Learning how to PITCH stocks

[hnsc]

As a Computer Science major, I was advised to do some personal studying and follow the market. This would help me become a little more versed and aware of finance in general, which I totally agree.

I would like to make it a habit to pitch stocks either in my own journal or on a blog every week after I do some studying. But I have no background in finance besides watching CNBC whenever the TV is on. Do you think watching Cramer would be helpful? Here are some general questions:

What book(s) should I look into to learn how to analyze stocks/market for my intended purposes?

 

[bullion]

C... F... A...

 

[hnsc]

Thank you bullion. I'll act on your advice immediately :D

 

[daleholborow]

Are you trying to learn how to value stocks, i.e. estimating their intrinsic value in some sense, or pitch stocks, i.e. become a salesman?

 

[DMD]

As a Computer Science major, I was advised to do some personal studying and follow the market. This would help me become a little more versed and aware of finance in general, which I totally agree.

I would like to make it a habit to pitch stocks either in my own journal or on a blog every week after I do some studying. But I have no background in finance besides watching CNBC whenever the TV is on. Do you think watching Cramer would be helpful? Here are some general questions:

What book(s) should I look into to learn how to analyze stocks/market for my intended purposes?

Watching Cramer will give you some good intuition when it comes to pitching stocks, however, take anything you watch on TV with a grain of salt. Never buy a stock because Cramer says its a buy, or because anyone else does. <-- that you can learn in Reminiscences of a Stock Operator.

If you want to learn how to analyze a company, read The Intelligent Investor and Security Analysis. If you want to learn to trade, read Market Wizards I & II.

You can pick up the basics of comparable multiples and DCF on the internet. If you want something concrete, buy an MBA finance textbook.

The most important part of a stock pitch is not your valuation, it's just how well you know the business you're pitching. For example, what is that company's economic moat?

Great company at a fair value. Emphasis should always be on great company.

 

[hnsc]

Are you trying to learn how to value stocks, i.e. estimating their intrinsic value in some sense, or pitch stocks, i.e. become a salesman?

That's the thing - I am NOT exactly sure as to what I mean by pitching stocks. But if an employer asks you to pitch a stock, is he asking what you believe to be a good long-term investment, or something that will be worth-while in the short term?

Watching Cramer will give you some good intuition when it comes to pitching stocks, however, take anything you watch on TV with a grain of salt. Never buy a stock because Cramer says its a buy, or because anyone else does. <-- that you can learn in Reminiscences of a Stock Operator.

If you want to learn how to analyze a company, read The Intelligent Investor and Security Analysis. If you want to learn to trade, read Market Wizards I & II.

Thanks a lot.

 

[daleholborow]

Short answer is, if you don't know what you're asking, I'm hard pressed to know how to help answer you. "If an employer asked you to pitch a stock", then you're working for a broker, who doesnt care what the stock is really worth, so long as you unload it on some sucker and pick up your commissions. You wouldn't learn how to be a better mechanical engineer by working as a used car salesman, so what makes you think watching Cramer bang away on his cheap sound effects will make you a better financial engineer?

 

[daleholborow]

If you want to know how to value stocks, read these books: http://www.rogermontgomery.com/ and in the same vein but I think not as good, http://www.fwallstreet.com/.

 

[bullion]

aight, so people like getting really complicated with their answers

there's two types of pitching. 1) your audience thinks you know what you're talking about, or 2) your audience thinks you're completely out of your mind.

If your audience is not sophisticated (like the generic public / TV), then you can really tell them to buy anything. They will buy anything if their grandma's best friend's cousin's son who "works on Wall Street" says so. You don't need logic. You don't need education. You need to support the same sport teams that your clients do and buy them a lot of drinks. Your relationship and likability is a lot more important than what you say.

If your audience is very sophisticated (well educated / seasoned managers), then you need to know the industry standards for valuations. You can pick up any accounting / valuation books you want. There are only three valuation schemes (DCF, trading comp, and recent transactions) and you can find them on the web. You need to know what people mean by "cheap," and which multiple to use for a given industry / company at certain stages. If your audience is big on technical analysis, you'll read those too. Basically, you learn whatever your client believes in (fundamental / technical / quantitative / groundhogs), and adjust your pitch to fit into his belief system.

Now... obviously, you want to be recognized for your hard work. Writing "I read a book" on your resume probably isn't gonna cut it. CFA is one (of many) industry standard that investors are familiar with. Almost everyone has it (or tries to get one these days), so people can take comfort knowing that there was at least some check on your grasp of the concepts. It's not gonna land you a job, but it covers the basics of what investors expect from a financial professional.

 

[JulianT]

I found the best way to do that is to simply do it. Try to get your hands on a broker report, preferably an initiation of coverage report on a company. Then try to find a company you want to do work on. I would suggest a smaller company, because you could actually try to model it. Under 2billion is generally easier, industry dependent. Then just read the 10k, the ipo prospectus and hopefully some industry reports. Much of this information is readily available online. Your library likely has access to some databases. Try to write your own report and think why you would want to buy or sell the company.

As for books, I would start with One Up on Wall Street by Peter Lynch as an intro book. To learn valuation damodaran on valuation is the bible. Ben graham is also required reading for the more value approach. Finally Fisher' Common Stock Uncommon Profit is great book if you are more a growth investor.

As previously mentioned the CFA is essentially a must these days, but everyone has it. What will set you apart in an interview is the ability to say, "I cover 4 companies the in the energy services subsector. Here is the latest report I wrote on Natural Gas Services, Would you like to hear about them?"

 

[TeeKay]

if an employer asks you to pitch a stock, they want you to tell them about a stock you think is worth buying or selling right now.