Advice on How to Become an Investment Research Analyst by Jason Voss, CFA.

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I am frequently asked, “ What can I do to
improve my chances of getting hired as a
research analyst? ” Beyond the obvious —
become a CFA charterholder — there are a
number of other steps that aspiring
analysts may take in my opinion.

Making the Intangible Tangible
What an aspiring analyst has to offer to an
employer is largely abstract- and creative-
thinking skills. These skills are intangible
and difficult for recruiters to assess. This
is one reason why firms in finance tend to
recruit from the same schools decade after
decade: rigor of the curriculum and
reliably high quality candidates. This is
also why those without experience in the
investment industry find it hard to get
hired for research analyst positions. That
is, in the absence of other evidence, firms
hire what they think they can depend on —
that is, what is tangible: your education
and your experience.
But do not despair if you have not gone to
your country’s top educational institution
or if you have no experience! I went to the
University of Colorado (not a top school
for finance recruiters) and had very little
experience when I was hired as a research
analyst at one of the United States’ largest
and best-known money managers.
What employers really want is for your
intangible skills to be made tangible. This
realization empowers you tremendously,
because with this framework, you can
focus on providing concrete evidence that
you have the skills necessary for being an
effective analyst. When I began my career
I created a personal website that included:
examples of my own personal research
analysis on companies; book reviews of
economics, finance, and investment texts
that demonstrated my ability to think
critically about information; and an
extended version of my CV (i.e., greater
than the orthodox one page maximum), so
human resources departments could see if
I had what it took to be a research
analyst.
By engaging in these activities it will also
sharpen your own skill set. For example,
when I created my own research reports —
which I highly encourage you to do — I
used only primary data sources, such as
company annual reports. I also did all of
my own calculations for things like future
gross domestic product; the future shape
of the yield curve; and the cost of capital.
Recognize that your opinion matters.
Companies will be hiring you for your
opinion as much as for your skill set. In
other words, they hire you with the
expectation that you will take
responsibility for your choices. So, if you
choose to make your intangible skills
tangible by creating your own research
reports then you must track how your
investment recommendations do by noting
the prices of assets on the day that you
recommended them for purchase and then
track how they perform over time. You
must be honest with yourself, otherwise
you won’t learn anything. This is more for
you than for your future employer.
(Though it certainly wouldn’t look good
for you to get caught fudging the numbers
in even a theoretical exercise.) Markets
provide a valuable feedback mechanism
for assessing your skill set. The beautiful
and terrifying thing about investment
management is that the results of your
performance are measured objectively.
You either did well for people or you did
not. So, if you are not doing very well,
then you need to identify where your
analysis broke down, and then strive to
improve.
I have a friend who took a similar
approach as me to getting work. He sent
his research reports to investment firms
every single month for two years and
eventually got a job interview. By doing
this process he taught himself to be an
analyst.

Look for a Mentor
Across the globe, CFA Institute has
hundreds of local societies , which are
made up of many generous individuals,
many of whom may be willing to guide
your career track. If that does not appeal,
then contact money managers whose
process is in alignment with your own.
You may be intimidated, but the worst
they can say is “no.” In any case, any
possible anxiety you experience in
approaching investment heroes is good
practice for the anxiety you may
experience in approaching management of
prospective businesses, some of whom
may include the likes of Rupert Murdoch
or Li Ka-Shing.

Analysis Is Probably Not What You Think
It Is
Most analysts, the aspiring and the
experienced, think that investing is about
facts, models, mathematics, and analysis.
Yet, as I discuss extensively in my own
book, The Intuitive Investor, there is no
such thing as a future fact. Facts, by
definition, are things that occurred in the
past. Yet investing results unfold in the
future. What this means is that investing
is as much a creative and intuitive
process as it is an analytical process. To
be a well-rounded and experienced
candidate you need to be able to think in
a balanced fashion — that is, both
anaytically and creatively. Therefore,
engage in activities that enhance your
creativity, too. For me, I am an active
meditator, as well as an artist. Your
success as an analyst will depend on your
ability to synthesize information and to
see things no one else is seeing. After all,
by definition, if you want to earn returns
that no one else is earning, you have to do
things that no one else is doing.

Stock Your Mental Toolkit
Another tip is to read, read, read, read.
Read investment texts. Read texts on
geopolitics. Read texts on mergers and
acquisitions. Read economic texts. Read
anything that sparks your curiosity, even
fiction ( potent advice from CFA
charterholder, Tom Brakke, CFA ). And
most of all, read the news and from many
sources every single day and begin to
develop an opinion about the news and
how it affects different countries,
industries, businesses, and individuals.
The most important skill for any investor
is: understanding information. He who
understands information the best does
better, and he who understands
information the best and acts decisively on
that information wins the day. When I was
an aspiring analyst if I encountered a
piece of news I did not understand, I
would read not just the article in question
but also an entire academic paper or book
on the subject. I did this day after day,
month after month, and year after year
until my mental mosaic became large. In
other words, let your ignorance guide you.
What you do not know and understand
should guide what you try and learn next.

Introspection
Spend some time figuring out who you are
as an analyst. This is critically important.
Why? If your natural strengths as a thinker
make you a good trader, then you will be
very frustrated working at a deep value,
long-term focused money management
firm. Likewise, if your character is more in
line with a long-term, deliberate process,
then you will likely be frustrated at a high-
frequency trading shop. You want to know
yourself so that you can make an
informed decision about where you want
to work; about what type of analysis
works in accord with your mind; and
about where to spend huge parts of your
life.
Furthermore, your introspective process
will allow you to take an inventory of your
innate strengths and weaknesses — and
we all have both. You want to develop
skills that accentuate your existing talents
and skills that compensate for your
shortcomings, too.

Be Patient
Expect this entire process to take a lot of
time. From the time I first had the idea to
become a research analyst to the time I
got hired doing the work I wanted to do, it
took me five years. For some people it is
a much shorter process. But then, having
done all of the work I described above,
once hired I was promoted to portfolio
manager in two short years and was
fortunate enough (and maybe skilled
enough) to have retired at age 35.

Best wishes for success!

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