Ask HN: Any recommended resources to learn market analysis? - febin
======
alehul
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
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
Yes, that's exactly what I was trying to get at. Thanks for the clarification!

------
jashmenn
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
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.

------
tvladeck
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?

------
whitepoplar
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
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.

~~~
sanderjd
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).

------
theptip
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.

------
hellofunk
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.

------
throwaway122222
are you referring to trading or are you referring to "market research"

~~~
elliotlarson
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.

------
slantaclaus
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
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.

------
lisper
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.

------
strong_silent_t
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.

------
robodale
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
I certainly am interested!

------
Ihmahr
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/)

------
thisisit
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.

------
chad_strategic
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

------
tixocloud
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.

------
calabin
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)

------
3pt14159
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.

------
bbimbop
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)

------
ydnaclementine
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

------
nautilus12
You should change the title of this to "market research" which resonates more
with researching the market for researching a startup.

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

------
uptownfunk
Valuation by McKinsey

