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Interview help for analyst role

krishnan (accountant) (28 Points)

14 March 2012

Hi all ,I recently completed my MBA and have around 6 months experience in the field of stock broking and am trying my luck to find a job as equity research analyst. Recently I attended an interview for the position of equity research analyst with Motilal Oswal securities and was asked:

If you have two stocks in your portfolio one loss making and another profit making .If you have to sell one of the two stocks to make an investment in another new stock (which you find more promising) which one would you sell? Would you sell the loss making stock and minimize your loss or sell the profit making stock and book the profits

Is there any Analyst who can help me with the right answer please—Thanks in advance

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14 Replies

ranga (accountant) (26 Points)
Replied 14 March 2012

I am commodity trader and generally think it’s the investor decision, if the investor asks us to sell X stock and buy Y stock, as stockbrokers we just execute the transaction and each one has his own rationale for coming to a decision which I would not question

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hari (owner) (22 Points)
Replied 15 March 2012

Originally posted by : ranga
	I am commodity trader and generally think it’s the investor decision, if the investor asks us to sell X stock and buy Y stock, as stockbrokers we just execute the transaction and each one has his own rationale for coming to a decision which I would not question

But Ranga when client asks your advice whether to sell the loss making stock and book losses and to hold the profit making stocks in anticipation of even further increase in stock value what would you advice?

veena (associate) (26 Points)
Replied 15 March 2012

I thinks it’s better to sell the profit making stock and book profits, who knows in future even that profit making stock goes for loss

sandeep (associate) (22 Points)
Replied 15 March 2012

I mentioned in the interview that it’s better to sell the loss making stock and book losses because may be in future the price of stock may even come down. So it’s better to minimize loss

CA Ankur Mittal (Assistant Manager @ Reliance Communication) (759 Points)
Replied 15 March 2012

I would say the answer to this question lies on several facts

!) why is the stock loosing Steam , is it beacause market condition or is it beacuse of Bad Financial quarter or year or is it because there some Corporate Social responsibility issue..there cud be any reason..reason cud be countless..

Again Selling the loosing stock is not an option to be takn instantly , Never enter or exit any stock with targets, Keep a Strict stop loss if its still not performing

2) Never ever keep your wealth in one stock it may be performing Now, But u need to have a diversified portfolio,

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veena (associate) (26 Points)
Replied 16 March 2012

Originally posted by : sandeep
	I mentioned in the interview that it’s better to sell the loss making stock and book losses because may be in future the price of stock may even come down. So it’s better to minimize loss

So would you suggest profit making stock to be sold or one should hold it because going by same logic even the profit making stocks price may come down

hari (owner) (22 Points)
Replied 16 March 2012

I think it’s better to sell the loss making stock and book losses and also to sell the profit making stock so that as net effect you can save the tax that has to be paid on profit booked on good stock.

krishnan (accountant) (28 Points)
Replied 16 March 2012

The interview situation it’s very tricky. If you answer by saying, sell the loss making stock and book losses, they will say, now as the stock price has come down so don’t you think it’s the right time to invest more in this stock by selling the profit making stock. So whatever you answer they will thoroughly confuse you, I am clueless about how to handle such tricky questions for which there is no single right answer and more than the answer it’s the justification for the answer that is important. Any help from analysts in this forum please.

sunil (associate) (23 Points)
Replied 16 March 2012

Hi all, it’s an interesting post from Krishnan. I am currently working as equity research analyst in Mumbai for a company called “Finvestor research” and out of my own experience agree that it’s easier to handle an investor who had invested a million based on your advice but not the interviewers who would try to confuse you. I had similar experiences in four out of the five interviews I attended ,just reading economic times, watching CNBC etc or reading books related to equity research was not of much help to me that’s when I attended a training program in Mumbai, conducted by an senior investment banker which was very helpful from the interview point.

krishnan (accountant) (28 Points)
Replied 16 March 2012

Sunil does your company currently have vacancies for equity research analysts? If you don’t mind can you please let me know how much salary they offer for an equity research analyst? What is the name of this institute? And trainer details please.

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krishnan (accountant) (28 Points)
Replied 16 March 2012

sunil (associate) (23 Points)
Replied 17 March 2012

There are currently vacancies in our firm, they hire freshers but they would prefer someone who can hit the ground running. So it’s always better to get trained not only for interview purpose but also to perform well in the job. As a fresher I am offered 7lacs p.a package. Training is conducted by Global banking training (www.globalbankingtraining.com)

krishnan (accountant) (28 Points)
Replied 19 March 2012

Thanks for the information. I checked this website; the program content looks very good. But is this a certified program? Will the certificate help me to get a job?

sunil (associate) (23 Points)
Replied 19 March 2012

It’s a certified program and the certificate is issued by “Global banking Training” .Yes the certificate is very useful in convincing your skills to the prospective employer.