How to develop "second-level thinking"
Hello everyone I'm an AN1 in NY and currently in M&A. I know it's early but I want to go into equity L/S and hopefully into a merger arbitrage strat. Basically the title says it all, i want to know how do I go beyond reading news articles and actuallly developing a market view. Most of the time when I read stuff on Bloomberg and FT I just read them and forget the content unless it really stuck with me.
Thanks in advance!
reason why I briefly mentioned my background was because compared to S&T first years, we are apparently seen as just braindead rule followers (I am exaggerating but some of the HF guys I've talked to say that they and their bosses think that way). I can see why they say that and I admit I'm pretty weak in building a "mosaic" that develops into a market view based on what I've read via news articles and industry reports.
My experience its not like s&t guys are necessarily taught how to do that, just banks select s&t juniors based on their interest and ability for that type of analysis, and then they get to practice it every day (rather than fixing typos in powerpoints). So if you want to get better just practice more - e.g. for macro take one or two issues in the news that interest you/you ahve already read a decent amount about, big or small, e.g. consumer inflation, steel prices, or rural real estate, and spend 30 minutes writing down what you think is going to happen for each one on some timescale. Keep it decently short, like 5-6 sentences on each. Doesn't have to be perfect, and you dont have to fully justify everything, but make sure you know what you aren't justifying. You're trying to figure out what are the most important knowns and unknowns driving the process:
random example: city real estate prices - I know nothing about this just to show you what I mean:
Point is you are writing down a prediction and some rationale for that. Do this every few weeks / when you have a new idea and a) you'll get better at making predictions b) when you read the news you will be synthesising it within the context of your previous predictions. Does this story confirm your prediction or not? If the head of real estate at XYZ bank is saying the opposite of what you predicted, you should figure out why.
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