Meet the New Software Analyst

As US equity markets closed out 2013 at new highs, the future of equity research is facing significant change. With “price targets” being reset for many soaring social, cloud and big data analytics stocks let’s meet the new software analyst. But first, a little background.

Equity research has marginally evolved with investment styles and trading strategies over the past couple of decades. The days of primary fundamental research, particularly on the sell-side, faded long ago. Most analysts don’t have the gumption or the time.

Shrinking commissions and heightened regulatory scrutiny yield lower returns on investment, continuing a cycle of reducing research resources. The sell-side analyst role now has three principal components: 1) to provide access to company managements in their existing coverage universe; 2) to provide coverage for companies that are underwriting clients; and, 3) to provide “hot data points” – particularly for handicapping quarterly results. Buy-siders compete for management access and seek to combine these data points with their own findings to feed trading decisions.

Unfortunately, individual data points legally obtained and disseminated rarely move the needle in providing an adequate sample size on which to base an investment, no less a trading decision. For buy-siders, even aggregating data points from numerous analysts covering a particular sector or company does not provide a relevant statistical sample.

Limitations of today’s analytics

For example, let’s say a mid-sized publicly-traded technology company goes to market with a blend of 100 direct sales teams (one salesperson and one systems engineer per team) and 500 channel partners (mixed 75%/25% between resellers and systems integrators). Further, assume that these teams and partners are dispersed in proportion to the company’s 65%/35% sales mix between North America and international. How many salespeople and channel partners would an analyst have to survey to get an accurate picture of the company’s business in any given quarter?

If a typical sell-side analyst covers 15-20 companies (quintuple that for buy-side analysts), the multiplier effect of data points that an analyst would have to touch makes it humanly impossible to gather sufficient information. Moreover, with 50% of most tech company deals closing in the final month of a quarter, of which half often close in the final two weeks of that month, how much visibility can an analyst have?

Further, why would a company’s sales team talk to anyone from the investment community in the final weeks of a quarter when the only people they are interested in speaking with are customers who can sign a deal? Now consider that many companies throughout the supply chain have instituted strict policies in response to recent scandals to prevent any employee from having any contact with anyone from the investment community.

Even the best-resourced analysts lack the tools to correlate the data points he/she does gather to identify meaningful patterns for either an individual company or an entire sector. Finally, with shorter-term investing horizons and high-frequency trading dominating volume, how relevant are these data points anyway?

The big data approach to research

Stocks generally tend to trade on either sector momentum or overall market momentum. Macro news or events are far more likely to impact a sector’s movement, and therefore a stock’s in that sector. This includes volatility around quarterly earnings – which can run 10%-30% for technology stocks – because the majority of “beats” or “misses” are frequently impacted by macro factors. Excuses such as “sales execution” or “product transition” or “merger integration” issues are less frequent than conference calls would suggest. “Customers postponed purchases” or “down-sized deals” or “customers released budgets” or “a few large deals closed unexpectedly” are more likely explanations.

Now, major sell-side and buy-side institutions are trialing new software that leverages cloud infrastructure and big data analytics to model markets and stocks. Massive data sets can include macro news from anywhere in the world, such as economic variables, political events, seasonal and cyclical factors. These can be blended with company-specific events, including earnings, financings or M&A activity. Newer data sources, including social media, GPS and spatial can also be layered into models. Users can input thousands of variables to build specific models for an entire market or an individual security.

As with any predictive analytics model the key is to ask the right questions. However, the machine learning capabilities of the software will allow the system to not only answer queries but to also determine what questions to ask.

The advantages to both sell-side and buy side firms are significant. They include:

  • Lower costs. Firms can avoid major technology investments by leveraging the scale and processing power of cloud-based infrastructure and analytics software. They can collect, correlate and analyze huge, complex data sets and built models in a fraction of the time and cost that it takes in-house analysts to do.
  • Accuracy. Machine learning and advanced predictive analytics techniques are far more reliable and scalable than models built in Excel spreadsheets. Patterns can be detected to capture small nuances in markets and/or between securities that high-frequency trading platforms have been exploiting for years.
  • Competitiveness. The software can make both sell-side and buy-side firms more competitive with the largest, most technologically advanced hedge funds that have custom-built platforms to perform analytics on this scale in real time. In addition to enhancing performance, the software can be leveraged to improve client services by making select tools available to individual investors.

Analysts become data scientists

The analyst skill set must evolve. They will still have to perform fundamental analysis to understand the markets they follow and each company’s management, strategy, products/services and distribution channels. And they will still have to judge whether a company can execute on these factors.

But to increase their value, analysts will have do statistical modeling and use analytics tools to gain a deeper understanding of what drivers move markets, sectors or particular stocks. Data discovery and visualization tools will replace spreadsheets for identifying dependencies, patterns and trends, valuation analysis, and investment decision making. Analysts will also need a deeper understand client strategies and trading styles in order to tailor their “research” to individual clients.

These technologies may well continue to shrink the ranks of analysts because of their inherent advantages. But those analysts who can master these techniques to complement their traditional roles may not only survive, but lift their value – at least until the playing field levels – because of their new alpha-generating capabilities.

Discover the Types of Analyst Resumes

An analyst is a person who does all the investigation, examination and researches on any specific area or sector and then implements the required strategies for improved efficiency and higher productivity. These people should have strong analytical skills and also possess strong thinking capabilities. To start a career in this field, the first step is creating an effective resume that should reflect all the analytical skills of the applicant and also the relevant work experience.

There are many types of analyst resume depending on the type and scope of the job profile. Though the basic structure of all the types remain the same but the specifications and keywords used for creating each type of analyst resume. Specified keywords and other specifications should be kept in mind while writing the resume.

Here are some of the most important types of analyst resumes:

Chemical Analyst Resumes

Chemical analyst is a person who should have an eye to drug formation techniques and methods. He or she examines various techniques to get the best possible methods to verify the reliability of drugs and also determine its quality and stability. The resume of chemical analyst should also possess the same analytical skills. It should have strong keywords showing relevant work experience.

Business Analyst Resumes

Business analyst is a person who analyzes and examines all the business processes and takes care of the operations and functions. Depending on new strategies and techniques based on the research, an analyst plays an influential role in improving efficiency and productivity of any business. The resume of business analyst should also comprise skill sets that define applicant’s role as an examiner of business operations. It should also dictate the achievements and accomplishments of the applicant in the same field.

Marketing Analyst Resume

A marketing analyst is a person who analyzes and verifies price, product competition, customer strength, and economic data of various business firms. This helps any firm to take a firm decision on what to improve and where to improve. This also helps to adopt new strategies and techniques to improve business efficiency. The marketing analyst resume should be written in precise and expressive manner. It should contain work experience with relevant skills and abilities.

Systems Analyst

System analyst or computer system analyst is someone who analyzes the technical design and system requirement. He or she is also responsible for development of new software and also implement the deadlines of various projects. The system analyst resume should also explain in detail the analytical skills of the applicant in terms of computer operations and development.

To know more, check Analyst Resumes.

Productivity is Not a Bad Thing

Productivity is a great thing. I do not believe that you have to schedule every minute of your day or that you have to be in work mode 24/7. I do believe that it is important to do our jobs and do them well — whether you are an investment banker, an office manager, an artist, a stay at home parent, or a research analyst.

I read a lot of books and blogs and I have seen people on both sides of the productivity issue. Some people say “get as much done as possible.” Others have a “who cares about productivity?” or an anti-“life-hack” attitude. Of course, there is everything in between.

The dictionary defines productive in the following ways:

productive

–adjective

1. having the power of producing; generative; creative: a productive effort.

2. producing readily or abundantly; fertile: a productive vineyard.

3. causing; bringing about (usually fol. by of): conditions productive of crime and sin.

It is not a bad thing to produce, to generate, to create. Most everything we have in life was produced–the food we eat, the clothes we wear, the movies we watch, the music we listen to. I would be pretty let down if musicians stopped producing great music for me to listen to. I do not plan on being a hunter or farmer any time soon, so I appreciate the productivity of people who help produce the food that is on my table.

While we often have to go the extra mile at work, or put in more time at certain points, do not work yourself to death. Work is important–but if it kills you, what good is that? Step back for a minute if you feel overwhelmed. Take time for yourself. Relax. Have fun. Take a vacation–even if it means not leaving town, but just spending time at home with family and friends–or alone.

Once you adopt a healthy view of productivity, you will stop seeing it as the enemy. You will not feel as pressured to always be in “go!” mode or to shun the idea entirely.

What is your view of productivity and how does it impact you?

Copyright 2008, Alaia Williams. All rights reserved. No portion of this article may be reproduced without the express permission of the author.

Maximize Your Market Research With Google Trends

It doesn’t take long in the world of Internet marketing before you recognize the importance of good market research when it comes to the health and ultimate success of your business. While you can spend big money hiring people to do market research for you, or spend significant time and energy attempting to conduct it on your own, few methods are more user-friendly and effective than Google Trends.

Google is known worldwide for its useful tools, from its highly popular search engine to Gmail to a number of research and analyst tools. Google Trends is part of this family of free tools, and it tends to receive rave reviews from all users, regardless of the level of experience or type of business the user possesses.

Users of Google Trends claim it greatly improves their methods for conducting research online, which in turn helps them to be more productive and efficient in their businesses. They actually end up saving time and money as they learn about search engine trends on a global level.

How Does Google Trends Work?

Google released the tool to the public in 2004. Its purpose was to give users a method for viewing and monitoring online search results. Users can gain an understanding of how search results shift and change over a period of time. Another benefit to Google Trends is that it provides supporting information and relevant news stories that are related to the particular search term you enter. Instead of having to find the information on your own, it is all presented very neatly in an easy-to-understand format.

For example, after you plug a search term into the tool, it provides a line graph displaying time and search volume, as well as the countries, cities and areas that have searched for your specific term the most. By doing this, you can easily identify the types of products and solutions your target market is seeking. You can also learn exactly what search terms they are using, so that you have an understanding of how to best utilize your SEO tactics.

If you are interested in doing a comparison search between different terms, you can submit up to five words on the same graph by entering the terms separated by a comma. Being able to view the results for each term side-by-side is a great way to determine which words are going to be most powerful in your optimization of websites, articles, blogs and other online content you may use.

Far too many online businesses fail because they leave out the vital step of market and product research. Many who begin to use Google Trends discover that they did not know their target market as well as they thought. By using the tool to determine the best products and SEO terms, you are better able to meet your potential customers’ needs, rather than just throwing products out there hoping people will want them.

Once you witness the power of solid market research and product trending for yourself, you will likely never begin another product launch or website without incorporating them into your plan. The good news is that conducting this research doesn’t have to be difficult or even time consuming. Google Trends provides excellent search engine research with a few clicks of your mouse, helping you to propel your online business to the next level.