Practical Skills Modules
Practical Skills Modules are available only for registered Level I CFA Program candidates beginning with the February 2024 exam, Level II candidates beginning with the May 2024 exam, and Level III candidates beginning with the February 2025 exam.
Overview of Analyst Skills
In the Analyst Skills module, you will learn the skills required for success as buy-side and sell-side equity research analysts. You will explore how to conduct thorough industry research, research companies strategically, forecast accurately, identify mispricings, and make recommendations based on your work.
Analyst skills are essential for anyone pursuing a career in finance. Often, equity research analysts struggle to learn the essential elements of their role while on the job, as these skills are not often taught at university. This course has been designed with insights contributed from hundreds of successful equity research analysts in order to build or enhance your skillset.
In this module, you will explore the best practices for identifying a stock’s critical factors, generating differentiated insights, applying practical valuation techniques for more accurate price targets, mastering stock call techniques, and communicating those stock calls to entice others to act on them. You will work alongside the instructor in a step-by-step series of videos that guide you through various strategic frameworks. Knowledge check questions provide feedback throughout the program. Upon completion of this module, you will be ready to apply your skills in practice.
Key Learning Objectives for Analyst Skills
- Identify 1) your materiality threshold, 2) your investment time horizon, 3) your ability to forecast, and 4) the consensus’ ability to forecast (EPIC™ framework) for a given factor surrounding a stock.
- Generate differentiated insights (information asymmetry) for a stock’s critical factors when they improve forecast accuracy (ASPIRE™ framework).
- Create more accurate price targets using the SHARE™ framework.
- Discover how to make accurate stock recommendations using the TIER™ framework.
- Use the ENTER™ and ADViCE™ frameworks to motivate others to act on stock recommendations.
- Improve productivity by optimizing time and information management.
Key Learning Objectives by Unit
- Discover the Learner Workbook and Transformation Action Plan (TAP).
- Explore the importance of identifying critical factors.
- Practice assessing if a factor is material for a stock and then evaluate your assessment (“E” of EPIC™ framework).
- Identify if a factor is probably going to occur during the investment time horizon (“P” of EPIC™ framework).
- Identify methods to improve the forecasting of critical factors (“I” of EPIC™ framework).
- Explore the importance of ensuring consensus is poor at forecasting a factor for it to be critical (“C” of EPIC™ framework).
- Identify which potential factors for a stock meet all four elements of the EPIC™ framework.
- Evaluate an analyst’s approach to generating differentiated insights.
- Explain the importance of generating differentiated insights for a stock’s critical factors when they improve forecast accuracy.
- Identify the Assumptions that should be researched to better forecast critical factors (“A” of the ASPIRE™ framework).
- Identify Sources of insight (“S” of the ASPIRE™ framework) to create information asymmetry for a stock’s critical factors by seeking live sources of information and cultivating sources of insight.
- Prepare to approach and interview others (“P” of the ASPIRE™ framework, the ICE™ framework, and “P” of the PRACTICE™ framework).
- Explain how to best approach valuation as a senior practitioner.
- Examine the principles of stock valuation.
- Explore the limitations of multiples-based valuation methods.
- Explain the limitations of P/B, EV/Sales, EV/EBITDA and Dividend Yield valuation methods.
- Use reference class forecasting to improve valuation analysis.
- Derive a price target using a relative P/E multiple.
- Explain the pros and cons of cash flow valuation methods.
- Evaluate an analyst’s approach to stock picking.
- Explain the challenges analysts face to being successful stock pickers.
- Discover what elements to consider when identifying and forecasting a stock’s catalyst(s) (“I” of the TIER™ framework).
- Identify and forecast a stock’s catalyst(s) (“I” of the TIER™ framework).
- Ensure the ideal entry point for a stock call (“E” of the TIER™ framework) by raising awareness of biases, ensuring differentiated stock calls, and avoiding behavioral finance mind traps.
- Determine how to review your performance and theses of stock calls (“R” of the TIER™ framework).
- Explain the importance of communicating stock calls in a manner to motivate others to act.
- Use the ENTER™ framework to ensure research is expectational, novel, thorough, examinable, and revealing before communicating to others.
- Examine how an analyst communicates research that is expectational, novel, thorough, examinable, and revealing (ENTER™ framework).
- Discover how to choose the optimal communication channel for delivering stock ideas.
- Ensure the research message meets the ADViCE™ framework for communicating stock-related messages effectively.
- Use the ADViCE™ framework to communicate stock-related messages in a manner that is differentiated, validated, conclusion-oriented, easy-to-consume, and aware of other views.
- Review how analysts communicate stock-related messages using the ADViCE™ framework, and analyze how you will improve your message delivery.
- Explain why time and information management are critical to succeeding in investment management.
- Explore best practices for prioritizing time to meet your professional goals.
- Analyze and apply best practices for scheduling your time for high-value activities.
- Discover best practices for working efficiently.
- Explore best practices for maximizing productivity with Microsoft tools.
- Review best practices for time and information management to increase productivity.
Prerequisites
We recommend candidates have familiarity with the principles behind Equity Investments and Financial Statement Analysis content from the Level II CFA curriculum.