Frustration With Errors in the CFA Curriculum

I’m starting to get slightly frustrated with misinformation that we’re being forced to learn through the CFA curriculum and it’s US centric body of knowledge (I know, it’s an American organisation, but is also a global certification).

For example in L2, stating that bank debt is a short term funding solution is just wrong on so many levels!

I would say that my frustrations’ genisis is the fact that I’m being forced to learn incorrect packets of knowledge just to pass the exam. I’m very against learning facts for the sake of exams altogether, but am willing to do so when the useless facts are correct; however, it does start to grind when what I’m learning is not correct.


“I’m starting to get slightly frustrated with misinformation that we’re being forced to learn through the CFA curriculum and it’s US centric body of knowledge (I know, it’s an American organisation, but is also a global certification).”


So quit then. If you want the charter, then shut up and study your wrong material.

Bank debt is not a source of short term funding? Maybe we are thinking of different things.

But anyway, I guess we should be open to the idea that different people have different opinions about investment knowledge. The CFA just exposes you to a certain school of thought. A rational person should be able to discard the non-useful stuff in practice. In the mean time, think of it as learning how other people think, which might be useful even if you disagree.

The curriculum is a bunch of articles chosen to highlight a bunch of principles. Some (ok, many) of the articles are written by an author who is assuming a US context, but CFAI has decided that there’s enough valuable material that it’s worth reading anyway.

And, it is true that the US produces around 20% of the world’s GDP and has substantially more of the world’s publicly traded securities, so teaching people how to operate in the single largest securities market is not necessarily a bad thing.

Eventually some of this stuff is going to be in Chinese and we’ll have to take the exam in Chinese (or possibly German). Jetzt, deine Nummer ist oben. Dwei bu dwei?

el duque - well done.

iteracom - you’re so naive.

ohai - you’re right, but I can just picture a situation where someone who is learning the CFA and who doesn’t work in finance will embarrass themselves, defend their incorrect (but correct according to the CFA) proposition vehemently and blow an opportunity.

bank debt in Europe comprises 70% of corporate debt for the full range of tenors (i.e., 2-30yrs) vs. 30% in the US where it is typically used primarily for the first injection of debt in LBOs (due to flexibility) then refied with HY bonds.

bchadwick - there is a lot of useful knowledge in the curriculum, and I’m enjoying L2 far more than L1, but I think the CFAI need to wake up to the reality of finance outside of classroom. They have the opportunity to become a very worthy certification but are blowing it by teaching subjects such as the EMH etc.

CFAI doesn’t require you to believe the EMH to pass the exams, and in fact if the EMH were true CFAI dogma, then there wouldn’t need to be all that stuff on accounting and valuation or even portfolio management, becaue all that is required is to believe the price. So just because it’s on the exam doesn’t mean that it is the only right way to manage investments.

I think it is true that if you are going to assert that markets aren’t efficient, the burden of proof is on the investor to explain why they aren’t. I don’t happen to think that markets aren’t efficient, but the fact that lots of people lost money in 2008-2011 isn’t proof on its own that EMH isn’t true. Nothing about EMH says that markets can never go down, or down severely; it says that current prices reflect discounts to expected earnings that incorporate all existing knowledge and the possibility that markets can go down.

What they do want you to do is know about what the EMH argument is and that 1) beating the average market return consistently through skill is definitely not easy and may be impossible, and 2) getting the market average is relatively simple and involves buying an index fund. Furthermore, any fund manager who is capable of beating the market consistently has a huge incentive to keep most of the outperformance for themselves in the form of management fees.

I do think that the CFAI curriculum is a little US centric, but I am not sure how much is gained by forcing CFAI candidates to learn all the intricacies of each individual market just to pass the exam. Given that it’s global and transportable, it makes it manageble to cover the largest most liquid market, and allow those candidates from other regions to then start to take that knowledge and adapt it to their own local regulations.

CFAI isn’t a regulatory exam, it’s a principles exam. Experience (which is also required for the charter) is where you get practice applying those principles to the realities of your market.