There's a first time for everything.

I have taken the CFA exam before. Let's just say I've taken it more than once before. Every time I have taken it, they have given me an estimate of when the results will come out. They have always said the results would come out by the end of month X. For level 2 and 3 they always given the exam the first Saturday in June and the results would be out by 'the end of August'. They would never state the day so starting around the 15th until the results come out, I just check the website at least 5 times a day. Today they sent me a email for the first time ever stating that the results will be out August 19th at 9am. They probably did that because they were tired of having me and everyone else hitting the refresh button every 5 minutes. I alled them to confirm the email and it's legit.

I have never known before hand when the results would come out. Now I know. On one hand, it eliminates uncertainty, but I am going to be a nervous wreck on August 18th. It's kind of like being pregnant, but knowing for certain the date the baby will be born as early as the 2nd trimester. I'm not counting down to a particular week or trying to manage my nerves for the long haul. By lunchtime on the 19th, I'll know the results. I can't wait.

Hating other Players

The main reason that I am doing this blog is that to earn a CFA charter is a unique experience. It is an experience that requires several years - more if you fail the exams. It is also a relatively lonely experience of self study and most people haven't heard of it. If you are doing it toimpress family or friends, you are wasting time. You earn the charter to get a good job in investment banking. On the internet there are discussion groups for a great many things, but there aren't many outlets for CFA charterholders or candidates. If I wanted to chat with another candidate about the recent exam, there are very few choices. Google CFA and you will find mostly ads or study materials.

One exception to talking with other candidates is a website called analystforum.com. This is the biggest forum I have found thus far devoted to CFA candidates. I do not like this website at all. it's a personal thing, but if you wish to check it out, please feel free to do so. I don't like it for several reasons. First of all, they tend to destroy my confidence. Everyone has their personal strengths. For instance, I have had trouble with derivatives in the past. Go to this forum, someone will post a question on derivatives asking for help. Derivatives are a weak area for me, but not others. There will be 20 people with answers to the question I can't answer by the close of business. That tends to make me feel dumb and unlikely to pass.

Another problem I have is that some people are just jerks. To get my self motivated for the test I think of my past bosses who have fired me, and think of my baby boy. That motivates me to study and probably to pass. Others get motivated by convincing themselves that they are the best. They do this by actively putting down others. 'You are stupid for not knowing portfolio management and seeking help. I just did portfolio and got all of the practice questions right. You have no chance at passing, don't even bother showing up.' I don't need to hate on you to perform my best. I enjoy a little smack talking during a card game or sporting contest, but I'm not going to take time out of my day to expressly try to talk smack to you so that you fail. Hell, if I get 70%, then the other candidates might as well not be there as far as I'm concerned.

Then is the main reason I don't like analystforum. That friggin idiot. As it gets closer to results release, I am going to be on pins and needles almost constantly. I will be checking the results page at least hourly in a couple of months. There will also be that friggin idiot on analystforum who falsely says that the results have been released at least twice a day. I don't know who that idiot is, but it shows the maturity level of a 7 year old. It's kind of like waiting for a college acceptance letter as a high school senior and your younger sibling goes through the trouble of mailing you an envelope with college letterhead and all that's inside is a letter saying 'Gothca!' I think an adult resorting to that level of immaturity with a bunch of emotionally unstable candidates should be a felony.

This is the room I took the exam in. It was in the convention center in Chicago as it is in most big cities. I took this the day before the exam just while they were finishing the setup. You see two rows of tables with each table sitting 4 people. What you see here is pretty much what I got. This picture is taken from the entrance. There are restrooms on both sides of the hall as well as water coolers. That way, they lock the doors and no leaves until they are done with the exam. They give you a chair and you share a table with someone else. You bring your own pencils and calculators. “The time is now 9 o’clock. You have 3 hours to complete this portion of the exam. You may begin.”

The two most common questions that I get asked at this stage are ‘Did you pass?’ and ‘When do you find out?’. The third most popular question is ‘What is a passing score?’ or some other variant. Let me answer the simplest question first. The test is administered the first Saturday of June every year without exception. The results for level 1 are released around July 18th or so, and the results for Levels 2 and 3 are about a month later. Please understand that the results dates are rough estimates. If you try and visit cfainstitute.org today you will see the website operates very smoothly and quickly. If you try it starting around August 15th, it gets progressively slower and slower as a hundred thousand people from around the world check the site every hour or less to see the results. It’s kind of funny until it’s you waiting for the results.

The CFA institute passing score is like Bigfoot. A few people claim to have seen it, and there are reports all the time from people claiming to have proof, but those people are usually drunk, a-holes, or sometimes both. First I will go with the facts, then some theories. First, no one has ever gotten a perfect score. Second, the passing score is fluid. It changes between levels and years. The passing score for level 2 in 2008 will be different than the passing score for level 1 in 2008, or level 2 in 2007. However, CFAI does state that the passing score is adjusted according to the difficulty, and that the passing score is never higher than 70%. That means if I got at least 70% right, then I automatically pass. However, I will never know exactly what I got. The results are released in a bit of a grid. On the left hand side list the different subject areas of the exam (ethics, econ, derivatives, etc.). Along the top is a column for 50% or below, between 51% and 69%, and 70% and above. Then there is a grid with the appropriate marks for what you got in a specific area. There is an introductory sentence that begins with either, ‘We are pleased to inform’, or ‘We regret to inform’. That means for corp finance, I only will know whether I got above 70% right, below 50% or in between. I won’t know exactly how many I got right on any specific area of the test or the test overall. Last year I was asked 12 questions on derivatives. I don’t know whether I got 6 right or none right, but they did tell me it was 50% or less. That hardly seems fair to me, but I am positive I got more right this year. I have heard from some people that a passing score is 70% of the top 1% of test takers, and since no one has ever gotten 100%, that the number is usually in the mid 60’s. I don’t know how they figure it out, but ultimately I can’t spend too much time thinking about it. That would only matter if I stopped answering questions after answering the first 70%. I tried to get the best score I could. If it’s good enough I’ll pass. If it isn’t I’ll get pissed. Passed or pissed I still have over 2 months to go.

The Day After

So it’s finally done. I have finished the exam. This is always the weirdest part of the process for me. It’s like being driving all day long cross country and then when you finally get to the hotel and sit down on the couch, part of you says “Time to go. We have to keep moving!” I spent over 20 hours of studying last week and at least that much the week before. Now, I have no studying. I have gone from full speed to stop. For the last couple of months all my free time has been spent studying or getting mad at myself for not studying. Now what? I don’t know what test I’m taking next June, and they haven’t told what will be on the test yet. However, my brain is saying that it’s a rainy Sunday afternoon with no good sports on – the perfect time to study. I know I need some time off; it will just take a few days to get used to it.

The biggest problem that I have with the test is that it’s multiple choice. There are 4 choices and you are either right or wrong. If I am computing the formula for DDM and for get to use next year’s dividend instead of this years, I am 90% right, which on a multiple choice exam is 100% wrong – especially when they will have the dummy answer as a choice so that I think I got it right. No one ever answers a question on a multiple choice exam intentionally getting the wrong answer. Either you think you got the question right or you guessed. For me, I think I performed well. I know I did much better than last year and guessed relatively rarely. Out of 120 questions, 12 are ethics (which is entirely another beast). That leaves 108 questions and I guessed on less than a dozen of those. If I got all of the other ones right, then I passed with flying colors. As a practical matter I certainly think I passed. However, there were 2800 other people in the room who also think they passed and most of them won’t. Anyway, there are no results yet. Not until much later but I’ll go into that another time.