How important is the knowledge of stock markets for the role of say, an equity research analyst or an investment banker? Like the current Indian market crashed because of the Chinese slowdown, and other factors such as rupee fall, etc. However, the role of a researcher or an investment banker is sector specific. So, I believe that besides this superficial knowledge, he should have a more detailed analysis of his sector. But beyond his sector, I hope it is sufficient to only know the basics, which are not at all in use in any deal or report.
Because the behaviour of the markets is very complex. And it is very time consuming (& boring) to read the essay long articles on economy, its functioning, and current and future impact on the markets. Already in his profile, the employee is tied with vast data. I think it might be useful to a trader or a portfolio manager!
How important is the market knowledge for those profiles?
Yes, to start with I want the least but right amount / content of knowledge. I do not want to lose the direction. Market is full of shi*, and because I believe I am not a trader to know even the minutest microscopic details. Such things can come to me with time. Everyday, I have to take out time from my job to read the news, and make the most boring topics interesting. May be because I am not in the game yet I am finding them still boring. I cannot see the direct effect. I have begun by studying all the investment products that the market currently offers. Their pros and cons, and the returns. And thinking of putting in small sum to dabble. I don’t trust markets. And anyway, this will be personal financial planning.
However, I do not understand the need to know the complete economics and market behavior without picking a sector or a company because only then the serious application of the fundamentals and the news reads takes place. Being in the game. That’s what I meant when I wrote “sector”. I guess trader is different from a banker or a researcher.
What’s your take? How do you describe “right” amount of knowledge?
If you do not find markets interesting, if the FT does not make you hard every morning when you browse it on your iphone, if reading about economics is boring to you, why the hell are you pursuing this designation?
You don’t need to know anything about the stock market to be in the investment business. Most people already in the business don’t know anything so don’t hold yourself to an artificially high standard for no reason. If you have minimal knowledge but clean up well and sound confident, you will fit right in.
Nice, I find myself agreeing with this post. Having been around awhile, I would say most people in the investment industry don’t know much of anything about markets, and frankly don’t care. Their investment returns suck, and frankly they don’t care about that either. It’s more about talking the talk and acting confident, just spout the party line, and every once in awhile drop “Black-Scholes” or “black swan” into the conversation so people think you might actually know something.
Market noise is mostly nonsense. You don’t have to enjoy watching CNBC or its Indian equivalent to be a good research analyst. In fact, quite a lot of research analysts come to the job later in their career having first worked in industry. Imagine someone who has worked in a pharma company then moving across to cover company’s in that sector. In my experience, such people can make for very insightful analysts but often they don’t particularly have an interest in reading the FT every day.
If you really do not enjoy this then probably you shouldn’t force yourself to be doing it. I know so many people from India and other emerging markets move into this industry just because of some BS information that is given to them by some smart people who want to make money off them (i.e. selling CFA classes to them). With that being said, I believe that any relevant information will make you a better candidate for any of those roles. So it’s your choice whether you want to be one of good analysts that base their analysis on facts or one of those ones who most of the time BS (and the truth is some of them have quite successful careers!)
