it into the chat and ask for feedback on drivers, logic, etc.
That makes sense and I've tried something similar, however I don't really even know where to start with building the model itself. By this I mean I don't even know what the model looks like, what physically goes where on the spreadsheet and things like that. Do you have any recs if I'm that much of a beginner?
Go learn how to build a basic 3 statement model on youtube. That is what most financial models are for L/S - now the tutorials on youtube will be very basic, but that’s a good starting point - it’s up to the analyst (you) to add granularity and detail e.g. revenue building from volume x pricing etc
The modeling itself is just corp finance, and that can be learned anywhere. There is no shortcut to learning other than repetition imo. That said, anyone can put together a 3 statement model (in fact this gets outsourced to asia or canalyst often).
The real "value" of the model comes from the layout + underlying assumptions.
1) Simplicity + cleanliness should always be prioritized. Streamline everything that can, and only focus on what matters. There should be as few inputs as possible that actually drive the model. That way, you know what KPI change = to Rev/EPS/FCF/etc.
2) This isn't super modeling specific, but being thoughtful about drivers and the build is the whole goal. Early on, don't borrow other people's numbers for coming up with things / the baseline. Its a muscle in your brain - having an independent, original opinion or perspective on the business, what drives it, etc. I liked learning from seeing other people's stuff, but its a bad habit to borrow other people's work when doing this work, especially if you haven't developed your own thinking yet. Training your brain to analyze things (not just process, repackage, condense, and sensitize), is the most important. If I tell you a business, you should immediately think about how the revenue and cost build should flow, not check out sell side models to see how they did it.
I'd probably buy one of these "Break into IB" courses that come with Excel templates that they ask you to complete.
Curious for a link to the original post on pitches that inspired this thread
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