Top 4 Lessons Learned Working as an Equity Research Analyst

The following is a guest post from Simply Safe Dividends. 

My name is Brian Bollinger, and I run the website Simply Safe Dividends.

I have enjoyed following Sabeel’s blog since I discovered it last year, and watching his passive income grow has been fun. Needless to say, I was flattered when Sabeel asked if I would be interested in writing a guest post for his blog. As I thought about what to contribute, I figured some of you might be interested in reading about the main lessons I learned during my career in the investment management industry.

Prior to starting Simply Safe Dividends, I was an equity research analyst at a multi-billion dollar investment firm that actively managed a handful of equity mutual funds. My days were spent reading through annual reports, speaking with management teams, studying the drivers of different industries, and discussing investment ideas with my colleagues. I truly enjoyed almost every aspect of the work. Each day brought a new set of information that needed to be analyzed. There was no shortage of learning opportunities and challenges, and it was exciting to impact investment decisions with millions of dollars on the line.

However, something was missing.

The deeper I got into the industry, the more I began to question the value provided by most active managers. My own investment philosophy had also evolved in a way that no longer aligned with the majority of fund managers out there. Perhaps most importantly, I believed that individual investors were being given the short end of the stick in many ways and deserved better access to data, tools, and research rooted in integrity. Ultimately, I decided to voluntarily resign from the investment management industry.

Starting Simply Safe Dividends allowed me to take on the issues identified above and help individual dividend investors save fees, make better informed decisions, and take tangible steps to get closer to their goals. Working on Simply Safe Dividends is a joy, but I wouldn’t be where I am at today if it weren’t for the lessons I learned from my time spent as an equity research analyst.

Let’s take a closer look at my top four takeaways from working in the industry during my career.

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Chatter Around the World – 151

Chatter Around the World is a curated weekly update of articles related to economics, investing, dividends and personal finance. In these weekly updates, I also capture my blog updates and news related to my portfolio holdings.


The Buyback Binge Continues

Let’s dive into the links that caught my attention this week.

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Recent Sell – The Big Reset Edition

I have broken the one rule that dividend growth investors never dream about doing and Im sure this will not be a popular post with the community. I sold part of my portfolio and took some of my money off the market! I have been antsy over the past few months and decided that for the sake of my sanity, I needed to move part of my portfolio to cash. This was the easier part of the decision. Which stocks to sell? That was much harder to decide. This post details my recent sales in the portfolio and provides my reasoning.

As most investors are aware, buying is the easy part. Its the sale: when to take the profits? or when to cut your losses and re-evaluate your investment thesis? — that is the hard part. Dividend growth investing, while I still really like the overall concept, can cloud this judgement a bit. Being “paid to wait” (dividend payments on a regular basis) is a double edged sword. There are countless articles out there which detail why this is the best thing since sliced bread, so I will not rehash the idea. But the flip side of this argument is that investors become too complacent risking a lot of their capital for very little reward.

Reason # 1 – Insanity in the Market

Image Source: Hedgeye

Image Source: Hedgeye

This market is crazy. There is no other way to put it. There are plenty more high-profile institutional investors, with far more resources than retail investors, who have been sounding the alarms. But like I have learned during the previous cycle (in the lead up to financial crisis of 2008/2009), I dont buy their arguments simply because they say so. I decided to listen and read through their reasoning (for e.g., see Jeff Gunlach’s latest presentation, and Stan Druckenmiller’s latest presentation) and looked at the data. The data doesn’t lie. And as far as my limited understanding goes, I can see why this market cannot continue its run higher, without some bloodletting.

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Chatter Around the World – 150

Chatter Around the World is a curated weekly update of articles related to economics, investing, dividends and personal finance. In these weekly updates, I also capture my blog updates and news related to my portfolio holdings.

Let’s dive into the links that caught my attention this week.

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Financial Diversification

The following is a guest post from Rudy from Smart Money Today. You can follow Rudy on Twitter @SmartMoney00.

Hi, my name is Rudy and my blog is Smart Money Today.

Sabeel and I have a similar†story; we had a hard time during the 2008 financial crisis, and we got screw from the so-called “financial experts” by paying too many fees. We realized is better invest in our financial education first and take the matter into our own hands to avoid paying “silly” fees and get better ROI (Return On Investment). But this isn’t what the article is about.

This article is about how you can use diversification to reduce your risks associated with investing. As a result, you can preserve your wealth but still be able to take advantage of the market stock high returns.

NOTE;†One thing you should know: I was born and raised in Italy, so English isn’t my native language. This is the reason why my English sometimes might sound “funny”, but I had the deep desire to help others to achieve more with their finances and English is the best language to spread my knowledge in the world.

I’m constantly working on my portfolio diversification to improve the bottom line; over the years, I went from a single digit growth to a double-digit not by taking extra risks but by diversifying my portfolio strategically.

I was reading Sabeel’s blog and found interesting his way to diversify†investments geographically, you can read his recent post; Geographical Revenue Diversification of My Holdings.

What is Diversification? Diversification†is the process†of allocating capital in a way with the goal to reduce risks.†

Well hereís the truth: investing is†risky.

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