Best Equity Research Books
Equity research has remained an area of great interest for investors and analysts alike, and much has been written about what should and should not guide an investor in his or her decisions. While the perception of an average investor toward the markets might keep changing with every bear and bull run, but the significance of equity research remains largely undisputed. It is true that this field has undergone a sea change in the last few decades; however, a number of age-old fundamental concepts remain equally valid to date. Here, we have prepared a highly recommended list of equity research books that could be of great use for investors as well as aspiring equity research analysts.
#1 – Best Practices for Equity Research Analysts:
Essentials for Buy-Side and Sell-Side Analysts
by James Valentine
Review:
An indispensable guide for aspiring equity research analysts that discusses the fundamentals and helps a beginner successfully navigate the complex web of concepts and methodologies employed in the field. Drawing on his decades of experience, the author shares a wealth of information on how to succeed as an equity research analyst. Among other things, the author delves at length on methods identifying critical factors and information sources that can help with better forecasting, advanced valuation and stock-picking techniques, and how to address ethical concerns in the professional practice. A highly recommended read by experts.
Best Takeaway:
The unofficial manual for equity research analysts that covers all the five primary areas of equity research and offers invaluable tips to make it a success in the profession. Best suited for those planning to take up equity research as a career or looking to understand the role of an equity research analyst.
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#2 – Equity Research for the Technology Investor:
Value Investing in Technology Stocks
by Sundeep Bajikar
Review:
This work is specifically meant for those interested in exploring investment opportunities in the technology sector. The author tackles the complex subject in a systematic manner, beginning with an overview of the financial services industry along with the behaviour of market participants, which plays a key role in making investment decisions. It offers a practical exposition of value investing with a focus on technology stocks. Although it narrows down the scope of this work but also brings to light several details which might be lost otherwise in a work of generic nature.
Best Takeaway:
A valuable guide to understanding technology stocks, especially for long-term investors who might relate better with value investing as compared to traders. A recommended read for investors, analysts or students interested in understanding the practical application of investing concepts.
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#3 – The Intelligent Investor:
The Definitive Book on Value Investing. A Book of Practical Counsel
by Benjamin Graham (Author), Jason Zweig (Author), Warren E. Buffett (Collaborator)
Review:
Acclaimed as the Bible of value investing, this timeless classic has been read by millions across the world and praised by experts and novices alike for the level of clarity and depth of concepts presented in this work. Graham deals with the essentials for developing a long-term investment strategy to achieve your financial objectives while avoiding common mistakes made by investors. Originally published in 1949, the current edition includes updated commentary by Jason Zweig, senior editor of Money, which brings added relevance to the text and helps readers understand how to apply Graham’s principles in today’s markets to achieve the desired outcome. A must-read for anyone interested in value investing.
Best Takeaway:
Written by the father of value investing, this work focuses on long-term investment strategies to become a successful investor. One of the few classic texts which have stood the test of time successfully and the investment concepts enumerated still hold good in today’s markets. Not really meant for day traders and short-term investors.
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#4 – Security Analysis
by Benjamin Graham (Author), David Dodd (Author)
Review:
Bringing together the genius of Benjamin Graham and David Dodd, this repository of knowledge reveals the time-tested classical approach developed by them for identifying value investments. No doubt it’s a cult classic with more than a million copies sold in its 60-plus decades of existence, but the million-dollar question is that Do the value investing techniques explained in there still hold true? And the answer is a resounding YES. The kind of success achieved by value investors like Warren Buffett, John Neff, and Michael Price should serve as proof enough for the same, all of whom swear by this classic. Written barely five years after the Great Depression of 1929, this work was originally intended to help investors see through the worst of times without losing fortunes, and this is exactly what it has been doing ever since.
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Best Takeaway:
The most definitive guide on value investing composed in the 1930s and continues to remain a veritable source of information on time-tested principles of value investing. What sets this edition apart is that it intends to be a reproduction of the original classic published first in 1934, including every word penned down by the masters of value investing without any later alterations. A true collectible for every investor.
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#5 – Equity Research and Valuations
by Dun &Bradstreet
Review:
Excellent work on securities evaluation detailing technical aspects of equity research in a highly accessible language. It goes without saying that valuation holds the key to making critical investment decisions, and the author expounds an extremely reliable and scientific methodology to arrive at a balanced valuation in this work to help the analyst as well as an investor. Beginning with the macro-economic factors, the author goes ahead to explain the tools of industry-level analysis before focusing on company analysis and makes use of several valuation models to arrive at the most logical outcome. A must-read for any avid investor.
Best Takeaway:
Lays down a solid foundation for making stock valuations grounded in realistic industry and company-level analysis for making critical investment decisions. An excellent overview of valuation analysis focused on its real-world application.
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#6 – The Investment Checklist: The Art of In-Depth Research
by Michael Shearn
Review:
An acclaimed work on systematic investing that can help you avoid some of the common mistakes committed while making investments. The author adopts an easy-to-follow approach and provides a number of checklists to help readers identify what they are missing out on. Interestingly, the author offers a number of real-world examples of how to apply the principles of research enumerated here, enhancing its value for investors. Skillfully utilizing key factors, the author analyzes companies and evaluates their future growth potential while explaining how anyone can do the same with a little effort.
Best Takeaway:
It offers invaluable help and practical advice on conducting equity research without breaking a sweat. This work can help readers develop an understanding and interest in studying companies instead of stocks and make balanced investment choices.
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#7 – Principles of Quantitative Equity Investing:
A Complete Guide to Creating, Evaluating, and Implementing Trading Strategies 1st Edition
by Sugata Ray
Review:
A complete nuts and bolts guide to quantitative investing in equities, designed to help investors and professionals alike. The author provides a wide range of information and resources on portfolio rebalancing, market timing, benchmarks, and stock screening and demonstrates each of the techniques with Equities Lab software. It might be of interest to note that this book comes with 20 weeks of free access to the Equities Lab. Equipped with the right kind of knowledge, readers can make good use of this software to develop quantitative strategies suited to specific investment objectives and backtest their efficacy against historical data.
Best Takeaway:
An excellent resource on quantitative investing to help traders develop a personalized set of rules and trading strategies to achieve their goals. Adding to its practical value, comprehensive information on technical aspects of investing contained in the text can be put to use with the help of Equities Lab software.
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#8 – Advanced Equity Derivatives: Volatility and Correlation
by Sébastien Bossu.
Review:
A highly technical manual on pricing and hedging of equity exotic derivatives for options traders, quantitative analysts, and sophisticated investors. The author deals extensively with advanced concepts of option pricing based on the Black-Scholes model and its extensions while sharing his own and other experts in the field. Some of the key topics covered include implied volatility surface models, stochastic volatility and correlation models, volatility derivatives, and correlation trading. A highly recommended read for those versed in basic equity derivatives and acquainted with advanced mathematical modeling.
Best Takeaway:
A detailed exposition on financial modeling for accurate pricing and hedging of exotic equity instruments with special focus on the Black-Scholes model for the purpose. Recommended for students and professionals with a flair for advanced mathematics and grasp of basic equity derivatives.
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#9 – Equity Asset Valuation Book and Workbook Set
by Jerald E. Pinto
Review:
A comprehensive work on valuation theory and practice that introduces readers to the concept of equity valuation and various assessment methods in vogue. A highly systematic approach is adopted while delineating the valuation process that makes it easier to understand and acquire knowledge of various valuation methods in practice. Some of the key topics covered in this volume include Markowitz and Sharpe’s modern portfolio theory and Graham and Dodd’s valuation concepts, even as the author does not shy away from discussing the adoption of multiple approaches to arrive at a balanced valuation. Various aspects of equity valuation are explored while focusing on industry-company analysis, which plays a key role in the entire process. Published with the CFA, this work is a perfect supplementary text for the Level 3 CFA certification Program.
Best Takeaway:
An essential read for students of the Level 3 CFA certification program, along with anyone interested in acquiring a clear-cut understanding of equity valuation concepts. Taking it a step ahead, this work focuses on the practical application of these concepts while elaborating on the valuation process and offers lots of additional practice resources for the readers.
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#10 – How Markets Really Work:
Quantitative Guide to Stock Market Behavior (Bloomberg Financial)
by Larry Connors (Author), Cesar Alvarez (Contributor), &1 More
Review:
A realistic exposition on stock market behaviour based on original research on historical market data for the past couple of decades. The author adopts an incisive analytical approach to study markets and unravel novel information to question commonly accepted ideas about historical volatility, momentum, new highs, and lows, put/call ratios, and other aspects. What emerges is a bold view on markets functioning as, equipped with insightful data, the author demonstrates how markets behave much the same way as they did years ago, and with the right kind of information, anyone can make wise investment choices and decisions. It is shown how it can sometimes pay to be a contrarian and not be bound by conventional wisdom while making sure you understand the markets well enough.
Best Takeaway:
An unconventional read on stock market behaviour which presents an analysis of past historical data to contradict much of common market wisdom. Readers are presented with novel information to help understand markets better and make investment decisions based on realistic assumptions.
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#11 – Unholy Grails – A New Road to Wealth
by Nick Radge (Author)
Review:
A bold, renewed look at the way markets work and how investors lose money by sticking to the herd mentality. Nick dares to break the mold of conventional thinking and presents a no-holds-barred approach to making the right moves at the right time and succeeds where most others merely remain, mute spectators, as things go awry. Going beyond the old buy and hold strategy, he focuses on momentum investing to show how you can ride a stock in a short-term uptrend with a strategy built around the fundamental idea that a stock price in motion tends to stay in motion. He analyzes and experiments with a number of investment strategies to help readers understand how to choose a strategy that suits their needs and to stop blindly following investment advice.
Best Takeaway:
Presents a fresh perspective on investing that dares to question the traditional wisdom and helps investors develop a personalized investment strategy. An excellent read on how average investors can make use of momentum investing and other little-used techniques to achieve their goals.
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