It is weird that I am so far into my studying while listening to Xmas songs on the radio. As mentioned before I have finished sessions 4 and 5. I have also now finished 6, will finish 7 tomorrow, and will finish 8 before I take off the last 11 days of the year. That's 5 of 18 sessions before new year's. I don't want to make it sound like it has been easy - it hasn't. The thing that motivates me the most when studying is hate. I get mad at people who have wronged me in the past, companies that haven't called me for an interview despite being underqualified, qualified, and over qualified for a position (I'm talking about you Target. How many years of accounting experience do I need to run a cash register?). Being unemployed has left me bitter and mad at a great many people. That helped me study last spring.
The problem is that I got some pretty good news in mid November that left me pretty satisfied with my life for a few days. On top of that thanksgiving was fun. That left me short on hate right when I was working on study session 6. I don't need to go into too many details except to say that someone close to me helped provide me great motivation by joining the hater list. That made session 7 go by real easy. So easy in fact, that I have been able to review session 6 as well and am now caught up with where I want to be.
What could make my life bearable for a week despite being unemployed for a year (other than my 2 year old son who is the light of my life)? I was just admitted into the MBA program at UF with a full tuition scholarship. All I have to do is keep a roof over my family's head without being able to have a full time job because classes are taught during the day. That made me happy, but now I have to buckle down. The program begins in April 2010 - roughly 6 weeks before the exam. That means there will be a month where I have to be a full time college student and a CFA candidate during crunch time. Luckily, the early MBA classes will be on subject I learned as an undergrad so I should be able to survive the month from hell. The bigger problem is that if I fail 2010, then by 2011 I should be nearing the end of the MBA program and may even have a job. I definitely won't have enough hate to pass that exam. That means if I don't pass 2010, then in order to pass the level 3 exam I will probably need to get motivated despite having a job, decent credit, and no hate. I will have to be motivated on some positive crap like improving myself or the quest for knowledge. I can't take that risk.
I am going all out for the 2010 exam. I will finish going through all the cirriculum by the time classes begin, but I'll still have to review. I have come to the realization that because there are fewer readings in level 3 I don't need a full 10 days for a study session. So I will have a primary study session for each 10 days and a secondary one to review. For example the next 10 days I will learn session 8 and if time allows, review session 4. This has the added cost of ensuring less free time, but the added benefit of keeping the material fresh in my mind. I will update again at the New Year, but for now it's full speed ahead on session 8, asset allocation.
Tuesday, December 8, 2009
Monday, November 16, 2009
IPS intensity
First of all you would expect that a level 3 candidate would not exhibit such astounding levels of stupidity. Due to financial reasons I haven't enrolled yet for the 2010 exam. As a result, in order to prepare for the exam I bought the materials for the 2009 exam at a pretty deep discount on ebay. I always tell people preparing for the exam that the key is to follow the LOS. So of course I start with study session 4. As part of my studying I spend a full day and a half becoming proficient on a difficult reading that isn't in the 2010 cirriculum. I now know more about trusts than I will ever need to know - probably.
As I mentioned I decided to start with SS4. The first 2 are ethich which I am probably going to do either at the start of the new year or closer to the end to keep it really fresh. I have already gone through 3-5 in September when I burned out. 3 is about biases and kind of easy so 4 was the logical place to start. It is definietly a meaty area where I can get or miss a lot of good points. It deals with individual portfolio management. Every year the CFAI lists the actual essay questions from that years exam. The first essay question for the last 5 years has been tied for the most points and has been on this study session. I spent a full 10 days working on it and feel good, but not that good. On the essay questions, I get most of the points, but not as many as I would like. The good part about essay questions is that if you don't know all of the answer you can get partial credit. The bad part is it is so hard to get all of the points.
The main thing that I have noticed about level 3 thus far is the amount of thought involved. I am expected to actually think. The previous levels involved remembering what I learned in the texts. Now I am expected to derive your tolerance for risk based in part on your occupation. For instance, a fashio designer would be more willing to take risk than a librarian. However, they will give me an occupation and tell me to think. The text doesn't list every occupation in existence. That means I have to use judgement. If I wanted to think I wouldn't have spent so many years studying numbers. The things you have to sacrifice to become a CFA.
As I mentioned I decided to start with SS4. The first 2 are ethich which I am probably going to do either at the start of the new year or closer to the end to keep it really fresh. I have already gone through 3-5 in September when I burned out. 3 is about biases and kind of easy so 4 was the logical place to start. It is definietly a meaty area where I can get or miss a lot of good points. It deals with individual portfolio management. Every year the CFAI lists the actual essay questions from that years exam. The first essay question for the last 5 years has been tied for the most points and has been on this study session. I spent a full 10 days working on it and feel good, but not that good. On the essay questions, I get most of the points, but not as many as I would like. The good part about essay questions is that if you don't know all of the answer you can get partial credit. The bad part is it is so hard to get all of the points.
The main thing that I have noticed about level 3 thus far is the amount of thought involved. I am expected to actually think. The previous levels involved remembering what I learned in the texts. Now I am expected to derive your tolerance for risk based in part on your occupation. For instance, a fashio designer would be more willing to take risk than a librarian. However, they will give me an occupation and tell me to think. The text doesn't list every occupation in existence. That means I have to use judgement. If I wanted to think I wouldn't have spent so many years studying numbers. The things you have to sacrifice to become a CFA.
Saturday, October 31, 2009
Burnout
This has been an unbelievably busy summer. Of course today was Halloween and the temp was 88 so summer is present tense here in central FL. Anyway, less than a month after I took level 2 I started preparing for the GMAT exam. That exam isn't as difficult as any CFA exam, but it does require preparation and study. I took that exam roughly the same time as the level 2 results came out, and I was so jazzed up by the level 2 results, I ordered the 2009 texts and started studying for level 3 before labor day.
My plan was very simple. Go through the curriculum (other than ethics) once before Xmas. Take two weeks off for the holidays. Go through the entire curriculum a second time and then use the month of May for review. However, my plans had a problem. I studied for level 2 until this past June. Within a few weeks after that I started studying for another exam. Within a few weeks after that I started studying for the level 3 exam. By the middle of September I had actually gotten through 3 study sessions, but mentally I felt like it was April. I could have pushed through the material if I needed to, but the learning center of my brain was clearly burned out. For the first time since I started as a CFA candidate I decided to change my plan of attack.
The plan now is for me to still spend May for review and to spend 10 days on each study session rather than the standard week. If you check your calendar that means 180 days ending on April 30. Those 180 days begin tomorrow. I haven't studied in the last month and a half even though there were time I could have and wanted to.
I did learn several things about level 3 when I studied before though. First, this is largely a conceptual course. No formulas to memorize just concepts to demonstrate and apply. Second, everything is related to portfolio management. There is material on trusts, institutional investors, and a myriad other things that essentially reduce to modern portfolio theory. Not more difficult than the level 2 exam, but in no way could it be called easy. It's pretty clear that for right now I just need to work had and not focus about strategy until the spring. No shortcuts. No tricks. Just a treat next August.
My plan was very simple. Go through the curriculum (other than ethics) once before Xmas. Take two weeks off for the holidays. Go through the entire curriculum a second time and then use the month of May for review. However, my plans had a problem. I studied for level 2 until this past June. Within a few weeks after that I started studying for another exam. Within a few weeks after that I started studying for the level 3 exam. By the middle of September I had actually gotten through 3 study sessions, but mentally I felt like it was April. I could have pushed through the material if I needed to, but the learning center of my brain was clearly burned out. For the first time since I started as a CFA candidate I decided to change my plan of attack.
The plan now is for me to still spend May for review and to spend 10 days on each study session rather than the standard week. If you check your calendar that means 180 days ending on April 30. Those 180 days begin tomorrow. I haven't studied in the last month and a half even though there were time I could have and wanted to.
I did learn several things about level 3 when I studied before though. First, this is largely a conceptual course. No formulas to memorize just concepts to demonstrate and apply. Second, everything is related to portfolio management. There is material on trusts, institutional investors, and a myriad other things that essentially reduce to modern portfolio theory. Not more difficult than the level 2 exam, but in no way could it be called easy. It's pretty clear that for right now I just need to work had and not focus about strategy until the spring. No shortcuts. No tricks. Just a treat next August.
Thursday, August 20, 2009
I am pleased to inform you...
You are looking at the results of the newest Level 3 CFA candidate!!!
Questions <=50% 51-70 >70%
It is impossible to overstate how much of a relief this is. I have been working on this for years – just for level 2. No one reads this blog to hear about my emotions so I won't bore you, but this feels really good. It is especially weird because if you look at the 3 questions I asked in the last post, I actually got them all wrong:
I didn't get in the right hand for corp fin. It goes to show that every time I do corp fin I am overconfident. However, there is negligible corp fin at level 3 so it doesn't matter much going forward.
Got 3 in the left. Econ and Derivatives were expected, but I thought I had done better in fixed income.
Continuing with Fixed Income, I performed worse than last year in that area. If someone had told me a week ago that fixed income was in the left column I would have immediately started reviewing level 2 for next year.
Technically, I am not a level 3 candidate yet since I haven't registered for the exam (due to financial reasons). However I have set aside some money to purchase the texts from last year on ebay. Checking out the LOS, I can see that there isn't much change between the years. I should begin studying within the next month. I will keep the blog updated with my progress.
Questions <=50% 51-70 >70%
AI 6 *
Corp Fin 12 *
Derivatives 12 *
Econ 6 *
Equity 24 *
Ethics 12 *
Stmt Anal 24 *
Fxd Income 12 *
Port Mgmt 6 *
Quants 6 *
It is impossible to overstate how much of a relief this is. I have been working on this for years – just for level 2. No one reads this blog to hear about my emotions so I won't bore you, but this feels really good. It is especially weird because if you look at the 3 questions I asked in the last post, I actually got them all wrong:
I didn't get in the right hand for corp fin. It goes to show that every time I do corp fin I am overconfident. However, there is negligible corp fin at level 3 so it doesn't matter much going forward.
Got 3 in the left. Econ and Derivatives were expected, but I thought I had done better in fixed income.
Continuing with Fixed Income, I performed worse than last year in that area. If someone had told me a week ago that fixed income was in the left column I would have immediately started reviewing level 2 for next year.
Technically, I am not a level 3 candidate yet since I haven't registered for the exam (due to financial reasons). However I have set aside some money to purchase the texts from last year on ebay. Checking out the LOS, I can see that there isn't much change between the years. I should begin studying within the next month. I will keep the blog updated with my progress.
Saturday, June 27, 2009
Keys to Victory
The test center the day before the test. The tables and chairs are in place. This is roughly two thirds of the total room. About 80% plus of the seats were taken and you heard nothing other than tapping on the calculator and coughing.
So it's now almost July. Nearly a month after the exam. A couple of weird things have happened. I thought that there would be good days and bad. Some days I would be certain of passing and others certain of failure. Actually, after the first week I have been analyzing the thing so much that my confidence hasn't wavered as much as I thought. I can't promise I have passed, but I am more confident than last year at this point. My analysis has come down to several yes or no questions. There is no way to know the answers before they release the results, but the answers to these questions will determine the answer to the most important question – Pass or Fail?
So it's now almost July. Nearly a month after the exam. A couple of weird things have happened. I thought that there would be good days and bad. Some days I would be certain of passing and others certain of failure. Actually, after the first week I have been analyzing the thing so much that my confidence hasn't wavered as much as I thought. I can't promise I have passed, but I am more confident than last year at this point. My analysis has come down to several yes or no questions. There is no way to know the answers before they release the results, but the answers to these questions will determine the answer to the most important question – Pass or Fail?
1. Did I get in the right hand column for corporate finance? I always feel strong in corp fin, but I have always performed much worse than I thought because of small mistakes and trick questions. On the practice exam I thought I got 10 of 12 right. I got 6 right and one of the 6 was a guess. If I got in the right hand column on the real exam, I will get FSA, equity, corp fin, and probably fixed income all in the right hand column. That would be over half the test and make it hard to fail.
2. Did I get more than 2 subject areas in the left hand column? If I got lucky economics was not in the left, but the CFA exam is not for lucky people. Study session 17 was a disaster that probably pulled session 16 and thus all of derivatives over to the left. There were other tough parts of the exam that I think I did moderately well on. For instance, quants. However, the difference between the left and middle columns on quants is one question. I think if I get 4 subject areas in the left column I am guaranteed to fail.
3. Other than derivatives, are there any subject areas where I scored worse than last year? This is the most important question. Last year I got 6 areas in the left hand column. Two of them (PM and AI) I wasn't prepared for at all last year and certainly improved. I can also say that econ probably stayed the same unless I'm lucky - which I am not since I'm taking the test a 3rd time. Derivatives moved to the left, but I don't believe anything else has moved to the left.
I almost feel like a football announcer going over the keys to victory at half time. If nothing other than derivatives moved to the left, I was able to stay out of the left hand column, and they didn't trick me too bad on corp fin, I will pass easily. If two of those questions are answered wrong, then I have failed with flying colors.
Monday, June 8, 2009
Exam Recap
OK, so it is over. I took the test in Tampa on Saturday. Now comes the hardest part of being a CFA candidate - waiting for the results. The test center was at a local catholic school and wasn't as big as Chicago or Atlanta but still much larger than Jacksonville. The test itself was tough but fair. Ethics was much more difficult than the practice item sets they have given before, but last year I got in the left column and I think I improved on that not so much because I did well, but because I didn't do bad. Quants was pretty much right down my aisle. My biggest fear was that they would ask about time series, but they asked about regression so I am sure I got at least 4 right. Right now I'm thinking economics is structurally unfair. It is such a long study session with both conceptual and calculation stuff, it seems at lot to effectively cover in 6 multiple choice questions. Of course, I would probably feel different if I felt that I got more than 3 or 4 right. 4 if I'm lucky. The CFA exam is not for lucky people.
FSA was an area I believed I had to over perform and I did. There is no question I got the right hand column there. Corporate Finance is the standard problem. I feel pretty confident, but from my experience that is where they use the biggest tricks. There are some subtle differences between cash flow numbers and accounting numbers and corp fin features those differences more than anywhere else in the level 2 cirriculum. Now equity on the other hand is pretty straight forward for me. I think out of 4 item sets I may have missed 4 questions total. They have to work hard to beat me in equity. This year I expected them to come correct with fixed income because of the whole economic situation and they did. They didn't even give me a question on binomial valuation. That was a major surprise. However, I am pleased to say I felt prepared overall. I know I got most right and maybe even more than 70%. The same thing with portfolio management. I think I was able to work my way up to a 4 of 6 right. That really the best I could have hoped for walking into the exam. The one area where I really screwed up was the item set for study session 17. I thought I would be ready, but the CFA intsitute had other ideas. I don't really remember the specific questions, but this is the one area where I can definitively say that I performed worse than last year.
I am in a weird position here. Last year I got better than 80% of the people who failed according to the institute. Logically, I know I performed better than last year. In economics I think I stayed the same and most likely went down in derivatives. Just about everything else I improved in - I think. However, emotionally I am scared to death. I never really recovered from failing last year and failing again this year would be devastating. I have spent the last few days on an emotional roller coaster that promises to make the next two and a half months last even longer than last year.
FSA was an area I believed I had to over perform and I did. There is no question I got the right hand column there. Corporate Finance is the standard problem. I feel pretty confident, but from my experience that is where they use the biggest tricks. There are some subtle differences between cash flow numbers and accounting numbers and corp fin features those differences more than anywhere else in the level 2 cirriculum. Now equity on the other hand is pretty straight forward for me. I think out of 4 item sets I may have missed 4 questions total. They have to work hard to beat me in equity. This year I expected them to come correct with fixed income because of the whole economic situation and they did. They didn't even give me a question on binomial valuation. That was a major surprise. However, I am pleased to say I felt prepared overall. I know I got most right and maybe even more than 70%. The same thing with portfolio management. I think I was able to work my way up to a 4 of 6 right. That really the best I could have hoped for walking into the exam. The one area where I really screwed up was the item set for study session 17. I thought I would be ready, but the CFA intsitute had other ideas. I don't really remember the specific questions, but this is the one area where I can definitively say that I performed worse than last year.
I am in a weird position here. Last year I got better than 80% of the people who failed according to the institute. Logically, I know I performed better than last year. In economics I think I stayed the same and most likely went down in derivatives. Just about everything else I improved in - I think. However, emotionally I am scared to death. I never really recovered from failing last year and failing again this year would be devastating. I have spent the last few days on an emotional roller coaster that promises to make the next two and a half months last even longer than last year.
Saturday, June 6, 2009
Quick thoughts
Just back from the exam. I just want to talk about two special events today. First, the genius moment. They gave me the current book value, the current residual income, and the current dividend. They wanted the next year book value. It took me almost 3 minutes to figure out that they wanted me to figure out the profit first before I could answer the question. It was actually a pretty clever question. I think it waqs the most clever question of the day.
On the other hand was that quesiton on cash flow. There are about 1 million formulas in the level 2 cirriculum. It is impossible to memorize all of them, so sometimes I use short cuts. One of the shortcuts is to memorize about 6 different ways to compute FCFF and 1 way to convert FCFF to FCFE. That way I don't have to remember 6 different ways to compute FCFE. Anyway, there was one question where they wanted me to compute FCFE. Of course to compute FCFF you need interest and I spent a solid 10 minutes thinking the quesiton couldn't be answered without interest expense. Of course it could if you knew the formula directly for FCFE. I got it right but questions on the level 2 exam shouldn't take 10 minute just to figure out how to answer the quesiton. I'll write more about the exam in a couple of days.
On the other hand was that quesiton on cash flow. There are about 1 million formulas in the level 2 cirriculum. It is impossible to memorize all of them, so sometimes I use short cuts. One of the shortcuts is to memorize about 6 different ways to compute FCFF and 1 way to convert FCFF to FCFE. That way I don't have to remember 6 different ways to compute FCFE. Anyway, there was one question where they wanted me to compute FCFE. Of course to compute FCFF you need interest and I spent a solid 10 minutes thinking the quesiton couldn't be answered without interest expense. Of course it could if you knew the formula directly for FCFE. I got it right but questions on the level 2 exam shouldn't take 10 minute just to figure out how to answer the quesiton. I'll write more about the exam in a couple of days.
Thursday, June 4, 2009
T-minus 2 days and counting
Well, my mind is a big bowl of mush right now. I have been cramming like crazy this week and I still am not done. I have reviewed the mock exam from this weekend and most of the material, but I still need to review derivatives and ethics by sundown tomorrow. However, I must admit that I am pretty confident. Of course the mock exam helped, plus I have gone over just about ever item set in the texts so I know some of the tricks they might use. I believe that the key for me is to over perform on equity and FSA. Those two areas are a minimum of 30% of the exam and I believe I can get better than 80% there. I don't think I will have too many weaknesses unless they ask really hard on the PM and an item set on time series for quants (my two biggest weaknesses).
My plan is to leave here tomorrow morning and drive to Tampa for the exam. I will be able to study all evening while being left alone. I will be in a mindset that won't be too appealing to the family anyway. As far as I can tell, the test wil be given at a high school or college near the airport. I am up by 7. Shower and check out of the hotel by 8. In the seat by 8:30. The test runs from 9-12 followed by a two hour lunch and an afternoon session from 2-5. Chances are I'll finish both sections early (most people in level 2 don't need a full 3 hours). I'll post next week on how it goes.
My plan is to leave here tomorrow morning and drive to Tampa for the exam. I will be able to study all evening while being left alone. I will be in a mindset that won't be too appealing to the family anyway. As far as I can tell, the test wil be given at a high school or college near the airport. I am up by 7. Shower and check out of the hotel by 8. In the seat by 8:30. The test runs from 9-12 followed by a two hour lunch and an afternoon session from 2-5. Chances are I'll finish both sections early (most people in level 2 don't need a full 3 hours). I'll post next week on how it goes.
Monday, June 1, 2009
I friggin passed!
Ok so here's the deal. The CFAI offers a full length exam that they say is of comparable difficulty to the real thing. Two sessions of 10 item sets each. I wanted to take the exam this past weekend after I had the chance to review the entire cirriculum but still had enough time to learn from the questions I missed. I even made sure to take it in the conference room of a local hotel to try and simulate the environment (as best as possible without spending money). I allowed 3 hours for the morning and 3 for the afternoon, though I didn't need the 3 hours for either half. Anyway, I got 71%! It may not sound like much but the last 3 exams have shown an improvement and don't forget the scoring. No one knows what the minimum passing score is but it is probably in the mid 60s and is always less than 70%. That means if I get 71% next Saturday I will definitely pass! Of course I haven't actually taken the real thing yet.
Out of an abudance of caution in respecting the code of ethics I won't go into the specifics of what was tested, but I will say they tested every study session and I didn't do well in all of them. I thought I performed adequately in derivatives and great in corporate finance. Those were the two areas I got less than 50%. In corp fin in particular there were about 4 questions I was confident I got right and they offered me the wrong answers which I happily selected. If I performed as well on corp fin and derivatives as I thought I would have gotten mid 70s.
The schedule for this week is simple. Today will be reviewing the results of the exam. Then review the last third of the cirriculum. Then the middle third, and finally the first third. Most of the focus will be on the main concepts and all of the formulas. I won't even try to pick days to go along with it. The schedule is simple. Study until I get a headache. Relax until the headache goes away. Study again. On Friday I get in the car and drive to Tampa for the test. I am really starting to feel good about this year's exam.
Out of an abudance of caution in respecting the code of ethics I won't go into the specifics of what was tested, but I will say they tested every study session and I didn't do well in all of them. I thought I performed adequately in derivatives and great in corporate finance. Those were the two areas I got less than 50%. In corp fin in particular there were about 4 questions I was confident I got right and they offered me the wrong answers which I happily selected. If I performed as well on corp fin and derivatives as I thought I would have gotten mid 70s.
The schedule for this week is simple. Today will be reviewing the results of the exam. Then review the last third of the cirriculum. Then the middle third, and finally the first third. Most of the focus will be on the main concepts and all of the formulas. I won't even try to pick days to go along with it. The schedule is simple. Study until I get a headache. Relax until the headache goes away. Study again. On Friday I get in the car and drive to Tampa for the test. I am really starting to feel good about this year's exam.
Tuesday, May 12, 2009
Month in Review
I don't know whay but I haven't been keeping up with my posts as well as I should have. I have moved along pretty well with the prep and I actually want to talk about it. First of all, let me say that I have finished the learning phase of the program. I have gone over the review for PM and for ethics and they were rough. Actually PM wasn't too bad, but it was a long session and I essentially had to learn it because it was new last year and I didn't learn it then. Anyway, I didn't get to go over as many study problems as I would have liked. I felt pretty strong, but I am not as strong as I would like to be. Then came ethics. Ethics has always been pretty hard for me, but I was able to spend a lot of time focusing down on the details and was able to get two thirds of the item sets correct. I will never feel strong about ethics though. That area more than any other on the exam depends on thinking. Just about every other question outside of ethics involves remembering a concept or calculating numbers from a formula. I naturally feel more comfortable with that type of thing. The proverbial 'common sense' thing? If I wanted to use common sense I'd be a doctor.
This is the time for final review. The exam is on June 6th. The previous week I reserve for pretty much trying to burn all the equations into my brain. That means the previous four weeks are to review the entire cirriculum. 20 weekdays to review 18 study sessions. Last week I reviewed corporate finance and statement analysis because that is my comfort zone. They will not be able to get many questions from session 5 through 9 past me. That's why I reviewed them first. This week is equity and fixed income analysis. These are also good areas for me. Conceptual questions on credit spreads at the end of fixed income will be hard if asked (and at least one will be). However equity is real strong for me and the rest of fixed income should be solid as well. This weekend I will take a practice exam and then spend next week on derivatives and PM. I will do my best to keep a update on the blog.
Finally, my motivation has been pretty good overall. I haven't been able to study too well this past weekend but that is because between mother's day for my mom and wife, I didn't want to force them to leave me alone for 2 hours a day. Regardless, I'm going to be able to make it up tomorrow and I am starting to really look forward to next month. I can admit that I still haven't mentally recovered last years exam, but I can honestly say that I am more prepared than I was last June. I am marginally better in ethics and am fully prepard in alternative assets and mostly prepared for PM. I am also better in fixed income and feel much better about quants. Of course I felt pretty good about quants and econ last year, but that is the past. Right now I am looking a month into the future.
This is the time for final review. The exam is on June 6th. The previous week I reserve for pretty much trying to burn all the equations into my brain. That means the previous four weeks are to review the entire cirriculum. 20 weekdays to review 18 study sessions. Last week I reviewed corporate finance and statement analysis because that is my comfort zone. They will not be able to get many questions from session 5 through 9 past me. That's why I reviewed them first. This week is equity and fixed income analysis. These are also good areas for me. Conceptual questions on credit spreads at the end of fixed income will be hard if asked (and at least one will be). However equity is real strong for me and the rest of fixed income should be solid as well. This weekend I will take a practice exam and then spend next week on derivatives and PM. I will do my best to keep a update on the blog.
Finally, my motivation has been pretty good overall. I haven't been able to study too well this past weekend but that is because between mother's day for my mom and wife, I didn't want to force them to leave me alone for 2 hours a day. Regardless, I'm going to be able to make it up tomorrow and I am starting to really look forward to next month. I can admit that I still haven't mentally recovered last years exam, but I can honestly say that I am more prepared than I was last June. I am marginally better in ethics and am fully prepard in alternative assets and mostly prepared for PM. I am also better in fixed income and feel much better about quants. Of course I felt pretty good about quants and econ last year, but that is the past. Right now I am looking a month into the future.
Thursday, April 16, 2009
Portfolio Management
It has been too long since I have posted, so lets get to the updates. Since last time I finished derivatives which was pretty intense. It wasn't a big change from last year so I was able to get the pretty well. The hard part was portfolio management. I don't know whether it was a big change from last year or not because I didn't do a very good job of learning it last year. I made a promise to make sure I was prepared for PM this year. However, my motivation admittedly isn't the highest this time around.
Generally I have been reviewing the material specifically related to the LOS and working on practice questions. That has been adequate overall, but with PM I actually had to learn and did not stick to a good schedule that week. I learned eveything, but didn't spend enough time studying that week to work on some questions. That means I am trying to condense the material now so I can spend a couple of days working on PM practice questions. Looking at the results from last year, it is easy to see why I am trying to give extra weight to PM.
Studying overall hasn't been going as well as I'd like. The issue is exclusively a motivational one. I get plenty of time to study but I don't use as much as I should. I have decided to focus my study on methods that work for me. In the areas where I know the materials I start with the end of reading questions. I then use the results of the practice questions to let me know what parts I need to review. It isn't the ideal method, but this isn't time for ideal. I have a month and a half till the exam and need to use a month to review.
Generally I have been reviewing the material specifically related to the LOS and working on practice questions. That has been adequate overall, but with PM I actually had to learn and did not stick to a good schedule that week. I learned eveything, but didn't spend enough time studying that week to work on some questions. That means I am trying to condense the material now so I can spend a couple of days working on PM practice questions. Looking at the results from last year, it is easy to see why I am trying to give extra weight to PM.
Studying overall hasn't been going as well as I'd like. The issue is exclusively a motivational one. I get plenty of time to study but I don't use as much as I should. I have decided to focus my study on methods that work for me. In the areas where I know the materials I start with the end of reading questions. I then use the results of the practice questions to let me know what parts I need to review. It isn't the ideal method, but this isn't time for ideal. I have a month and a half till the exam and need to use a month to review.
Tuesday, March 17, 2009
Derivative Days
Wow, I haven't posted in a couple of weeks. Guess it's time for an update. First, I have totally finished AI. It wasn't as bad as I feared, but it was pretty intense. I would consider myself test ready for session 13, but not to my personal standards. I usually try to make it a point of pride to do well in asset valuation which includes AI. I will make time to review it soon.
I followed AI with derivatives (session 17) last week and (session 16) this week. If you were to do a lexis nexis search of credit default swaps you would find about a hundred references in the media this week. CDS is a part of derivatives and derivatives are in the news lately. I know that they will come correct on the exam and they will find me prepared. Luckily there are not any substantive changes in the derivatives reading this year and last year I got the 3rd column. I have actually completed all of the readings and I want to try to complete the end of reading questions by the end of day Friday.
Friday is a very special day. As I have mentioned in previous posts, my in laws watch the baby during the day on alternating weeks. My mom was watching the baby on the other weeks previously, but she has been out of town for about 4 or 5 months getting her parents affairs in order. She will be returning the end of next week, so I will be able to get some good studying in for April. I will do session 7 next week while I'm in NY. That is the last session in FSA, but it won't really be too difficult. It's getting down to the crunch time and I'm not exactly where I want to be, but I'm close. For those pilots out there, I'm not on the cross hairs, put I am on the glideslope and just need to add a little thrust. I will update after I get back from my trip.
I followed AI with derivatives (session 17) last week and (session 16) this week. If you were to do a lexis nexis search of credit default swaps you would find about a hundred references in the media this week. CDS is a part of derivatives and derivatives are in the news lately. I know that they will come correct on the exam and they will find me prepared. Luckily there are not any substantive changes in the derivatives reading this year and last year I got the 3rd column. I have actually completed all of the readings and I want to try to complete the end of reading questions by the end of day Friday.
Friday is a very special day. As I have mentioned in previous posts, my in laws watch the baby during the day on alternating weeks. My mom was watching the baby on the other weeks previously, but she has been out of town for about 4 or 5 months getting her parents affairs in order. She will be returning the end of next week, so I will be able to get some good studying in for April. I will do session 7 next week while I'm in NY. That is the last session in FSA, but it won't really be too difficult. It's getting down to the crunch time and I'm not exactly where I want to be, but I'm close. For those pilots out there, I'm not on the cross hairs, put I am on the glideslope and just need to add a little thrust. I will update after I get back from my trip.
Friday, February 27, 2009
All you ever wanted to know about Hedge Funds
I didn't have the baby this week, so I was able to work on a very difficult session. Alternative investments (AI) deals mostly with real estate and hedge funds and some of the unique aspects of valuing them. There are half a dozen readings and I have finished 5 and a half. The trick is that it is of course the most difficult reading this week. The hedge fund readings are entirely conceptual dealing mostly with their unique risks. However, if I were a betting man I would bet that they will ask about real estate valuation. Anyone who has been paying attention to the news knows that the nation (and globe) is in a recession. The talking heads have blamed the proximate cause to be the subprime mortgages. Relative to the CFA program that means derivatives (SS 16 & 17), fixed income securities (SS 14 & 15), and real estate valuation (this one). I fully expect them to come correct on the exam in some misguided notion that my performance on a multiple choice test in June 2009 could prevent mistakes made in June 2007. However, those 5 session will have at least that many item sets on the exam. That is at least 25% of the test. If I perform well here, it will go a long way toward reaching my goal.
The part of the reading I haven't finished I have purposely put off until Saturday and Sunday. Saturday I want to spend the day on the reading and practice questions. Sunday I'll review the entire session. AI should be an area where I get at least 4 of 6 if I do my job right. This is one of the harder parts of the preparation right now. I'm in the middle of the journey. I have to motivate myself to work hard in February for something that won't pay off until June and frankly I have to do it alone. I don't know any other candidates and because I'm unemployed I can't afford some of the classes offered by the prep companies. My family and friends love me but I can't discuss hedge funds with people who don't know the difference between a debit and a credit. I've been here before and I'll get through it but if you're driving from NY to LA, then Indiana ain't nothing but a place to refill your gas tank.
The part of the reading I haven't finished I have purposely put off until Saturday and Sunday. Saturday I want to spend the day on the reading and practice questions. Sunday I'll review the entire session. AI should be an area where I get at least 4 of 6 if I do my job right. This is one of the harder parts of the preparation right now. I'm in the middle of the journey. I have to motivate myself to work hard in February for something that won't pay off until June and frankly I have to do it alone. I don't know any other candidates and because I'm unemployed I can't afford some of the classes offered by the prep companies. My family and friends love me but I can't discuss hedge funds with people who don't know the difference between a debit and a credit. I've been here before and I'll get through it but if you're driving from NY to LA, then Indiana ain't nothing but a place to refill your gas tank.
Monday, February 16, 2009
FSA is AOK
They changed econ around a bit this year. Had I studied with last year's texts I would have been in trouble and not known it. They changed the definition of direct and indirect quotes around. Not a major change, and something that intuitively makes much more sense, and it wasn't a major problem. Overall econ was much as I remember it. It was largely divided into two parts with minor changes. Last year there were only 3 arguments against free trade. This year they used some pretty tortured logic to nullify those arguments. Last year the currency parts were similar but as I mentioned, they changed the definition of direct quotes and the LOS seem to be less about calculate and more about discuss. I feel pretty good about both, but that is the real problem with econ. Currency deals with really small numbers and fractions. The key is knowing with numbers to work with and what to do with them. You must know to use the bid price and divide. No worries however! If you accidentally use the ask price and multiply they will gladly put that (incorrect) answer as one of the options. You will select that option and be none the wiser until you get the results in August that when you thought you got 5 of 6 correct, you got no more than 3 correct. Trust me, I'm talking from experience on this one.
I have the baby this week, and a bit of a family problem so I am choosing a pretty weak study session. Session 5,6, & 7 are financial statement analysis and accounting. I always get above a 70 in this area. Plus they have really watered it down this year. This week's session is session 5. Two readings and one of them is 12 pages. All of FSA is 7 readings for 3 sessions - equal to the number of readings in econ. The readings are longer, but not particularly meaty. Last week was a chicken thigh, this week is a chicken wing. I will be flying to NYC round trip this weekend to bury my grandfather so I should have session 5 done before I leave and use the flights to review quants and econ. If I had actually performed on quants and econ as well as I thought I did, I'd be about halfway done with the level 3 cirriculum today.
I have the baby this week, and a bit of a family problem so I am choosing a pretty weak study session. Session 5,6, & 7 are financial statement analysis and accounting. I always get above a 70 in this area. Plus they have really watered it down this year. This week's session is session 5. Two readings and one of them is 12 pages. All of FSA is 7 readings for 3 sessions - equal to the number of readings in econ. The readings are longer, but not particularly meaty. Last week was a chicken thigh, this week is a chicken wing. I will be flying to NYC round trip this weekend to bury my grandfather so I should have session 5 done before I leave and use the flights to review quants and econ. If I had actually performed on quants and econ as well as I thought I did, I'd be about halfway done with the level 3 cirriculum today.
Monday, February 9, 2009
On to Econ
First of all, the CFA institute was really on the ball. I ordered the books after business hours on Wednesday. They arrived by 5pm Friday. I don't know where the books were located, but standard delivery from VA to central FL usually takes more than 48 hours. Hell, standard delivery from Atlanta to central FL is 3 days. Anyway, I got the new books which included the new reading for study session 10. SS10 is pretty much an intro to valuation, but the new reading had several new ways to calculate the required return rate (I'll just call it K for this post). For those who aren't into finance I won't go into detail but K is one of the fundamental concepts. Without K most of the level 2 cirriculum wouldn't exist. In fact, K is the foundation of level 1 as well. I now know about a half dozen ways to compute it. ThCFA people tend not to test new readings the first year, but it would be criminally negligent to walk into the exam without being fully prepared for this one. I can say that I am fully prepared on all of SS10 including the new reading. I even did pretty well on the practice questions. That means since it's Monday, it's time for a new study session.
Since I don't have the baby this week, I wanted a session with some meat to it. SS4 (economics) is perfect for me. First, it is the longest. It has over 100 pages of textbook reading (very dry stuff at times). It is divided into 7 readings and with only 6 questions on the exam you know they won't test on even half of the stuff. However you don't know what part they will test so you have to learn everything. Also, the currency exchange that I learn in this session is imperative in other areas. The session is largely in two halves. The first is the ideological and conceptual stuff. This isn't a politcal blog but the people who write the economics texts are obviously McCain supporters. It boils down to gov't regulation is bad and the best countries in the world have the weakest investment laws. If you can't speak the company line it will probably hurt you on the exam. The second half of the session in foreign exchange. That area is trick for me. I understand the concept well, but the calculation can be a bitch. To convert from dollars to whatever you have to know whether to use the bid or ask price and whether to multiply or divide. If you get it wrong no worries! They have the wrong answer you just got as one of the 4 choices. You fill in the oval thinking you got the answer right until you get the results in August showing you got at least 3 of 6 quesitons wrong. Trust me I am talking from experience. I will be spending most of this week on currency exchange and GOP ideology, and if there's time leftover I'll review quants.
Since I don't have the baby this week, I wanted a session with some meat to it. SS4 (economics) is perfect for me. First, it is the longest. It has over 100 pages of textbook reading (very dry stuff at times). It is divided into 7 readings and with only 6 questions on the exam you know they won't test on even half of the stuff. However you don't know what part they will test so you have to learn everything. Also, the currency exchange that I learn in this session is imperative in other areas. The session is largely in two halves. The first is the ideological and conceptual stuff. This isn't a politcal blog but the people who write the economics texts are obviously McCain supporters. It boils down to gov't regulation is bad and the best countries in the world have the weakest investment laws. If you can't speak the company line it will probably hurt you on the exam. The second half of the session in foreign exchange. That area is trick for me. I understand the concept well, but the calculation can be a bitch. To convert from dollars to whatever you have to know whether to use the bid or ask price and whether to multiply or divide. If you get it wrong no worries! They have the wrong answer you just got as one of the 4 choices. You fill in the oval thinking you got the answer right until you get the results in August showing you got at least 3 of 6 quesitons wrong. Trust me I am talking from experience. I will be spending most of this week on currency exchange and GOP ideology, and if there's time leftover I'll review quants.
Tuesday, February 3, 2009
Level 2 Candidate
It's official – I am a Level 2 candidate (again). I paid the fee to enroll and received electronic confirmation that I am enrolled for the exam. One of the ethics rules makes it clear that you are not a candidate until you pay the money. You then remain a candidate until the day the results are released. Anyway, I had to register I couldn't wait much longer. I started studying a few weeks ago, but I have hit a wall. There are no easy study session left where they haven't changed the material from last year. Study session 10 (capital markets) looked promising, but they changed one of the readings. Same for statement analysis. I would be more than willing to do a hard study session but I can't, my son won't let me. I lost my job last fall (why I didn't register for the exam months ago). My wife works 13 hours a day on Monday, Wednesday, and Friday. Right now, on alternating weeks my in laws watch my 15 month old son for 8 hours on those days. On those weeks I have plenty of time which allow me to do some real studying. The other weeks, I am stuck with him all day long for 3 days a week. If you have ever babysat a 15 month old you know that you can't take your eyes off of them for 5 minutes. I have to strap him into the stroller to use the restroom. I am literally unable to study before 8pm this week on M, W, and F. That means I am limited to light material. However, there is no more light material that hasn't changed at least a little from last year.
I have finished corporate finance which is study sessions 8 and 9. Those are my favorite areas of learning usually and I don't know why I didn't get above 70 on the last exam. I did tighten up on economic income and profit (not like accounting income and profit). I did very well on the practice questions. This most recent week was quants – study session 3. The first two readings were single and multiple linear regression. I feel confident on those overall. I didn't study as much as I planned and am not as tight as I'd like, but I feel strong about it. The third reading is time series analysis and that could be tough for me if they test it in June (I'm certain they will ask at least 3 questions minimum). The first half on the reading is simple enough, but when they start asking me to test for errors and correct them, my eyes start to glaze over. This chapter more than any other in the level 2 curriculum has all of those weird statistics and symbols. If you remember high school trigonometry with all the weird greek letters, that is the last half of time series analysis. I am going to have to make some time this spring to learn this stuff. For now, I am moving on to study session 10. I should be able to work most of it by the end of the weekend. It will be even easier now that football season is over.
I have finished corporate finance which is study sessions 8 and 9. Those are my favorite areas of learning usually and I don't know why I didn't get above 70 on the last exam. I did tighten up on economic income and profit (not like accounting income and profit). I did very well on the practice questions. This most recent week was quants – study session 3. The first two readings were single and multiple linear regression. I feel confident on those overall. I didn't study as much as I planned and am not as tight as I'd like, but I feel strong about it. The third reading is time series analysis and that could be tough for me if they test it in June (I'm certain they will ask at least 3 questions minimum). The first half on the reading is simple enough, but when they start asking me to test for errors and correct them, my eyes start to glaze over. This chapter more than any other in the level 2 curriculum has all of those weird statistics and symbols. If you remember high school trigonometry with all the weird greek letters, that is the last half of time series analysis. I am going to have to make some time this spring to learn this stuff. For now, I am moving on to study session 10. I should be able to work most of it by the end of the weekend. It will be even easier now that football season is over.
Friday, January 16, 2009
Level 2, Take 2
August 2008
3016626
Marc B. Ross
Level 2: Fail
Item Set
We have divided the full group of failed candidates into ten approximately equal score bands. Your score band below shows how your overall score on the exam compares with all other failed candidates.
For example, if your reported score band is 1, you scored in approximately the bottom 10% of failed candidates. If your reported score band is 2, your score was within the next band width ranging from approximately the bottom 11% to 20% of failed candidates. If your score band is reported as 10, you scored in the top 10% of all failed candidates.
Performance band of your overall score among all candidates who failed the exam: 8
_____________________________________________________________________
I'm Back. I have posted my results from June above. I'm not going to lie, I was devastated by the results. I felt more prepared for this exam than any other CFA exam and prepared more for this exam than I ever prepared for any test in my life. I even thought about quitting the program for about a week, but I thought better of it. Ultimately I started to recover and hear I am. First, last year's results. Where it says max results I put in the number of questions they asked in that area. I wasn't really surprised by ethics. Ethics for me is the one part of the exam I can't really prepare for as well as I'd like. I read the handbook and even work the examples, but the questions are always complicated. They try and test 2 or 3 rules per exam question and I always have trouble figuring which rules take precedence over the others. Is my primary duty to the employer, the public, or the designation? I usually get 4 of 6 on the practice exams, but never more than that. Fixed income is always an area where they ask tough questions. I went into the test thinking I was prepared and walked out of the test thinking I did well. They asked a bunch of conceptual questions this year that I thought I got most of them right. Apparently, I got no more than half right.
Economics and quants cost me the exam. I thought between the 12 questions I got at least 10 right. I thought I got the 5th question on quants wrong, the 6th question on economics wrong and remainder right. I got at least half wrong and that difference of 4 questions probably cost the exam. I honestly don't know how I can prepare harder on economics. Portfolio mgmt. was unbelievable. They changed the cirriculum in that area totally this year. I knew before during and after that they would ask 6 questions and I'd be lucky to get 3. I probably got 1 or 2 right. That was the one area of the exam I expected to get in the first column. I didn't expect to do so poorly on Alternative Investments. I didn't expect it because I didn't know they would ask it. It was one reading as part of equity investments. The entire reading was about real estate valuation. I got the main concepts down but thought it would be 2 or 3 questions as part of equilty valuation. Instead, it was it's own item set. I was screwed.
The good news is that the areas I thought I performed the best in, I was right. I expected higher in corp fin, but overall, I did well in asset valuation. According to the email above, I did better than 80% of the people who failed. Also, according to the email above I did worse than 100% of the people who passed. Apparently I need to maintain in the asset valuations, work my ass of in quants and econ even more than before, spend some extra time on fixed income, and actually put forth some effort on A.I. and P.M. That should not just get me passing, but with flying colors.
So that's the story. Now to make it happen. This week am finishing up the first study session on corp fin. There are 2 sessions, each with an item set in June. I am almost done with the first. I have to work on a couple of practice questions, but it won't be too bad. I wanted to start with an area I feel confident in so I can wrok up to full speed. I can't just go from studying 0 hours last week to 20 this week. So I start with an area where I have to wrok hard, but not too hard. Finance is perfect. I now most of the material, but some of the finer points, mostly memorization of lists, will get by brain working again. Like the transmission of a car you can't go from 1st gear to 5th. Well, my study plan has me doing a study session a week until the first full week in May where I spend the month in review. The hardest part is that I'm studying stuff I was convinced I new last spring. I won't be able to get over that for quite some time.
3016626
Marc B. Ross
Level 2: Fail
The table below illustrates your subject matter strengths and weaknesses. The three columns on the right are marked with asterisks to indicate your performance on each question or topic area.
Item Set
| Q# | Topic | Max Pts | <=50% | 51%-70% | >70% |
| - | Alternative Investments | 6 | * | - | - |
| - | Corporate Finance | 12 | - | * | - |
| - | Derivatives | 12 | - | - | * |
| - | Economics | 6 | * | - | - |
| - | Equity Investments | 24 | - | * | - |
| - | Ethical & Professional Standards | 12 | * | - | - |
| - | Financial Statement Analysis | 24 | - | - | * |
| - | Fixed Income Investments | 12 | * | - | - |
| - | Portfolio Management | 6 | * | - | - |
| - | Quantitative Methods | 6 | * | - | - |
We have divided the full group of failed candidates into ten approximately equal score bands. Your score band below shows how your overall score on the exam compares with all other failed candidates.
For example, if your reported score band is 1, you scored in approximately the bottom 10% of failed candidates. If your reported score band is 2, your score was within the next band width ranging from approximately the bottom 11% to 20% of failed candidates. If your score band is reported as 10, you scored in the top 10% of all failed candidates.
Performance band of your overall score among all candidates who failed the exam: 8
_____________________________________________________________________
I'm Back. I have posted my results from June above. I'm not going to lie, I was devastated by the results. I felt more prepared for this exam than any other CFA exam and prepared more for this exam than I ever prepared for any test in my life. I even thought about quitting the program for about a week, but I thought better of it. Ultimately I started to recover and hear I am. First, last year's results. Where it says max results I put in the number of questions they asked in that area. I wasn't really surprised by ethics. Ethics for me is the one part of the exam I can't really prepare for as well as I'd like. I read the handbook and even work the examples, but the questions are always complicated. They try and test 2 or 3 rules per exam question and I always have trouble figuring which rules take precedence over the others. Is my primary duty to the employer, the public, or the designation? I usually get 4 of 6 on the practice exams, but never more than that. Fixed income is always an area where they ask tough questions. I went into the test thinking I was prepared and walked out of the test thinking I did well. They asked a bunch of conceptual questions this year that I thought I got most of them right. Apparently, I got no more than half right.
Economics and quants cost me the exam. I thought between the 12 questions I got at least 10 right. I thought I got the 5th question on quants wrong, the 6th question on economics wrong and remainder right. I got at least half wrong and that difference of 4 questions probably cost the exam. I honestly don't know how I can prepare harder on economics. Portfolio mgmt. was unbelievable. They changed the cirriculum in that area totally this year. I knew before during and after that they would ask 6 questions and I'd be lucky to get 3. I probably got 1 or 2 right. That was the one area of the exam I expected to get in the first column. I didn't expect to do so poorly on Alternative Investments. I didn't expect it because I didn't know they would ask it. It was one reading as part of equity investments. The entire reading was about real estate valuation. I got the main concepts down but thought it would be 2 or 3 questions as part of equilty valuation. Instead, it was it's own item set. I was screwed.
The good news is that the areas I thought I performed the best in, I was right. I expected higher in corp fin, but overall, I did well in asset valuation. According to the email above, I did better than 80% of the people who failed. Also, according to the email above I did worse than 100% of the people who passed. Apparently I need to maintain in the asset valuations, work my ass of in quants and econ even more than before, spend some extra time on fixed income, and actually put forth some effort on A.I. and P.M. That should not just get me passing, but with flying colors.
So that's the story. Now to make it happen. This week am finishing up the first study session on corp fin. There are 2 sessions, each with an item set in June. I am almost done with the first. I have to work on a couple of practice questions, but it won't be too bad. I wanted to start with an area I feel confident in so I can wrok up to full speed. I can't just go from studying 0 hours last week to 20 this week. So I start with an area where I have to wrok hard, but not too hard. Finance is perfect. I now most of the material, but some of the finer points, mostly memorization of lists, will get by brain working again. Like the transmission of a car you can't go from 1st gear to 5th. Well, my study plan has me doing a study session a week until the first full week in May where I spend the month in review. The hardest part is that I'm studying stuff I was convinced I new last spring. I won't be able to get over that for quite some time.
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