I am wondering how much CFA candidates really learn (irrespective of which books they follow while preperation) by doing only the CFA program. Because the instruction is ‘passive’ through text books how much do we really know that we think we know.
For example, certain asset allocation models. Just reading about portfolio optimization is totally different from doing it say in MsExcel or a statistical software.
In B-schools, for comparison, more than reading plain material, you start working it out and simulate models in excel. The CFA candidate don’t get to do such things. I am not saying he is prevented from doing, but unless he knows these things could be done, and need to be done to get the edge over others, will he do it?
My questions are
Do you really go out to experiment and learn apart from just reading just the CFA books?
Do coaching institutes that you attend encourage you to do or their faculty demonstrate such techniques while teaching?
Do you think CFA institute must bring out CDs or online files to explain practical concepts - say a monte carlo simulation or a bond immunization or pv01 technique - however limited those exercises could be?
CFA is amongst one of the courses where your own attitude towards your own development is at utmost importance. It’s a self-study based program mainly for working executives. Also one of the reason why CFA is seen as an ‘add-on qualification’ & not ‘the main qualification’ to get you the aspired jobs.
You are right in pointing out the missing ‘real-life’ applications skill development, though am sure that many AFers would be answer it like by saying that you yourself will have to go an extra mile in your efforts & find out the applicability of the knowledge base CFA provides. This is why a full time course in B-school gets an extra edge since they are made to work on the valuation models useful in real life work arena right there while studying.
My responses are-
Do you really go out to experiment and learn apart from just reading just the CFA books?
Totally depends how much time you devote/afford to understand the concepts. Me for instance has put in lot of extra time in excel to understand the concepts like bootstrapping, IPS return requirement etc. After a while i read the concepts more from ‘exam point of view’ with whole intention to pass it
Do coaching institutes that you attend encourage you to do or their faculty demonstrate such techniques while teaching?
I have not come across any institute, in India, which covers this.
Do you think CFA institute must bring out CDs or online files to explain practical concepts - say a monte carlo simulation or a bond immunization or pv01 technique - however limited those exercises could be?
Good point. Then it will also require them to have more interactive candidate’s query solving desk. However this CDs or files will open plethora of questions, IMO. CFAI is hardly able to explain many part of the curriculum which is quite vague through their query desk. I remember when many of AFers (including me) were looking to fully understand the concept such as to why “in a downward sloping IR curve, the realized return will be higher than target return”. Few shot e-mails to the desk yet unable to found any satisfactory answers.
I always said that when I finally passed all the tests I would go back and attempt to actually learn what I have learned.
For me, it seems the FSA books for L1 and L2 are really the ones that seem to be useful, so I am selectively re-reading the parts I never really pinned down 100% (pinning down for a pass and pinning down for real world application are two different animals) as I encounter them on the job. Overall since I’ve already seen everything before it’s really more a matter of review and apply rather than re-learn, which I think is where alot of the benefit of going through the program applies - that is you since you have been famliarized with the materials, it comes to you much quicker.
In general, a lot of the benefit of education in my opinion comes from not necessarily remembering everything you’ve ever studied (unless you are rainman), but being familiar enough with the material to know what you are looking at when you come across it, and know where to go to refresh if needed.
It’s funny. I never thought I would use the quantitative material in L1 or L2 and have, up to now, always used the FSA and Equity valuation methods. Yet just the other day someone from our team sent a client some regressions analysis that was using AR(1) models. Although I would need a refresher to really speak to it, it was really good knowing right away what the presentation was about.
You never know when some of this material will come up in a real-world situation.
FRom what I gather from comments is that when you go back and read it all makes sense. Definitely, its been happening with me too. I am creating portfolio optimization techniques and understanding differrent asset allocation models (all this happened after a year since clearing level 3). I have been re-reading many portions of l3 so many times now, that is has been adding to my confidence very nicely. My application of equity valuation technique is rather rare, so how I keep in touch with these topics is by teaching my junior colleagues at office on some concepts in valuation amd FSA. I deeply value all that was included in CFA curriculum and believe there is no one topic that is regularly used. It does depend on your job opportunity, but also on self created ones. I don’t want to preach here.
But my question remains, how does a candidate view his cfa journey?
hey waiguy, when you say you are creating portfolio opt technieques…does that mean you are using Excel to implement Markowitz,BlackLitterman,etc models…or are you using proprietary methods/software…or are you using programming languages like MATLAB,R etc?
Whenever someone in public or at work is bothering me, I just start talking about GIPS and they leave me alone. I think it has tremendous real world application.
Hey alladin, I have been using Excel to implement those models (linear optim, marko…etc). We (where I work) are sort of very early in the evolutionary phase of understanding and implementing asset allocation models. Using excel has its limitation (slow, size is a problem - used random numbers to simulate portfolios but had to limit the number of synthetic portfolios). So now the idea of using a software has been ‘incepted’ in certain key peoples’ minds. Matlab for one. I am talking to Matlab guys as I write. Its sort of an exciting phase - deciding to go or not for Matlab, or like programs. Or just stick to Excel? At the moment I am frankly quite confused.
Not going out and building spreadsheets, however I do have a better understanding of the underlying concepts behind the tools I use. So, I have a slightly better understanding of how the engine works, but I am going to stick to being a racecar driver and not a mechanic.
Not enough of the lecturers are practitioners, which is fine. I’d rather them just focus on getting us a passing grade.
I feel that they do enough of this in the texts. If one is interested in taking it a step further they can usually google the footnotes and there are plenty of detailed examples.
being a race driver and not a mechanic - nice one, I understand what you mean here, but everytime people keep pushing me to do a bit of mechanical engineering. Frankly I want to stick to driving, the circumstances isn’t letting me be.
Want to connect offline waiguy? I can send you a PM on AF with my email address if you would like to share / help. Nothing better to do (other than network) until we get our charters next month. Specially interested on how the Indian banking industry welcomes the chartrholders?
