What irritates me is how the CFA readings try to pass various numerical machinations as solid reasoning. Some examples: Time-Series Analysis (pg. 371). An analyst tries to fit an AR(1) model to US inflation time series and finds out the fitted model has error autocorrelation, so she fits an AR(2) model and finds out the error autocorrelation is gone. The text points out how using the old model to predict the next month’s inflation would result in a forecast of 4.44% whereas the AR(2) model will predict 4.07%, a whopping 37 basis points less. Now, the text lists the regression output for the example which shows the standard error of the estimate which is 3.32%. In other words, the 95% confidence interval for the forecast is (at least) -2.57%…10.71%, i.e. thirteen percentage points wide, so how does a change of 37 basis points represent a big win? Portfolio Management has an example (pg. 482) where these good folks make a forecast of market return of 15% with a 20% standard error and then proceed to show how, using Treynor-Black and three securities with superior forecasts, you can construct a portfolio that has a superior Sharpe measure and that portfolio has (wait for it!) expected return of 1.42% greater than the market portfolio. And I just want to cry, at 95% confidence, your original market portfolio forecast confidence interval is -25%…55%, who gives a flying fsck about an extra 1.42%? I dunno. Am I wrong here? Maybe I am just missing something.
I’m the fattest I’ve ever been
^^me too
Here the same. They should pay us a diet after the exam!!!
Can we sue them for mental disintegration? Hey, if someone can sue and win cause they spilled coffee (while trying to hold it between their thighs) which no warned as being hot, I have a very valid argument. Its the US of A-the land where dreams come true.
JDV, your first post was interesting, but I ask: why post it (only) here? Why not rather write to CFAI and point out your concerns. I somehow doubt that the head of CFAI comes here and trolls through the posts looking for pointers. (unless you have already written to them with your thoughts, in which case good job)
Ethics is a big friggin’ waste of time. It’s way too subjective. I agree with Joey’s statement: you can study over and over and over again, and still miss 30% of the questions. CFA Institute needs to loosen up. Yes, it’s ok to have any ethical code of conduct. But please don’t shine your arrogance with convoluted test questions.
newsuper Wrote: ------------------------------------------------------- > JDV, your first post was interesting, but I ask: > why post it (only) here? Why not rather write to > CFAI and point out your concerns. I somehow doubt > that the head of CFAI comes here and trolls > through the posts looking for pointers. > > (unless you have already written to them with your > thoughts, in which case good job) I want to get some things to add to the list. The LIFO thing seems especially good.
Joey, >I passed a professional exam in Japanese once (my Japanese has all but left me). Which one?
Dividend discount model… PLEASE. If a manager tells me he does lots of valuations based on the dividend discount model I’m definitely not going to pay him any serious fees. I totally agree on the credit point. It’s very underweighted and that’s a shame. Ethics, lots of kudos. Nice to include but if you can tackle people who have thoroughly gone through ethics that’s a serious problem. ANYONE should be able to nail that part or the standards themselves suck. Anyway… back to studying now.
zigy Wrote: ------------------------------------------------------- > Joey, > > >I passed a professional exam in Japanese once (my > Japanese has all but left me). > > Which one? JoeyDVivre realized his passion for making people look and feel their best while apprenticing at a salon in Dahlonega Ga. He entered Lanier Technical College eager to learn and graduated as their GOAL (Georgia Occupational Award of Leadership) student of the year. After becoming a licensed Master Cosmetologist, Joey continued his education by attending classes in advanced cutting, color techniques, and formulations, styling and formal hair given by Redken, Matrix, Graham Webb, and Martin Parsons just to name a few. He then went to the Redken Japan Exchange, and became one of their certified hair colorists. This visit included a stringent exam given by Redkens top Japanese professionals. His successful completion of this exam and past work experience resulted in the awarding of a certificate in the Japanese Thermal Straightening system. As a JTS charterholder he is bound by the Redkin Code of Ethics and Standards of Professional Conduct Joey is continuously enhancing his education by attending classes on the latest styles and trends. His future plans are to become a certified colorist by the American Board of Colorists.
boston Wrote: ------------------------------------------------------- > also the whole ethics thing where they make you > determine what standard/code you are > breaking…who cares what they categorize it > as…knowing right from wrong is all that should > matter not to mention that ethics should be renamed regulations, anyway. i don’t think my “ethical compass” is any better for having read this crap three times. let’s be honest, there are just the rules of the business, rules that just happen to be covered by the series 7 (for the most part). at least the ethics section is usually pretty easy… i need all the points i can get.
As actuaryalfred noted, risk neutral is a simple concept, but there’s no reason they should go in depth. All your saying is that you’re indifferent between the expected dollar value of a loss and a gain. In general it doesn’t hold in the real world b/c, as we are taught in prospect theory, people hate losers more than they love winners and we see it in the volatility smile. Being in finance doesn’t mean you are pro-free market or anti-free market. The job of the analyst is to be able to deduce the effects of what is happening. So you should be able to say what the effects of different governmental policies are on the companies or industries you evaluate. The CFAI can’t help that most government policies are bad for the economy. I think boston makes a good point. As an Economist, I never calculate the DW myself, I use statistical packages to do that and no one ever calculates it on their own. It is, however, important to understand what is means and why autocorrelation is important in time series data that is seen VERY frequently in finance. The problem with time series analysis is generally, as FourCastles noted, that all of the models kind of suck when it comes to forecasting. I would agree with Joey that credit should be given a bigger role, especially credit derivatives (but maybe they will get a bigger role in Level 3 from now on). In general, I think the Economics sections have sucked outside of the International Economics sections (where the questions relate to actual numerical problem). On level 1, my worst grade was Economics (and I have an M.A. in it). There’s too much emphasis on macro topics which can’t even outperform an ARMA model. Partial equilibrium (ie what happens when x happens, holding z, k, and m constant) analysis and the long-term determinants of growth (property rights, capital investment, and all that jazz) are much more important for an analyst than any short-term macro model is.
CFAdummy Wrote: ------------------------------------------------------- > Is the CFA program respected in other countries? > England, Canada, Singapore, China? > I mean is it like getting a masters degree or > something? its well respected here in canada. pretty sure toronto has the highest number of charterholders in the world (could be out to lunch on that though - feel free to correct me)