Stock Market AnalystStock Market Analysts are often labeled as the gods, gurus and wizards of the stock market and sometimes, even, doomsayers. Their words can trigger spurious buying or mass selling depending if they gave a buy or sell recommendation. Investors truly revere these analysts so much that some analysts even publish their own newsletters subscribed to by their loyal following, for a fee, of course. As an added perk of the trade, business channels like Bloomberg and CNBC usually seek out Market Analysts to be resource persons during pre-opening and post-market analysis.
Stock Market Analysts are usually employed by brokerage houses but the famous analysts are those working for the likes of Merrill Lynch, JP Morgan, Morgan Stanley, Goldman Sachs, and Lehman Brothers. These broker houses usually assign one Market Analyst for every industry. Of course, each industry has corresponding companies that comprise the industry. So let’s say a Market Analyst is following the software industry, more or less, the developments in companies like Oracle, Microsoft and Adobe, to name of few, would be his responsibility to monitor. The Market Analyst would be looking out for developments happening in these companies like mergers and acquisitions, expansions and consolidations and assess its overall impact to the company or companies’ future stock price. It is also up to the Analyst to coordinate with the investor relations department of each company to ask for important data that may be useful to the brokerage firms trading strategy.
Market Analysts generally employ two approaches in analyzing the market. One is fundamental approach and the other is technical approach. Old-school Analysts rely mostly on fundamental analysis that is, relying on basic indicators like if a company is registering profits, giving regular dividends and has future plans of expanding their operations. On the other hand, technical analysis relies mostly on computer programs. These programs generate charts and graphs that would chart out buying and selling points. Once the buying and selling points have been determined, they can now formulate trading strategies. The difference between fundamental and technical analysts is that technical analysts would buy a stock even though a company is not making money or doesn’t have a single asset as long as their chart gives a buying indication, they would do so without qualms without batting an eyelash. However, there are also those going for the middle ground, some Analysts would use fundamental analysis when choosing a stock to buy and then use charts to time buying and selling of stocks.
Predicting where the market, an industry, or particular stocks are going is indeed like an immensely pressure-filled job. Immense pressure because all the firm’s brokers are depending on the analyst’s findings so they can pass it on to their individual clients. Not only that, the public is always eager to hear what they think, more so the big clients who trusted the firm to safeguard their money. Indeed, the services of Market Analysts are the life blood of a full-service stock brokerage and one wrong call could really trigger a client exodus.
Becoming a Market Analyst was very mysterious as if they’re a secret fraternity. But now, the shroud of mystery has been lifted, those targeting the high profile broker houses positions could now easily position themselves in landing these coveted jobs by enrolling in courses like Financial Markets from reputable schools, not to mention getting above average grades.