My best guesses as to why the #'s are so low:
- Lots of undergrads taking this while still in school, not understanding the curriculum is at a graduate level, and also grossly underestimating how much work it is. To put it in perspective, I just finished 2 years of a dual MBA/MSF program that covered 85% of the material and I still need to study as if I never seen it before. I couldn't imagine attempting this while taking 4 or more undergrad classes plus work. You'd have to be a God to pass it with that schedule.
- Lots of foreigners taking it. I think the CFA brand is now seen overseas as the hot thing to have. I think it's being seen as a "get rich quick" fast track. This leads more people to go after it when they may not be qualified. The same applies for US domestic candidates as well.
- The most obvious answer is, people just are not preparing the right way. Some must just not understand that you will not learn finance simply by studying for the CFA and the test requires more than reading the books and memorizing formulas. It's not the GMAT or SAT. Synthesis of the material is key and you only get that by either working in finance full time or by being an avid follower of the markets.
- Watch CNBC religously. It has replaced ESPN as my most watched channel. I honestly can't even tell you what's happening in sports right now but I can tell you about Merrill's dilutive stock offering and sale of CDO's at distressed prices.
- Read the Wall Street Journal daily. If you're not doing this anyway, I question why you're even attempting to get the CFA. With what's happening in the markets now, this is the best time to learn. Everyone's a genius in bull markets, it's these markets that determine who's good and who's been lucky. By the way, I also get Barron's on a weekly basis. It's good to read thru their charts and tables and the interviews are usually very good.
- Frequent financial sites and blogs - I will be posting some of my favorite sites in the future but I can't stress enough how important
it is to add color to what you'll read in the WSJ and what you'll see
on CNBC. CNBC is particular is called "Bubblevision" because of their
constant bias towards bull markets. WSJ tries to toe the objective
line. It's always useful to read other people's commentary on the exact
same topics they cover to help fill in the blanks. - Read company financial statement and listen to analyst conference calls. This shouldn't require explanation. I try to do at least one of each a month. No deep digging or anything, just making sure I can spot the trends myself and also whether my BS detector works.
- Trade actively - even if it's just paper trading as I'm doing. I use Thinkorswim since their platform is amazing and since you can play with up to $200k in play money. Everything from futures to options to currencies to stocks can be traded.
Get used to the questioning style of the CFAI, esp. by solving plenty of sample exams and questions. Budget spending the 200$ close to exam time (nov) to take the CFAI mocks and samples. (ONe sample is free and you have it when you signed up).
Use a pattern of using Schweser's QBank to give yourself 30-60 question tests daily on all topics covered thus far, so you can keep a continuous review process going. That way you are keeping in touch with stuff you studied in the past as well, so not everything is not History.
And after every one of those tests, go thro' your mistakes and review the books if needed.
Closer to the exam - read the Ethics books and do all of the QBank.
Not sure about your question on the ANalystNotes site - never used them, do not plan on using them either. They seem to give everyone a rush of blood esp. because they are so cheap, but in the final analysis, I think Schweser and/or Stalla is closer to the real deal, and though you might think these are more quantitative oriented, but the CFA exam is qualitative, they help build up the skills required for the final push.
And of course, keep posting and reading AnalystForum.
Date Class # Study Session # Study Session Topic
31-Jul 1 1 Intro & Ethics
7-Aug 2 2 Quantitative Methods 1
14-Aug 3 3 Quantitative Methods 2
21-Aug 4 4 & 5A Economics 1 & 2
28-Aug 5 5B & 6 Economics 2 & 3
4-Sep 6 7 Financial Statement Analysis 1
11-Sep 7 8 Financial Statement Analysis 2
18-Sep 8 9A Financial Statement Analysis 3
25-Sep 9 9B Financial Statement Analysis 3
2-Oct 10 10 Financial Statement Analysis 4
9-Oct 11 11 Corporate Finance
16-Oct 12 13 & 14 Analysis of Equity Investments
23-Oct 13 15 Fixed-Income Investments 1
30-Oct 14 16 Fixed-Income Investments 2
6-Nov 15 17 Derivative Instruments
13-Nov 16 12 & 18 Portfolio Management & Alternative Investments
I'll have to miss 3 of the sessions due to travel requirements. Ethics is ok since I've been reviewing the material already. Corporate Finance is a small enough session I should be ok to handle on my own. Fixed Income 2 will be ok since I just finished a fixed income course taught by a CFA in June.
I signed up for the Enhanced version which includes the flashcards and the mock exam. I'm debating whether to take it on the computer or in person to simulate real exam conditions. I'll be making that call in October. They don't offer a location in Miami, so I may fly back home to NYC to take it. I'm excited to begin.
www.analystnotes.com - I'm contemplating using their package. They have good forums, but the highlight of this site is the review exams you can take for each study session. I found that they give a good mix of easy, medium and difficult questions. I'm strongly considering using one of their packages. They range from $69 to $99. This is peanuts compared to what I've already dropped on my grad degrees plus the CFA enrollment plus Stalla.
www.analystforum.com - They have some good forums where people exchange advice. You cannot sign up using a free email account however, so use your work address. Don't worry, I've been a member for a while and have never been spammed.
www.senfinance.com - Some good videos from a college professor that cover the L1 material except for ethics. You're gonna want to review that on your own. He's a little hard to understand at times but this is another good resource to leverage, especially if you just want to hear the material presented a different way.
I think taking questions from Stalla, Schweser, AnalystNotes, and CFAI will prep me well for the real test.
Link to my notes for this section.
http://www.scribd.com/doc/4159696/Readings-34
You can see my other post on this section for more
http://mycfaadventure.blogspot.com/2008/07/more-on-reading-3.html
The Schweser videos ended with what they felt were common questions that show up on every exam. May help is focusing your studies for this material
One interesting thing I noticed is that in the CFAI material, most of it is labeled optional(Rading 4). I recommend reading the entire thing anyway just for context and definitely read the Appendices 4A-B which show sample GIPS compliant presentations. This really crystallizes the material I found.
All in all, I feel comfortable with the Ethics material at this point. Reading thru it a 2nd time was really worth it and I'll get a 3rd go round this week since Stalla starts with Ethics in the first class.
The quantitative section is next and this is a section I expect to do well on since I covered this material as part of my MSF program.
Sorry for the delay in adding a new post, I've been swamped with work and trying to finish up my last class. I also have 2 year old twins as I mentioned before and when I have them I'm either:
- too busy and hectic running around trying to keep up with them all day
- too tired at night after trying to keep up with them all day
So that's been limiting my study time. Classes end next week so I'll be able to free up enough time to focus on the exam.
I was able to get a couple of hours in this morning and decided to recap the first 2 readings to make sure I was comfortable with the standards. After the first Stalla class session which covers Ethics, I won't be touching this material until review time in November so I wanted to make sure I got all my notes down.
Since I haven't received my Stalla material yet, I used some 2007 Schweser videos for these two readings. The content is almost identical to the 2008 LOS' so I felt confident using the videos in conjunction with the CFAI book.
I used Microsoft OneNote to take notes for these two readings but converted to Word 2007 format. It's long so I won't post it here, but here's a link to it. If anyone wants it in a different format, email me and I'll convert it and send to you.
http://www.scribd.com/doc/4160698/Reading-12
I'm glad I went back and reviewed this material again. My approach was to watch the lecture and at the same time highlight key points in the CFAI book. When the lecture got to the application section, they would only do one case so I paused the video and went thru each example in the CFAI book to make sure I got it. On this second glance, the material was not too difficult if you can remember the gotcha's and key points to remember. What I go away with from these readings is:
- disclose, disclose, disclose and when in doubt, disclose.
- The Loyalty Food Chain is Clients, Markets, Employers, Yourself. A few of the standards are nothing more than making sure you have this hierarchy correct. Anything that would put it out of order is most likely a violation.
- Piggybacking of the point above, Section III about duties to clients is probably the most important one.
- Confidentiality is key even if disclosure of information would be beneficial to client. It's easy to not remember this and get a question wrong because you thought you had your clients best interests' in mind.
- You MUST read these questions slowly and sometimes 2x. The relationships must be clear and you can easily get confused who's doing what for whom. These questions should not be blown thru on the actual exam. I'll be making sure to time myself to see how long it takes me to finish the ethics section. You don't want to rush thru these questions since this section is the tiebreaker but you also don't want to spend too much time on it either. Definitely one of the metrics I'll be watching during my prep.
Tonight I'll review readings 3 and 4(the GIPS) and just answer tons of questions. After the Stalla review this week I'm sure I'll have a decent enough handle on it to put it to rest until November.
As I said before, the key to ace this section is lots and lots of questions. More so than other sections I'd imagine since this whole topic a bunch of gray areas.
If you'd like to contact me at all, please use the following options
Email: jamesmorales@gmail.com
LinkedIn: My LinkedIn Profile
I also post on AnalystForum under jlive1975
Sitting in my credit analysis course and just didn't feel like reviewing what the Balance Sheet is for the millionth time so I decided to go back over Reading 3 which covers the GIPS(Global Investment Performance Standards). As I said in a previous post, this material is short, only 4 pages, but the questions are tricky.
Key points
- compliance with the GIPS is voluntary
- know the purpose of GIPS - you'll get those "what best describes" or "what most accurately represents" questions about this
- performance standards must be for composites, which are groupings of individual portfolios representing an investing strategy(i.e Large Cap, Small Cap, Emerging markets). The composites must include all past and present portfolios that the firm as a whole(important) has managed.
- GIPS only applies to asset managers. There were questions about who GIPS applies to and all the choices were investment related but only one was actually managing assets.
- If the portfolio is discretionary and fee paying, it must be included in at least one composite.
I did notice the Schweser test bank questions had examples that assumed you read ahead to Reading 4.
Here's what I'm using to study for the L1 exam
- Stalla "The System" - haven't signed up yet but will do so this week.
- Schweser 2008 L1 Notes
- Schweser 2008 L1 QBank - Lots of questions and you can come up with your own mock exam
- Various PDF's I have found by searching on the web and using Torrents.
- Textbooks from school - will be used when I want a different perspective or extra practice problems. I have Frank Fabozzi's text on Fixed Income and the Investment Analysis & Portfolio management text that used to be used for the security analysis course I finished. Both courses were taught by CFA's at FIU.
Some may say this is overkill but I'd rather have more material than I know what to do with than strictly rely on the CFAI material.
Today I began reading study session 1. My goal was to get thru Readings 1 - 3. At this point I have not enrolled for the Stalla course and do not have their material so I am using the Schweser material as my supplement currently. I will most likely be missing the Stalla course that covers this material so I wanted to tackle it early enough.
Reading 1 - Code of Ethics(COE) and Standards of Professional Conduct(SPC)
Only 7 pages of the CFAI material but I quickly learned that this is stuff you must learn inside and out. I made the mistake of assuming this is common sense so don't dig too deep but the sample questions make you quickly realize how in depth you must understand the material. Knowing the difference between the COE and SPC seems to be key since some of the questions will have answers that all seem correct(or incorrect) but test your ability to know what's contained in the COE vs the SPC.
It appears that the Code of Ethics is the "High Level" objectives and the SPC is "where the rubber meets the road". I read the CFAI material and then supplemented it with the Schweser notes and the Schweser Qbank questions to drill it in. This is definitely material that will fade over time so I made notes to come back and review it later on.
Reading 2 - Guidance for Standards I-VII
It was right about here that I truly realized how much work is ahead of me. This section alone is 94 pages and covers mostly how to apply the SPC's in daily situations. Most of the situations are common sense however. I did notice when using the Schweser notes to compare to the readings that they give cliff notes versions and in certain cases do not match up the examples exactly to the CFAI text. This reading seems to focus on the individual standards, guidance on how to apply in specific situations and how to comply at the personal and firm level. I recommend using the Schweser/Stalla notes for this section since it really distills the key points down to a more readable 52 pages. I used their notes to go back and highlight the key points in the CFAI material in case I wanted to go back and review a specific topic in more detail.
I cheated a little bit and jumped ahead to the questions to see how well I would do without reading the sections on Standards IV-VII. I didn't do that badly but it's imperative I review these in more detail for the actual exam. Since I plan on focusing on the Ethics section for the next 2 weeks I'll have enough time to go over these again.
Reading 3 - Intro to GIPS(Global Investment Performance Standards)
Only 4 pages long and not too bad. One thing I did realize with the Schweser notes vs the CFAI material, Schweser helps put the key content directly underneath each LOS. The CFAI material puts it at the beginning so it's easier to lose what LOS you are actually reading content about. Anyways, this section may seem easier since it's shorter but it's pretty tricky.
I'll stop here and pick up Reading 4 and the remainder of Reading 2 tomorrow.
Time Spent Studying - 2-3 hours
Lessons Learned:
- Know differences between COE and SPC
- Answer lots of questions for Reading 2 to learn how to apply Standards in different situations. Most of these are common sense but the questions can be tough since all of the answers can seem to be correct unless you know the intracacies of each standard.
- Reading 3 is short but tricky. Also answer many questions for this section.
- Ethics cannot be taken lightly if you hope to pass the exam. It accounts for about 15%, if I recall correctly and is used to make or break candidates who have borderline passing grades. I heard this directly from CFA charterholders. They want people who are strong in this area.
- After answering questions, take notes in the side of CFAI material further explaining key points.
- Quoting Larry Kudlow "Drill Drill Drill" - I think the key to ace this section is to answer as many questions as possible to cover all possible permutations, of which there are many.
Until tomorrow...
Hello everyone, my name is James Morales and this my first entry in what I hope will be an ongoing blog about my attempt to obtain the CFA charter. I may as well give a little background on myself and what has led me up to this point. I'm 33 years old and I graduated from Columbia University in 1998 with a BS in Computer Science and for the past 10 years have been working in a variety of IT functions. I started out as a programmer but eventually worked my way into more integration work and I currently work for a large aviation services company as a Solution Architect. What's that you ask? Well, I basically sit right on the fence between the business and the IT dept which allows me to use both my business acumen as well as the technical skills I have obtained over the years. I'm basically a business analyst on steroids. Pretty sweet gig, and it keeps me close to the technology but not bogged down in it like a pure developer would be.
This past December I graduated with my dual MBA/MS in Finance degree at Florida International University(FIU). Many may be asking why I am pursuing the CFA given my IT background. Well, for the past few years I have come to realize that IT is a very limiting experience and while it pays very well(I make over 6 figures and could easily do so for the remainder of my career), I also know that there is not much room to grow. This is especially true if you work in industry vs for a consulting company. Typically you will be part of a small IT department and will not be asked nor expected to do more than what you currently do. Consulting is better in that regard since you will typically hop around to different clients and different projects. The downside to that is that it typically requires major travel which is something I'm not too big on, especially since I have young boy girl twins that I cannot be away from too long.
While pursuing my graduate degrees I began to get more exposure to the finance world and I noticed many of the skills I used on a daily basis in IT were directly applicable to finance. I was already proficient in Excel, I was used to quickly learning, digesting and applying very complex technical concepts, and having roots as a devloper had ingrained a certain thought process I felt would fit right in the finance realm. I knew I wanted to take my grad degree and go in a different direction with my career but I started to think about going a completely different route and decided to try a career in finance. I figured that since my school is not on the level of a Wharton or Harvard, passing the L1 of the CFA in addition to my two degrees and my 10 years of industry experience at high profile companies(PricewaterhouseCoopers, Sony Music, Sony Electronics, Volvo, Florida Power and Light, etc) would be a great help in getting my foot in the door.
With that little bit of background, I registered for the December 2008 Level 1 CFA exam. I used the Stalla L1 prep course which started right after my degree program finished. After an intense 4 month period of study, I passed the Level 1 exam rather easily. I took 2009 off to get my sanity back after 2 plus years of studying and decided to go for Level 2 in June 2010. After 4 very hard months of preparation and not feeling to confident of passing, I wound up with a passing score. I am planning to go for Level 3 in June 2011 and I am also in the process of studying for the PMP exam in December 2010.
I hope this blog assists those also studying for the CFA and PMP exams who may be looking for inspiration or just to know that someone else is going thru the same emotions, feelings and heartache. I hope to update the blog at least 3-4 times weekly and I may sprinkle in some non-CFA content from time to time. Wish me luck!!!
Please feel free to reach out to me via my personal email: jamesmorales@gmail.com. I would love to network and meet other CFA candidates or even charterholders. Also consider adding me to your LinkedIn network using the button on the blog.
As mentioned in my first post, I am leaning very heavily towards Stalla vs other methods of studying for the following reasons
- They offer live classes that meet for 3 hours once a week here in Miami. Schweser only offers the online seminars. One of the reasons I didn't go the online MBA route was because I liked the discipline that scheduled live classes gives you.
- The local CFA chapter of Miami provides discounts for Stalla if you are a member.
- I could obtain the Schweser material anyway and use it as a supplement.
The classes start July 31 but I may have to miss the first one since it coincides with the final class of my Credit Analysis course. The first class covers the Ethics material which I have already begun reading and will update in a separate post.
