Letters to a Young Analyst: A Book Review

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Letters to a Young Analyst: A Book Review
Letters to a Young Analyst
Letters to a Young Analyst

 Letters to a Young Analyst: Book Review – By David Merkel, CFA of Aleph Blog

We need to spend more time thinking about the big picture issues in investing.  Why do we do what we do?  How do we structure our firm to get the best out of the talented people that we employ?  Where do we really have a sustainable competitive advantage?

This slim volume has much advice in these areas, but focuses on how young analysts can make themselves valuable to the firms that they work for.

In addition to the advice of Tom Brakke, you get the advice of 12+ analysts, many of whom I respect, explaining the “nuts and bolts” of good analysis to young analysts.  I was on of the twelve, and judging from the other comments, there are many who remember what it was like to be young and grasping for help.  What would we have done differently, given our acquired knowledge?  This book is meant to give young and amateur investors a leg up.

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The end of the book gives a wealth of resources on how the young analyst can learn.  In this era, it’s almost more of a question of excluding pervasive bad content.

This is a great book for young analysts, and serious amateur stockpickers.  If you are interested, you canbuy it here.

Unlike most of my book reviews, there is no way for me to profit off of this one, not that I ever profit much off of my book reviews.  If you buy it, I encourage you to study it, because many older investors have given their best to aid young analysts.

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David J. Merkel, CFA, FSA — 2010-present, I am working on setting up my own equity asset management shop, tentatively called Aleph Investments. It is possible that I might do a joint venture with someone else if we can do more together than separately. From 2008-2010, I was the Chief Economist and Director of Research of Finacorp Securities. I did a many things for Finacorp, mainly research and analysis on a wide variety of fixed income and equity securities, and trading strategies. Until 2007, I was a senior investment analyst at Hovde Capital, responsible for analysis and valuation of investment opportunities for the FIP funds, particularly of companies in the insurance industry. I also managed the internal profit sharing and charitable endowment monies of the firm. From 2003-2007, I was a leading commentator at the investment website RealMoney.com. Back in 2003, after several years of correspondence, James Cramer invited me to write for the site, and I wrote for RealMoney on equity and bond portfolio management, macroeconomics, derivatives, quantitative strategies, insurance issues, corporate governance, etc. My specialty is looking at the interlinkages in the markets in order to understand individual markets better. I no longer contribute to RealMoney; I scaled it back because my work duties have gotten larger, and I began this blog to develop a distinct voice with a wider distribution. After three-plus year of operation, I believe I have achieved that. Prior to joining Hovde in 2003, I managed corporate bonds for Dwight Asset Management. In 1998, I joined the Mount Washington Investment Group as the Mortgage Bond and Asset Liability manager after working with Provident Mutual, AIG and Pacific Standard Life. My background as a life actuary has given me a different perspective on investing. How do you earn money without taking undue risk? How do you convey ideas about investing while showing a proper level of uncertainty on the likelihood of success? How do the various markets fit together, telling us us a broader story than any single piece? These are the themes that I will deal with in this blog. I hold bachelor’s and master’s degrees from Johns Hopkins University. In my spare time, I take care of our eight children with my wonderful wife Ruth.

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