Seven Skills Every Fundamental Analyst Needs to Acquire
To become a fundamental analyst may be easy but to be a well-versed one requires some essential skills to be acquired. Seven of them!
By Amr Hussein Elalfy, MBA, CFA
11/5/18 1:07 PM
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To become a fundamental analyst (sometimes known as a financial analyst), one may take the long route by going to college for four years, doing a couple of internships along the way, before landing a junior analyst job after graduation. This should take between 4-5 years at best. A shorter route would be to become that fundamental analyst while at college!
Most students know by the end of their freshman year in college whether finance is the field they are looking forward to. For me, my decision to go for a finance and investment major was originally based on the idea that accounting is not the route I wanted to take, so I went for the next best thing – in my opinion. I went up the financial analysis ladder by going for financial statements analysis (finance) rather than financial statements preparation (accounting). And guess what?! It turns out that I still had to take accounting classes to be where I am today. Luckily, I only needed to take two accounting classes (financial and managerial accounting), which was good enough for me to build upon within the finance field.
But what does it take for a fundamental analyst to become an expert in his or her field? I list below the three skills that a fundamental analyst needs to acquire, which I sum as “ANALYST”.
1. A … Analytical: Being able to divide matters into their elemental parts or basic principles in order to better understand the issues, be it financial or operational KPIs.
2. N … Nimble: Being mentally quick to be able to process new information fast enough to react to breaking news.
3. A … Attentive: Giving care and attention to details as well as the bigger picture.
4. L … Levelheaded: Having common sense and sound judgment. This helps the analyst keep an eye on all possible scenarios regardless of his or her opinion.
5. Y … Yielding: Being flexible enough to process new information as they become available and being brave enough to change a stance when needed.
6. S … Scrupulous: Exhibiting extreme care and great effort.
7. T … Tactical: Being able to turn all learned information into implementation be it a research report or a valuation model. “Tactics” is defined as “the study of the most effective ways of securing objectives set by strategy, as in deploying and directing troops, ships, and aircraft against an enemy.”
At the end of the day, to be a successful fundamental analyst in the market, he or she must be stepping into the battlefield with enough ammunition. In my opinion, acquiring the above seven skills is imperative and can surely take time to build, but the experience will polish those skills even faster.