Comparing two notepad documents in python

I understand that with two notepad documents you can do this:

notepad1 = open("C:\\User\\files\\list.txt")
notepad2 = open("C:\\User\\files\\single.txt")


for aword in notepad1: 
            if aword == notepad2:
                print(aword, "is in both files!")

Accept this does not work? on further looking this happened:

notepad1 in notepad2
False
notepad2 in notepad1
True

in this scenario notepad2 contains a single word and notepad1 contains a list of words

I think the problem is python is not comparing every word in notepad1 with notepad2 looking for a match. If this is my problem how would i resolve it?