5 ms·

Ask HN: Any recommended resources to learn market analysis?

162 points by febin 8y ago

3pt14159 8y ago
I'd recommend going through a good university's economics textbook and doing all the exercises. It's much easier to beat the market by fundamentals than by technical analysis, though a knowledge of both are important.
jashmenn 8y ago
Yes - The Art and Science of Technical Analysis by Adam Grimes is fantastic. Typically these kinds of books take one of two extremes: 1. Markets are psychology and TA patterns will unlock profits OR 2. Markets are mathematics and algorithms will unlock profits Books in #1 will tell you all about Ichimoku clouds, fibonacci levels, fractal patterns, and how to read tea leaves. Books in #2 tend to ignore the (real) psychological aspects of trading and don't give you much edge beyond a random walk. Grimes book holds a special place in this dynamic: He discusses price action as psychology, but applies statistical tests to common trader folklore. As a programmer and beginning trader/quant, Grimes book was exactly what I was looking for.
- saosebastiao 8y ago
  I've skimmed through Grimes' book a little and liked what I saw. I've independently taken a similar approach to TA and it has mostly worked out well for me. My personal take on TA is that Markets are psychology and TA is a slowly evolved form of feature engineering that has been finely tuned to be used by the most advanced visual pattern recognition algorithm we have, our brains. Many of these features can be tested and proven statistically, but they require additional feature engineering work to convert them from their visual pattern recognition purpose into something more suited to statistical inference. And just like any form of feature engineering, a lot of it doesn't work, but when you find what does work, it's pretty awesome.
whitepoplar 8y ago
I'd steer clear of it. Market analysis doesn't work on a risk-adjusted basis. I'd recommend reading any of William Bernstein's books for a good intro to passive, indexed investing.
- Rafuino 8y ago
  I'm guessing OP is asking about market analysis in terms of evaluating whether a business idea is good (or not), not market analysis for investing. E.g. what is the market for X product (units and revenue), who are the competitors, what is the profitability X product can achieve if it meets its goals, etc., etc.
  - whitepoplar 8y ago
    Ah, okay, my bad then.
  - sanderjd 8y ago
    Yes please! Even if that's not what the OP was asking about, it's what I'm interested in and why I clicked on this link, so I'm hoping there are some answers to that question (which I don't think has been answered here yet).
  - appleiigs 8y ago
    yeah OP is not clear. When a finance person sees market analysis, it’s a specific thing: evaluating whether financial market pricing is correct or not.
throwaway122222 8y ago
are you referring to trading or are you referring to "market research"
- elliotlarson 8y ago
  Yeah, I was confused about that as well. I came to the comments hoping to find good suggestions for doing market research. Most of the comments (at least at this point) seem to be geared towards trading.
ydnaclementine 8y ago
by market analysis I'll assume you mean technical analysis I recommend 'A new trading for a living'. Great intro to trader psychology and non-BS technical indicators
chad_strategic 8y ago
I have read financial books, got an MBA, worked in Finance. Read more books. ~70% in 2012 of the market trades on computers/algorithms. I recommend reading some finance books, but at the end of the day, you probably going to want start to build a financial trading algorithm. I recommend Black Swan or Fooled by Randomness
hellofunk 8y ago
I don't think this Ask is a question about the financial markets, trading, or investing, but rather about general analysis of a potential market for a particular business.
alehul 8y ago
Most people are responding to the trading-related side of the coin, so I'll offer some advice on analyzing a market for the purpose of building a startup. It's quite hard to find good resources on the internet for this purpose; what helped me was scouring Wikipedia [1] for the buzzwords (check out 'see also') and searching on Google if necessary beyond that. There's also lots of free lectures from places like KhanAcademy or Coursera that likely cover these parts of business. One small tip my cofounder learned in business school: I don't remember the exact terminology, but analyses that go from the inside outwards are more respected by investors than ones that go from the outside inwards. Don't take huge figures like "Number of Americans" and multiply by "Percent of Americans that do 'x'", but rather find localized, small figures, and extrapolate those up/outwards. [1] https://en.wikipedia.org/wiki/Total_addressable_market https://en.wikipedia.org/wiki/Total_addressable_market https://en.wikipedia.org/wiki/Market_segmentation https://en.wikipedia.org/wiki/Market_segmentation https://en.wikipedia.org/wiki/Target_market https://en.wikipedia.org/wiki/Target_market
- deyan 8y ago
  You probably meant top-down vs bottom-up. An example of top-down analysis is to go to e.g. Gartner or similar research firms and read that they estimate the ridesharing market to be say $100B. An example of bottom-up is to say, based on data from this and this article or data source, we estimate there are 1M cars doing ridesharing every year in the US. We will sell each of them a gadget for $10 so our market is $10M if we capture all of it.
  - alehul 8y ago
    Yes, that's exactly what I was trying to get at. Thanks for the clarification!
- fwdpropaganda 8y ago
  > One small tip my cofounder learned in business school: I don't remember the exact terminology, but analyses that go from the inside outwards are more respected by investors than ones that go from the outside inwards. Don't take huge figures like "Number of Americans" and multiply by "Percent of Americans that do 'x'", but rather find localized, small figures, and extrapolate those up/outwards. Not sure if it could be considered the same, but in physics there's a concept of "from first principles" where you obtain something starting from laws which you know are true (within the domain of applicability of a theory). "From first principles" is in contrast to making comparisons for example reasonings like "I know the answer in that other situation, so in my situation of interest I'm going to estimate the answer is X% more". Calculations from first principles are tipically more robust but harder to do.
slantaclaus 8y ago
Best to stick with picking companies based on fundamental analysis and some insight on their competitive advantage, value proposition, company culture, etc. Trading based on price alone amounts to little more than gambling, because it’s impossible to time the market’s cycles in the long run.
ert23 8y ago
Talking with a few NY traders I was told that they may use Technical Analysis Theory as a secondary framework to see what is going on just because if enough trades are made following these rules, the prices will follow the TA rules. TA is heavily relaying on human psychology. These traders also told me that do not know anybody at the trading desk that has not quickly felt out of love for TA. TA will work when nothing major is affecting the market. Special events will affect the price is a way that TA cannot predict. Who has enough money or influence can also manipulate the prices. Changes in fundamentals can also affect the price in a way that TA cannot predict.
calabin 8y ago
I wrote a short and incomplete guide to market analysis from the quant/programming side. https://tradedefender.com/news/10 https://tradedefender.com/news/10
robodale 8y ago
I was just yesterday considering writing an essay on Market Analysis (with the intention of creating a startup or otherwise trying to produce something of value for a market). There's many ways to approach market analysis and taking it all in at once can be overwhelming, with "Analysis Paralysis" quick to set in. I'll follow through and write/dump in an article all I know based on my experience and books I've read if anyone is interested.
- stevofolife 8y ago
  I certainly am interested!
thisisit 8y ago
You didn't use the term stock market, so I am assuming you mean market research. One of the ways people do their research is by creating a landing page and driving traffic via google/facebook/linkedin ads. The amount of signups for beta is supposed to be an indicator of the product's demand.
strong_silent_t 8y ago
I'd be really interested if anyone has a book or similar on supply and demand curves estimation by experiment. Ideally I'm looking for a cookbook type book less so than a theory book. If you're referring to financial markets, I personally learned a lot from Trading and Exchanges: Market Microstructure for Practitioners, although I didn't finish it. But it explains the basic characteristics of financial markets, and why they are set up the way they are. It isn't necessarily going to be obvious and financial markets are based on hundreds of years of accumulated knowledge.
nautilus12 8y ago
You should change the title of this to "market research" which resonates more with researching the market for researching a startup.
theptip 8y ago
You could do a lot worse than reading all of Ben Thompson's core articles on Stratechery: https://stratechery.com/concepts/ https://stratechery.com/concepts/ I've found his Aggregation Theory to be a very useful lens to understand the largest tech companies. Arguably this particular theory isn't as useful if you're trying to find a niche to start your own company, but he explains a lot of his working in a way that I feel is transferrable/generalizable.
bbimbop 8y ago
They say that Warren Buffet's favorite book is The Intelligent Investor by Benjamin Graham.
Ihmahr 8y ago
To understand the market better I would recommend learning much more than just about the market. Knowing and understanding what is going on macroeconomically and geopolitically will help you in the market place. E.g. https://macroaffairs.com/ https://macroaffairs.com/ https://www.economist.com/ https://www.economist.com/
lisper 8y ago
Before studying market analysis you should get a really firm grasp on statistics. In particular, you need to know how to calculate the probability of obtaining a false positive when testing a hypothesis, and then apply that understanding to any market strategy you wish to undertake. With modern computers and ready access to data, it is incredibly easy to fool yourself into thinking you have found a reliable way to beat the market when in fact all you've done is stumbled on a statistical fluke. Test enough strategies against enough data and finding such flukes is inevitable.
tvladeck 8y ago
Without knowing any more about what you are trying to do, I would just recommend a framework we learned at business school that I keep coming back to. It's for when you're looking at developing or altering a product. It's really just a checklist, and it's super simple, but it's effective. Can be tweaked to understand how different brands are attacking a market. 5Cs, STP, 4Ps 5Cs: Just list out a bunch of facts to get acquainted - Context: what are the wider trends (e.g. millennial habits, etc.). This is where you start wide - Customer: what 'job' is your customer trying to do? Who could that be? What is your unit of analysis: a person, an occasion, a ___ ?? - Company: what are you good at? - Competitors: Who else is trying to serve that job? - Collaborators: Who could be a partner? (Vendor, complementary service, channel partner, etc.) STP: - Segmentation: What are the different customer segments? What are the dimensions that make two {people, occasions, etc.} different in a meaningful way - Targeting: Which are the viable and nonviable segments? Who's your target? - Positioning: What is your: -- POP/POD: point of parity/point of difference -- Frame of reference: who are you stealing share from? -- Reasons to believe: why would someone believe that you can deliver? 4Ps/marketing mix: - Product/brand: what is your product? what's it's functionality? what's your brand? - Price: level and structure. - Place: distribution channels. Pull vs. push. - Promotion: where will you advertise? What's your message?
bbimbop 8y ago
My website (beta) teaches analysis with Excel the way that is done by hedge funds / asset managers http://www.shortcutinsider.com http://www.shortcutinsider.com
uptownfunk 8y ago
Valuation by McKinsey
tixocloud 8y ago
2 great books for thinking about market opportunities: Blue Ocean Strategy Thinking in New Boxes: A New Paradigm for Business Creativity Both aren’t entirely scientific and obviously downplays the effort to make success happen, the theories are quite interesting and applicable.

162 points by febin 8y ago

I'd recommend going through a good university's economics textbook and doing all the exercises. It's much easier to beat the market by fundamentals than by technical analysis, though a knowledge of both are important.

jashmenn 8y ago

Yes - The Art and Science of Technical Analysis by Adam Grimes is fantastic. Typically these kinds of books take one of two extremes: 1. Markets are psychology and TA patterns will unlock profits OR 2. Markets are mathematics and algorithms will unlock profits Books in #1 will tell you all about Ichimoku clouds, fibonacci levels, fractal patterns, and how to read tea leaves. Books in #2 tend to ignore the (real) psychological aspects of trading and don't give you much edge beyond a random walk. Grimes book holds a special place in this dynamic: He discusses price action as psychology, but applies statistical tests to common trader folklore. As a programmer and beginning trader/quant, Grimes book was exactly what I was looking for.

saosebastiao 8y ago
I've skimmed through Grimes' book a little and liked what I saw. I've independently taken a similar approach to TA and it has mostly worked out well for me. My personal take on TA is that Markets are psychology and TA is a slowly evolved form of feature engineering that has been finely tuned to be used by the most advanced visual pattern recognition algorithm we have, our brains. Many of these features can be tested and proven statistically, but they require additional feature engineering work to convert them from their visual pattern recognition purpose into something more suited to statistical inference. And just like any form of feature engineering, a lot of it doesn't work, but when you find what does work, it's pretty awesome.

whitepoplar 8y ago

I'd steer clear of it. Market analysis doesn't work on a risk-adjusted basis. I'd recommend reading any of William Bernstein's books for a good intro to passive, indexed investing.

Rafuino 8y ago
I'm guessing OP is asking about market analysis in terms of evaluating whether a business idea is good (or not), not market analysis for investing. E.g. what is the market for X product (units and revenue), who are the competitors, what is the profitability X product can achieve if it meets its goals, etc., etc.
- whitepoplar 8y ago
  Ah, okay, my bad then.
- sanderjd 8y ago
  Yes please! Even if that's not what the OP was asking about, it's what I'm interested in and why I clicked on this link, so I'm hoping there are some answers to that question (which I don't think has been answered here yet).
- appleiigs 8y ago
  yeah OP is not clear. When a finance person sees market analysis, it’s a specific thing: evaluating whether financial market pricing is correct or not.

throwaway122222 8y ago

are you referring to trading or are you referring to "market research"

elliotlarson 8y ago
Yeah, I was confused about that as well. I came to the comments hoping to find good suggestions for doing market research. Most of the comments (at least at this point) seem to be geared towards trading.

ydnaclementine 8y ago

by market analysis I'll assume you mean technical analysis I recommend 'A new trading for a living'. Great intro to trader psychology and non-BS technical indicators

chad_strategic 8y ago

I have read financial books, got an MBA, worked in Finance. Read more books. ~70% in 2012 of the market trades on computers/algorithms. I recommend reading some finance books, but at the end of the day, you probably going to want start to build a financial trading algorithm. I recommend Black Swan or Fooled by Randomness

hellofunk 8y ago

I don't think this Ask is a question about the financial markets, trading, or investing, but rather about general analysis of a potential market for a particular business.

alehul 8y ago

Most people are responding to the trading-related side of the coin, so I'll offer some advice on analyzing a market for the purpose of building a startup. It's quite hard to find good resources on the internet for this purpose; what helped me was scouring Wikipedia [1] for the buzzwords (check out 'see also') and searching on Google if necessary beyond that. There's also lots of free lectures from places like KhanAcademy or Coursera that likely cover these parts of business. One small tip my cofounder learned in business school: I don't remember the exact terminology, but analyses that go from the inside outwards are more respected by investors than ones that go from the outside inwards. Don't take huge figures like "Number of Americans" and multiply by "Percent of Americans that do 'x'", but rather find localized, small figures, and extrapolate those up/outwards. [1] https://en.wikipedia.org/wiki/Total_addressable_market https://en.wikipedia.org/wiki/Total_addressable_market https://en.wikipedia.org/wiki/Market_segmentation https://en.wikipedia.org/wiki/Market_segmentation https://en.wikipedia.org/wiki/Target_market https://en.wikipedia.org/wiki/Target_market

deyan 8y ago
You probably meant top-down vs bottom-up. An example of top-down analysis is to go to e.g. Gartner or similar research firms and read that they estimate the ridesharing market to be say $100B. An example of bottom-up is to say, based on data from this and this article or data source, we estimate there are 1M cars doing ridesharing every year in the US. We will sell each of them a gadget for $10 so our market is $10M if we capture all of it.
- alehul 8y ago
  Yes, that's exactly what I was trying to get at. Thanks for the clarification!
fwdpropaganda 8y ago
> One small tip my cofounder learned in business school: I don't remember the exact terminology, but analyses that go from the inside outwards are more respected by investors than ones that go from the outside inwards. Don't take huge figures like "Number of Americans" and multiply by "Percent of Americans that do 'x'", but rather find localized, small figures, and extrapolate those up/outwards. Not sure if it could be considered the same, but in physics there's a concept of "from first principles" where you obtain something starting from laws which you know are true (within the domain of applicability of a theory). "From first principles" is in contrast to making comparisons for example reasonings like "I know the answer in that other situation, so in my situation of interest I'm going to estimate the answer is X% more". Calculations from first principles are tipically more robust but harder to do.

slantaclaus 8y ago

Best to stick with picking companies based on fundamental analysis and some insight on their competitive advantage, value proposition, company culture, etc. Trading based on price alone amounts to little more than gambling, because it’s impossible to time the market’s cycles in the long run.

ert23 8y ago

Talking with a few NY traders I was told that they may use Technical Analysis Theory as a secondary framework to see what is going on just because if enough trades are made following these rules, the prices will follow the TA rules. TA is heavily relaying on human psychology. These traders also told me that do not know anybody at the trading desk that has not quickly felt out of love for TA. TA will work when nothing major is affecting the market. Special events will affect the price is a way that TA cannot predict. Who has enough money or influence can also manipulate the prices. Changes in fundamentals can also affect the price in a way that TA cannot predict.

calabin 8y ago

I wrote a short and incomplete guide to market analysis from the quant/programming side. https://tradedefender.com/news/10 https://tradedefender.com/news/10

robodale 8y ago

I was just yesterday considering writing an essay on Market Analysis (with the intention of creating a startup or otherwise trying to produce something of value for a market). There's many ways to approach market analysis and taking it all in at once can be overwhelming, with "Analysis Paralysis" quick to set in. I'll follow through and write/dump in an article all I know based on my experience and books I've read if anyone is interested.

stevofolife 8y ago
I certainly am interested!

thisisit 8y ago

You didn't use the term stock market, so I am assuming you mean market research. One of the ways people do their research is by creating a landing page and driving traffic via google/facebook/linkedin ads. The amount of signups for beta is supposed to be an indicator of the product's demand.

strong_silent_t 8y ago

I'd be really interested if anyone has a book or similar on supply and demand curves estimation by experiment. Ideally I'm looking for a cookbook type book less so than a theory book. If you're referring to financial markets, I personally learned a lot from Trading and Exchanges: Market Microstructure for Practitioners, although I didn't finish it. But it explains the basic characteristics of financial markets, and why they are set up the way they are. It isn't necessarily going to be obvious and financial markets are based on hundreds of years of accumulated knowledge.

nautilus12 8y ago

You should change the title of this to "market research" which resonates more with researching the market for researching a startup.

theptip 8y ago

You could do a lot worse than reading all of Ben Thompson's core articles on Stratechery: https://stratechery.com/concepts/ https://stratechery.com/concepts/ I've found his Aggregation Theory to be a very useful lens to understand the largest tech companies. Arguably this particular theory isn't as useful if you're trying to find a niche to start your own company, but he explains a lot of his working in a way that I feel is transferrable/generalizable.

bbimbop 8y ago

They say that Warren Buffet's favorite book is The Intelligent Investor by Benjamin Graham.

Ihmahr 8y ago

To understand the market better I would recommend learning much more than just about the market. Knowing and understanding what is going on macroeconomically and geopolitically will help you in the market place. E.g. https://macroaffairs.com/ https://macroaffairs.com/ https://www.economist.com/ https://www.economist.com/

lisper 8y ago

Before studying market analysis you should get a really firm grasp on statistics. In particular, you need to know how to calculate the probability of obtaining a false positive when testing a hypothesis, and then apply that understanding to any market strategy you wish to undertake. With modern computers and ready access to data, it is incredibly easy to fool yourself into thinking you have found a reliable way to beat the market when in fact all you've done is stumbled on a statistical fluke. Test enough strategies against enough data and finding such flukes is inevitable.

tvladeck 8y ago

Without knowing any more about what you are trying to do, I would just recommend a framework we learned at business school that I keep coming back to. It's for when you're looking at developing or altering a product. It's really just a checklist, and it's super simple, but it's effective. Can be tweaked to understand how different brands are attacking a market. 5Cs, STP, 4Ps 5Cs: Just list out a bunch of facts to get acquainted - Context: what are the wider trends (e.g. millennial habits, etc.). This is where you start wide - Customer: what 'job' is your customer trying to do? Who could that be? What is your unit of analysis: a person, an occasion, a ___ ?? - Company: what are you good at? - Competitors: Who else is trying to serve that job? - Collaborators: Who could be a partner? (Vendor, complementary service, channel partner, etc.) STP: - Segmentation: What are the different customer segments? What are the dimensions that make two {people, occasions, etc.} different in a meaningful way - Targeting: Which are the viable and nonviable segments? Who's your target? - Positioning: What is your: -- POP/POD: point of parity/point of difference -- Frame of reference: who are you stealing share from? -- Reasons to believe: why would someone believe that you can deliver? 4Ps/marketing mix: - Product/brand: what is your product? what's it's functionality? what's your brand? - Price: level and structure. - Place: distribution channels. Pull vs. push. - Promotion: where will you advertise? What's your message?

bbimbop 8y ago

My website (beta) teaches analysis with Excel the way that is done by hedge funds / asset managers http://www.shortcutinsider.com http://www.shortcutinsider.com

uptownfunk 8y ago

Valuation by McKinsey

tixocloud 8y ago

2 great books for thinking about market opportunities: Blue Ocean Strategy Thinking in New Boxes: A New Paradigm for Business Creativity Both aren’t entirely scientific and obviously downplays the effort to make success happen, the theories are quite interesting and applicable.