I'm from a non-target trying to break in. I'm trying to self learn. It seems like I'll never understand the financial markets but I want to. With 3 months of studying CFA Level 2, reading James Valentine's Equity Research book, and reading the news (WSJ, Barron's) each day, while trying to practice modeling, will I have the prerequisites to network + break in?
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Diving into the world of finance, especially from a non-target background, can indeed feel overwhelming. However, your approach and dedication are on the right track. Here's a breakdown based on insights from the WSO content:
CFA Level 2 Preparation: Passing CFA Level 1 and studying for Level 2 demonstrates a strong commitment to the finance profession. It's a significant signal to potential employers about your dedication and ability to grasp complex financial concepts. Remember, the CFA program is not just about passing exams but also about building a solid foundation in finance, ethics, and investment analysis.
Reading James Valentine's Equity Research Book: This is a smart move. Valentine's book is highly regarded for its practical insights into equity research. It covers a wide range of topics that are crucial for anyone looking to break into the field, from note-taking and personal effectiveness to writing differentiated research products. This book can significantly enhance your understanding and skills in equity research.
Staying Updated with Financial News: Regularly reading the WSJ, Barron's, and other financial news sources is essential for anyone in finance. It helps you stay informed about market trends, economic indicators, and corporate news. This habit is not only beneficial for your personal knowledge but also serves as a great conversation starter during networking and interviews.
Practicing Financial Modeling: Modeling is a critical skill in equity research and investment banking. While it might only constitute about 10-15% of the job in equity research, being proficient in financial modeling can set you apart from other candidates. It's recommended to invest in a comprehensive modeling course to ensure you have a strong grasp of the fundamentals.
Networking: Your technical skills and knowledge are crucial, but networking is equally important. Start reaching out to professionals in the industry through LinkedIn, alumni networks, or even cold emailing. Share your journey, your dedication to passing the CFA, and your proactive approach to learning about the industry. Networking can open doors that are not accessible through traditional application processes.
In summary, with three months of dedicated study and practice in these areas, you will be well-prepared to start networking and making your way into the finance industry. Remember, persistence and a willingness to learn are key. Keep pushing forward, and don't hesitate to reach out to professionals in the field for advice and mentorship.
Sources: Q&A: Equity Research Associate at a Boutique Firm, CFA vs Self Study, Q&A: 3rd Year PE Associate ($10bn+ AUM, MBO/LBO, equity, mezz, distressed debt), Q&A: Sell-Side Equity Research today, Helpful Resources For Breaking Into Equity Research
Anyone can break in. I’ve seen art majors in IB, psychologists and sociologists in asset management. Hell, Druckenmiller graduated in English and Economics, before dropping out of an Econ Phd program to go to PNB. Soros graduated in sociology.
The difference is that it was hard then, and it is much harder now. You have globalization, a saturation of funds…basically, an incredibly large amount of people are trying to break in. We have gone from someone going to a no-name school having a solid chance, to now any non-target having an incredibly low chance.
You must do a couple of things: keep grinding, generating investment ideas, networking like a maniac, and most importantly, set a deadline for this dream. The truth is, the older you get, the harder it is to break into it as a newbie. and in this, you may be jeopardizing your potential financial future via your career.
I’d say go into something that you can currently lever (ex.: industry expertise, so maybe consulting) that can be a pathway to finance. Lots of ex-consulting folks in finance. Or go work in a company’s finance department, and then pivot into sell-side or buy-side
Bump. following
From a technical standpoint I’d say if you’re trying to train your investment ideas watch stock pitches done by the largest competitions on YT (CFA, DIPPS, Cornell). Also read read read, and try to talk to as many people who also want to go into front office finance. A lot of my IB and S&T buddies give me really cool investment ideas/inspiration bc of what they’re looking at outside of work and for their own portfolios.
Understanding research from a top down perspective is what worked for me, I did this by literally understanding the markets like the back of my hand through just reading the shit out of the news and asking people what they thought of it. Once I understood a developing trend really well, I found it a lot easier to make an investment (or not) against, or for the trend. This type of basic pattern recognition gives you an idea of what to bite on and what to stay away from and is not that difficult to practice.
Find mentors and latch onto them. Be relentless in your pursuit of information. Entry level interviews are not based off of your investment acumen, but just how well informed you are. If you can explain a market trend very well and explain the qualifying correlations that the trend can produce, you will be in a very good position. Again, this just comes through reading the news diligently and getting outside opinions. I can’t stress this method enough. I kind of brushed over a lot of topics so if you want me to specify on anything just reply and I’ll answer. GL
Best advice might be obvious but needs to be stated: Focus and obsess. Have questions and find answers any way you can (Google it, read books, ask ChatGPT, whatever) and when you meet people in the field, ask them about their job, what they do every day, and what success looks like in their job.
A helpful way to understand the markets is to look at each piece and understand the business model behind it. Understanding the incentives and how each piece of the financial ecosystem helps one another is really important.
An easy example is learning that M&A investment bankers make money when the client they represent sells their business. These bankers are motivated by transactions and don’t necessarily care if the deal is good or bad. The highest price generates the highest fee and that’s what they aim for.
Why are you doing CFA L2? Have you passed L1?
Yep
Nice
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