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Financial Analysts


U.S. securities markets date back to the early years of the nation. The first U.S. stock exchanges were created in the 1790s. The New York Stock Exchange (which did not get its present name until 1863) was one of these. It started as a group of men who did their trading under a tree at 68 Wall Street. The markets grew as the country's industries developed. The unregulated U.S. securities markets flourished just following World War I. According to the U.S. Securities and Exchange Commission (SEC), some 20 million people "took advantage of post-war prosperity and set out to make their fortunes in the stock market." The stock market crash of 1929, however, wiped out the savings of many investors. Consumers became wary of the markets and hesitated to invest again. Congress created the SEC in 1934 to keep watch over the markets and institute rules and regulations in the industry. The goal was to ensure that companies and stockbrokers divulged truthful information about their businesses, the investments offered, and the potential risk involved.

The Financial Analysts Federation (FAF), a group for investment professionals, was created in 1947. The FAF brought some prestige and respect to the profession. Then in 1959 the Institute of Chartered Financial Analysts (ICFA) was developed. Financial analysts who successfully completed the ICFA examination received the designation chartered financial analyst (CFA). In June 1963, 268 analysts became the first group of CFA charterholders. The FAF and ICFA went on to merge in 1990, creating the Association for Investment Management and Research, which was renamed the CFA Institute in 2004.

Deregulations in the 1970s and 1980s brought about greater competition in the industry and more crossover between finance and banking. Knowledgeable professionals like financial analysts were in greater demand to help businesses keep up with the growing number and complexity of investment options. Financial analysts who forecast the rapid rise of technology stocks in the late-1990s were hailed in the industry and the media. But the steep decline of many of those same stocks by 2000–2001 led to questions and concerns about the truthfulness of the information reported by certain financial analysts. In late 2000 the SEC instituted the Regulation Fair Disclosure rule, calling for fuller and more honest public disclosure of investment information. Public officials have continued to investigate and prosecute corruption and dishonesty on Wall Street.

Not only have technology stocks affected the business conducted by financial analysts, but so have changes in technology itself. Spreadsheet and statistical software programs afford financial analysts many improved and sophisticated options in compiling and presenting data. What in its early days was little more than deal making among a small group of men beneath a tree has evolved into a worldwide, high-tech, competitive industry, and financial analysts play an integral role in it.

The job of financial analyst continues to evolve. Skilled, honest financial analysts will remain in demand because of the increasingly complex nature of investing.

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