Elizabeth Sisson

Ms. Davis

English III Honors

22 February 2018

Stock and Bond Analyst

Over the course of history, the stock market has constantly developed into the modern

investment industry seen today. Market crashes and recessions in the past have shaped the stock

market and economy and can provide valuable information to prevent them in the future.

Important factors to consider with stocks and bonds includes risk, liquidity, market fluctuations,

and interest. Jobs within the stock market range highly depend on the work of a stock and bond

analysts. A career as a stock and bond analyst requires a strong education, knowledge of

previous stock market crashes and market fluctuations, and the ability to differentiate risky and

safe investments.

An important factor involving a stock and bond analyst includes how they help

companies through their work. A stock and bond analyst works for a company to review

potential investment opportunities and analyze the amount of risk it has. This helps companies

decide whether they want to invest in the deals. Analysts have to consider the reliability of the

stock or bond, the quality of the investment, and the price. These factors ensure the company

gets the best use out of their money and invest in something worthwhile (Alm). An analyst does

this through thorough research of the deals before deciding whether or not to invest. A stock and

bond analyst needs to know and consider every aspect of the market (Alm). Reviewing deals

fully gives analysts more information about the investment to help them decide if loaning money
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seems worth it. Staying up to date on current events remains a highly important task for analyst

to maintain. One must stay aware of any possible news that can fluctuate the market (Alm).

Stocks and bond analysts must understand every element of the stock market to succeed in their

job.

An analyst needs to know the basics of stocks as it proves significant in the job. A stock,

or share, represents a partial ownership of a company that supplies it with more financial value.

A company sells its shares to the public as a way to raise money (Bhavish). These shares not

only help the company, but can give investors the opportunity to receive dividend yields, a

portion of the profits the company makes. When a company makes more profits, the value of its

stock increases and the potential for higher dividends. However, a substantial factor needs

consideration when investing in a stock: risk. Although stocks can result in investors making

positive returns, it can also leave investors with losses (Rosen). When the value of a company’s

stock decreases, the company and the investor lose money. When losing money in a stock

investment, companies must start making profits again in order for the investor to gain their

money back. The importance of analyzing the stock before investing in it contributes to the

safety of their investment.

The liquidity of a stock plays an important factor to consider as an analyst when investing

money into the market. Stocks have a high liquidity, meaning an investor can easily pull their

money out of a stock at any time (Chang). This allows investors the opportunity to quickly take

their money in and out of a stock when needed. The liquidity of stocks makes it safer to pull

money out of the market when prices start to drop (Chang). Keeping money in the market over

time proves safer than buying and selling frequently. Stocks, one of the many forms of
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investments opportunities, along with bonds, provide a unique resource to increase monetary

gain.

In addition to stocks, bonds plays an important role in the portfolio of many investors. A

bond represents a type of loan given to a company or government that gets paid back in full with

interest (Rosen). The longer a company uses an investor’s money, the more interest it owes. If a

company declares bankruptcy, the invested money gets paid back as much as possible to the

investor. Two main types of bonds exist: municipal and corporate. Municipal bonds, bonds from

the government, help to fund operations on a local or national scale (Gayer et al. 4). One can pay

off interest earned over time through tax exemptions, making this form of investment very

popular. Corporate bonds, bonds issued by corporations, help companies to expand industry and

grow as a whole. A bond’s liquidity depends on the bond, and often times has a lower liquidity

than stocks because the company needs time to earn back the money it borrowed in order to

repay the investor (Lee and Cho). The age and size of the bond determines how easily an

investor can earn back their money. The maturity of a bond determines when an investor can get

their money back, unless the bond trades in the open market. Interest rates directly correlate to

the expense of a bond (Lee and Cho). If interest rates fall, the price of bonds increases, and vice

versa. Once interest rates increase, the best time to purchase a bond becomes available to the

investor.

A stock and bond analyst needs to have knowledge of previous stock market crashes to

better understand market fluctuations. The stock market has had significant crashes in the past.

The spontaneous decrease in stock prices, known as a stock market crash, results in the loss of

invested money (Farmer). Factors contributing to market crashes include a weak economy, a
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catastrophic event, and/or public panic. The results of a crash can leave people unemployed and

in debt. After a market crash, the country goes through a recession, a decline in economic

productivity (Farmer). During this time, the country has to rebuild its economy and restore the

effects. Major stock market crashes have periodically occured in the past, devastating America’s

economy.

The Great Depression plays a major role in the United States stock market history and an

analyst must know the effects and how to combat such a crisis in the future. The Great

Depression exhibited a severe economic crisis causing millions of people to lose their jobs and

money. In October of 1929, the stock market crash caused massive effects all over the globe.

Investors sustained deep losses in the market causing unemployment rates to skyrocket and

salaries to cut in half (Farmer). Corporate bonds also had a high default rate. The intensity of the

crash lasted days, losing millions of dollars each day. On October 28, 1929 - known as Black

Thursday - the first wave of loss occurred when the United States market traded 13 million

shares. The following days lost even more money in the market, especially the following

Tuesday, trading 16 million shares (Farmer). Popular banks, such as J.P. Morgan had large

amounts of money invested in the stock market, losing clients hard earned savings. The revival

of the economy did not have an easy solution, however, war helped shorten the recovery period.

Although the Great Depression devastated America, World War II helped stabilize the economy

and restore the stock market. This knowledge provides a substantial understanding of how the

market fluctuates and stabilizes.

World War II ended the Great Depression by creating jobs, reducing government

spending, and increasing Gross Domestic Product (GDP). Military jobs increased family income
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and created more jobs in factories (Wandrei). Women started performing jobs men used to do

after they went to fight in the war, allowing industries to continue production. World War II

brought all government focus to war, leading to less money spent on other aspects. The war

became the most funded aspect in the United States for almost four years (Wandrei). GDP

increased during World War II because of the need for weapons, uniforms, and food. High

demand for goods presented itself in the effort to supply the country for war. The money saved

during war helped the growth of businesses and corporations, reviving the Stock Market after the

crash. World War II helped the economy get back on its feet and start thriving again.

Analysts require knowledge of a recession, because of the significant role it plays within

the markets. Understanding ressessions allows an analyst to know the impact on the markets and

how to combat them. The recession of 2008 resulted in a substantial decrease in the United

States economy and stock market. Real estate prices severely collapsed and in an effort to

address the problem in a timely manner, the government poured large amounts of money into the

real estate bond market to prevent public panic (Wandrei). Although this seemed like a plausible

fix, the massive flow of money into the market all at once caused interest rates to decrease. This

caused the prices of popular commodities, such as oil, to drastically decrease. After the

recession, stock prices plummeted and economic productivity slowed. Former President Barack

Obama passed a number of programs including the Economic Stabilization Act and

Reinvestment Act to prevent public panic and reduce the risk of future recessions (Wandrei).

These programs, along with the many others passed, made the market less risky and slowly

helped the economy grow again. In order to prep for possible changes in the market, analysts

needs to know of any new laws passed. Over the next several years, the United States would
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naturally restore its economy. Since the recession of 2008, America’s economy has seen

considerable growth, hitting a record high in 2017.

Current events have a great impact on the stock market that every analyst should know.

After the election of President Donald Trump in November of 2016, the stock market has

experienced significant growth. Presidential elections play a big role in affecting the market

when new policies form. Trump’s restrictive trade policy and fiscal policy caused stocks to soar.

This resulted in an increase in jobs, wages, and exports, and led congress to cut taxes (Petruno).

These factors not only benefit United States citizens, but positively impact almost all American

stocks, causing them to grow. Major stocks, such as Bank of America, have seen exponential

growth. In fact, “Profits rose by 14% in 2016, and analysts on average expect a 16% gain...,”

(Petruno). Stocks started increasing the day after Donald Trump’s election into office, and after

only three weeks, the Dow Jones Industrial Average (the average price of the 30 largest U.S.

companies’ stock traded on both the New York stock exchange and the NASDAQ) rose 800

points (Lim). Politics has a great influence in the stock market that every analyst should stay up

to date on the stock market fluctuations.

When investing in stocks, an analyst must remain aware of the potential risks. With the

chance to gain money, comes the chance to lose it. However, risky stocks tend to pay higher

returns in a short period of time while safer stocks have less growth (Rosen). Large company’s

stock have the security to protect the investor from large money losses, making it more safe with

less reward. Stocks without security have more volatility leaving the risk high, but the potential

reward greater. Bonds present a much safer investment choice over stocks because it almost

guarantees one’s money back with an added interest (Rosen). Despite their safety, the monetary
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gain of bonds, however, does not beat that of stocks over time. The decision to put money into

risky or safe options depends on the age of the investor.

Studies have proven that age presents itself as a factor that directly contributes to where

an investor will most likely put their money. This applies to stock and bond analysts because

their age will change the way they view a potential investment opportunity. An older person

preparing for retirement proves more likely to put their money into safer investments, such as

bonds or steady stocks (Rosen). A retired person needs to protect their money without the risk of

losing it due to no longer having an income salary. This will provide the older person with a

steady increase rather than a potential decrease in money. A young person right out of college

has less money to risk, and proves more likely to invest in risky stocks for the potential of more

rewards (Rosen). A high reward has more intriguing aspects to a younger person than an older

person. A young person has their whole life to regain any money lost through the market while

an elderly person does not. This provides companies with better insight into what age group of

an analyst they would prefer to hire. Over time, age changes the way people choose to invest

their money in the stock and bond markets.

Wall Street, the home of stock exchange, proves importance in the job of an analyst. The

New York Stock Exchange, a nationwide trading of stock, takes place on Wall Street in New

York City. Wall Street has acted as the main location of trading items for over four centuries

(Furgang 8). There, people traded animals, crops, and other goods which shaped Wall Street into

a modern stock trading street. Today, Wall Street has become the home of stock trading, the

buying and selling of stocks, and trades both national and international stock. The New York

Stock Exchange trades more stock than any other exchanging location (Furgang). Wall Street has
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many financial workers to trade stock and help the market grow. The trading that occurs in the

New York Stock Exchange greatly impacts the fluctuation of stock prices. Wall Street plays a

very important part in the stock market and requires stability for stock prices to remain

consistent, meaning if something happens on Wall Street, the whole market would show

consequences.

Becoming a investment analyst requires a thorough education and an appropriate major.

To become an analyst, one must have the minimum education requirement: a bachelor’s degree.

However, if one wanted to advance in job positions, a masters degree would prove helpful.

Majors that pair well in the stock and bond market include accounting, finance, economics, or a

business major (“Summary”). Completing courses such as management, accounting, finance,

marketing, and investments in college will provide a well rounded view of the market. The

stronger the education, the better one will do, not only in a job within the market, but investing

on one’s own as well.

Business schools all over the country accommodate the majors needed to become a

market analyst. One should consider applying to universities with highly esteemed business

colleges. Duke University in Durham North Carolina has one of the best business programs in

North Carolina. Duke’s Fuqua School of Business offers opportunities for students to work

alongside companies and intern with people of their choice in career (“Duke University”). By

working closely with professors and collaborating with them on projects, students interested in

becoming a stock and bond analyst have opportunities others might not receive at smaller

schools. Duke accepts ten percent of its applicants, with an average SAT score of 1540 and ACT
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score of 33. Duke, along with many other schools, provides a great way to prepare students for

stock and bond analysis in the real world.

The University of South Carolina, another well known business college on the east coast,

has the Darla Moore School of Business: the largest business school near Charlotte, North

Carolina. The school has one of the best International business programs in South Carolina.

Although this University’s programs does not compare to Duke’s competitivity, it has programs

just as intricate. In fact, the college recently built a brand new business school, giving their

students a creative learning environment. The University has an acceptance rate of fifty-nine

percent and an average SAT score of 1270 and ACT score of 28 (“University of South Carolina

at”). University of South Carolina helps their students receive internship positions with

companies to help advance their knowledge in a hands on manner. Regardless of the college one

attends, hard work and networking can guide him or her to become a successful stock and bond

analyst.

An early experience in the stock and bond market can provide beneficial exposure for

future investment analysts. Some colleges allow students to invest real money into stocks or

bonds alongside their professors and the monetary gain goes to the school. Appalachian State

University’s Bowden Investment Group at Walker College gives students the opportunity to

invest while still attending the University (“Appalachian State University”). This provides a

great way for students to make networking contact with companies that they might consider

working for someday and gives them a head start on the work they will do in their future careers.

The Bowden Investment Group applies the written knowledge learned in class to the real work

force through this unique investment opportunity (“Appalachian State University”). Not only
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does the program teach students to safely invest their money, but it also gives them experience

that will help them in their future career as a analyst. Programs with investment opportunities

such as these provide students with familiarity to the stocks and bonds markets before they enter

employment.

The market provides a variety of careers that work alongside a stock and bond analyst. A

stockbroker buys and sells stocks for companies or clients to guide them through investments to

increase their monetary output (Cohen). Stock traders buys and sells stocks and bonds for a client

or company. Financial advisors guide people in what they should invest in based on their

financial situation and if they want risky or safe investments (Cohen). These different careers

pair well together for a company to lessen the chance of monetary loss and increase the chance

of gain.

Companies hire stock and bond analysts to review investment opportunities and decide

where they should invest their funds. Analysts play a big role in the company because whatever

they decide to invest in has the companies name on it which could not only leave them with a

hurt reputation if it invested in a faulty deal, but it could also lose huge amounts of money

(Cohen). Analysts must achieve the main goal of investing: to gain money. Banks, such as Wells

Fargo, have many stock and bond analysts from all around the country to help them endorse

different projects (Alm). Banks must make the right investment decisions because the money

invested comes from their clients who trust them to grow their funds. However, if the bank

invests in risky deals and loses money, people will likely put their money elsewhere. Banks and

other companies trust stock and bond analysts to recommend deals that deem safe in the public

eye and has the best gain in the end.

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Stock and bond analysts play a crucial role for banks and companies to invest their

money into something worthwhile. A strongly educated person with a passion for stocks and

bonds can become a successful analyst for a company big or small with hard work. Stock market

crashes, recessions, and fluctuations need recognition when dealing with investments.

Consideration of current events and the effect on prices within the market proves important when

investing in a deal. Stock and bond analysts will continue to play a huge role in the stock market

and help companies achieve safe investments.

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Work Cited

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