A stock analyst tracks exchange-traded stocks, analyzes market trends, and factors affecting stock prices to help clients buy and sell stocks. They require mathematical and research skills and an understanding of how macroeconomic environments can affect stock prices. They may also focus on creating a diversified portfolio for clients.
A stock analyst tracks the movement of exchange-traded stocks, analyzing market trends and other factors that affect stock prices. He can also track the historical movement in the stock price, with the general purpose of helping his employer or clients in buying and selling stocks at a profit. Many equity analysts will follow not just one stock, but the actions of other major players in the same industry, as the fortunes of these companies often affect the market price of the competition. Some equity analysts work for one employer, such as a large hedge fund, while others advise multiple clients. A stock analyst typically generates financial reports on market trends or individual stocks for clients or the company they work for.
Someone who works as a stock analyst will usually look at a variety of factors that influence stock prices at any given time. In addition to analyzing fluctuations in a stock’s price, a stock analyst often seeks to discover how fundamental market factors can impact a stock’s value over time. This type of work usually requires mathematical and research skills. An intuitive understanding of how stock prices can be affected by the macroeconomic environment often proves immensely helpful in this career. Many stock analysts are well versed in the historical performance of the stocks they generally follow.
For example, the stock price of a company that sells seeds to wheat growers could go up if a large seed producer in that niche has a low yield of starter seeds because the available supply on the market has been reduced. This event may occur due to an unusual meteorological phenomenon. If the stock analyst is following the evolution of the shares of companies that produce bread products, he may also conduct research in an attempt to predict how this might affect the stock prices for these companies.
The analyst can compare a variety of news reports and earnings reports from companies in that particular industry. He or she may conclude that although the seed price has risen and may temporarily depress equity prices, the long-term prospects for the industry are still positive. The analyst can take this data and compare it to individual companies in that industry, reviewing publicly available data on each company.
Rather than following stock prices in an industry, an equity analyst might focus on putting together a diversified portfolio of stocks for a client or a group of investors who are clients of a hedge firm, for example. As these types of investments often cross multiple industries, the analyst may recommend this strategy to anyone looking for a diversified financial portfolio. The analyst may conclude that a diversified portfolio will serve the client better, as this type of investment strategy tends to produce smaller changes in value and more consistent performance.
Protect your devices with Threat Protection by NordVPN
