What Does a Stock Analyst Do?

A stock analyst tracks the performance of publicly traded stocks examining market trends and other factors that influence stock prices. He or she may also monitor historical stock price movement with the goal of assisting his or her employer or clients in making profitable stock purchases and sales. Many stock analysts will keep track of not only one stock, but also the equities of other major players in the same industry segment, because the fortunes of these companies often have an impact on the market price of their competitors. Some stock analysts work for a single company, such as a large hedge fund, while others provide advice to a variety of clients. For clients or the firm for which he or she works, a stock analyst will typically generate financial reports about market trends or individual stocks.

A stock analyst examines a number of factors that influence stock prices at any given time. A stock analyst typically seeks to understand how fundamental market drivers may impact a stock’s value over time in addition to analyzing price fluctuations. In most cases, this type of work necessitates both mathematical and research abilities. An intuitive understanding of how the macroeconomic environment may affect the stock’s price is usually extremely beneficial in this field. Many stock analysts are well-versed in the performance of the stocks they usually follow in the past.

For example, if a major seed producer in that niche has a poor yield of starter seed, the stock price of a company that sells seeds to wheat growers may rise because the market supply has been reduced. This occurrence could be caused an unusual meteorological phenomenon. If a stock analyst is following the stock price movements of companies that make bread, he or she may conduct research in order to forecast how this will affect those companies’ stock prices.

A variety of news reports and earnings reports from companies in that industry can be compared the analyst. He or she may conclude that, despite the fact that the price of seeds has increased, which may temporarily depress stock prices for seed stock, the industry’s long-term outlook is still positive. The analyst can use that information to compare it to individual companies in that sector, looking at publicly available information on each one.

Instead of following industry stock prices, a stock analyst might concentrate on putting together a diverse stock portfolio for a client or group of investors who are clients of a hedge fund, for example. Because these investments typically span multiple industries, the analyst may recommend this strategy to those looking for a well-rounded financial portfolio. The analyst may come to the conclusion that a diverse portfolio will better serve the client because this type of investment strategy produces smaller value swings and more consistent performance.