Conquering CFA Level 1: Passing the Exam!

I am happy to report that I recently discovered that I passed my CFA Level 1 exam.... on my first attempt. Pretty handily, I might add. Though honestly, I'm more relieved than happy.

Although the exam was in June, I've retained a remarkable amount from the actual experience itself which I felt that I ought to share, lest any of you mere mortals dare attempt an exam with a 1/3 pass ratio. (It's lower if it's your first try).

Personally, I'm thankful that I passed because I doubt my ego could withstand being ranked in the bottom 2/3rd of anything (which is why I was more relieved than happy).

Here are some of the tips I followed and I hope it helps a few of you:

Start Early

This course requires a significant amount of work. The CFA institute prescribes at least 250 hours, I probably did around that or a little less spread roughly over 2.5 Months. I was also working at that time, so it got hectic, even though I had a great boss who was willing to be flexible; If I were you, start earlier, ideally 3-4 months and give yourself a extra time cushion.

That said, if you do not have any background in finance you might require considerably longer time than the 250 hours, I work in finance, so I actually got some studying through my work load.

This exam can be very expensive; I registered in the last deadline and it cost me $1435 dollars. Realize that this is an investment and behave accordingly.

Get the Right Study Material

Unfortunately the material supplied by the CFA Institute is bulky, cumbersome and at times plain stupid. I've yet to meet anyone who has actually used it and passed. In fact its almost designed to put candidates off.

In Pakistan, majority of the people who clear the exam used Schweser Notes (In Pakistan a bootlegged copy costs $35). I'd offer to sell it to you, but then the Schweser folk might get really mad that I reduced there sales by thousands of dollars and sue me.

However, Schweser Notes or Analyst Notes are your best way of efficiently wading through the course and still have enough time for the all important practice exams. I've heard decent things about Stalla as well.

Calculator

The CFA Institute allows you to use only 2 or 3 calculators. I recommend buying either the Texas BA II Plus or Texas BA II Plus Professional as soon as you intend starting with your prep (The HP is acceptable, but has fewer functions).

It is important you get used to the calculator and adjust its settings to your convenience (decimal places mostly). LEARN TO USE IT. It is your lifeblood. And buy, beg or borrow a spare, or at the very least a spare battery and a philips screwdriver (to change the battery).

Work on a Schedule

Make a damn schedule; so you know what your doing and when your supposed to be doing it. If you fall to meet deadlines make sure you have some back up time to eat into. Attempt to diligently follow your plan, you probably won't but it's the thought that counts.

Weekends are ideal for studying, thought what worked for me is planting my butt on a chair for 6-7 hours at a stretch and working through the course. But whatever works for you. A scheduale is important because it gives you a sense of time to the exam which builds the anticipation and sense of urgency.

Course Breakdown

Quantitative Methods, Financial Statement Analysis and Ethics are massive chunks of your course (combined 112/240 or 47%) and more importantly Quantitative methods actually helps you navigate the rest of the CFA course. This is roughly the scheduale I used; It served me well. I strongly recommend it.

A: Economics
B: Quantitative Methods
C: Financial Statement Analysis
D: Corp Finance & Portfolio Theory
E: Fixed Income & Alternate Investments
F: Ethics 
G: Practice Paper 1
H: Revise Course
I: Practice Papers 2 & 3.
J: Last minute forumla & Concept prep

Your strengths can be quants or fixed income and equities. Whichever they be make sure you know that topic inside out, and set your time accordingly. My yardstick was that if I could do the concept checker questions at the end of each study session, I was ready to move on.

If I couldn't, I'd figured out why, they are good barometers to the actual questions in the exam. (The answers are worked out for you in the answers section).

Practice Papers are vital. Take them very seriously and realize that they help evaluate your strenghts and weaknesses as a candidate.

Form a Study Group

I hear great things about study groups, but for me personally, it didn't happen. I would still recommend forming a study group that meets either after work or on weekends; but make sure it's a productive focused group; the fewer close, personal friends the better. If you do make a group, set targets and meet them.

Outside Help

I don't recommend classes unless you are someone with no financial experience. It's a do it yourself kind of course and there are alot of people who've already cleared CFA level 1 whom you can probably access for the tough road blocks. That said, do what suits you. Analyst Notes has a forum that is actually a terrific resource for answering your questions online and they have practice sections for one to attempt as well.

Develop Exam Temperament

Practice papers are very important, do atleast 3. Recreate the environment as best you can. Remember, you have to be able to effectively time yourself and finish attempting all your questions on the answer sheet. Simulate exam environment as far as possible. The Regent Plaza in Karachi for example is always freezing cold, I brought an extra long sleeve polo just incase. My hands also tend to get sweaty when in Exam mode so I brought tissus.

The biggest factor to recreate is planting your butt on a chair for 3 hours at a time and working in dead silence; if you like studying to music, start not liking it; the brain operates on patterns, you train it how to work. CFA don't allow calculator covers, but they'll most likely make you place them them under your chair. I'd still strongly recommend that one try to leave as much of your personal items out of the hall....like cell phones or study notes. They have a place to keep them, but I rather not lose my Phone because the millions of bags got mixed up.

Work Hard
There is no substitute for this one. Just Do It and think of the Pay Off (Money, Women, Prestige, Job etc).  Or in my case Level Two Books (Above)

The Actual CFA Exam: Know Thy Enemy & Vanquish with the Vengence of the Almighty!

The exam is broken up into 2 papers, one in the morning and the second in the afternoon. All topics are tested in both sessions. You have to pass every single section (I think), so there is no value in trying to game the exam. None.Whatsoever. Do not skip anything in your study prep.

The CFA Level I exam is 100% multiple choice questions exam. You will be under time pressure in the exam and need to answer on average one question every 1.5 minutes so you must keep moving through the questions. Because I was well prepared I finished rather early.

As per CFA, this is your day's scheduale

1. There is a strong argument for working methodically through the questions in the order they are set but you might wish to start with a subject where you feel confident and which you can work through fairly quickly. But avoid hopping from one subject to another, you'll waste time and you may end up missing questions. Personally, I did it methodically, and it's much smarter that way.

2. Don't panic if you hit some difficult questions, you can probably get as many as 30 or 40 questions incorrect on each paper and still pass the exam. Which ought to make you feel better. Me?, I like certainty. Just back yourself and soldier on through.

3. Ethics in study session 1 is an important topic, if you are a marginal candidate your ethics score could be the deciding factor whether you pass the exam. Study Ethics: it's infuriating because it's the one section that you can never be quite certain off. I thought I failed it and according to the break down I was in the top quartile.

4. There is no penalty for getting an answer incorrect, so if you don't know the answer eliminate any obviously wrong answers and guess which one is correct.

5. Mark questions in the exam booklet when you are not sure of the answer or where the calculation needs checking and come back to them when you have finished all the other questions.

6. Do not get distracted by a question that does not make sense, if the question turns out to be ambiguous then it will be excluded when it comes to grading the paper. Do not also get distracted by any pretty women in the vicinity. Imagine that they are all vampires and will kill you if you donot pass this exam. 

7. Read the questions carefully, particularly when there is a negative statement in the question. They can get tricky. Practice reading the questions. Practice reading the questions. Did I mention how you should practice reading the questions? 

8. Leave time to check your answers on the answer sheet, be careful you don't miss answering a question. Seriously. Go over your sheet the minute you think your done and review the questions that you weren't sure about.

9. Lunch break: I'm not sure about other testing centres but the food at Regent Plaza was both expensive and terrible, not to mention pure badly concocted junk food. Bring food from home if you can, brown bread, boiled eggs, salad. I went for multiple cans of Red bull. Lots of it. I shouldn't have (I know this but I'm a glutton for punishment). I was very lucky I used the bathroom before I went into the exam for round 2. Do not consume vast amounts of liquids. Imagine that they are are pure acid and will collapse your intestines & stomach should you consumer more than a mere palm full.

10. Testing Policies: Know where your center is: Some cities may have multiple centres. Karachi, didn't but make sure you know where yours is. Have your multiple HB pencils, sharpner, spare calculater, eraser, Government Issued ID ready to go. here are the relevent CFA testing policies

11. Don't Study during the lunch break. Remember, you may be on adrenaline but your brain is very taxed by the 3 hour morning session. relax, talk to friends, if you are so inclined talk to a few of the cute girls (there are few girls taking the exam in the first place; so it may be cute girl.). Donot talk to anyone about the exam. It serves no purpose.

12. Don't stress: Everyone will love you just as much no matter what the result. It's an exam, not your life. You can take Level 1 in Both June and December as opposed to Level 2 & 3 which are held annually in June. So if you don't pass, know that you can take the exam again 6 months later with a higher statistical probablility of passing.


Here are some useful links that actually served as a template for this post

http://www.cfainstitute.org/
http://www.complore.com/tips-cfa-level-1-exam-day
http://www.ehow.com/how_2079031_pass-cfa-exam-level-1.html
http://www.collegeboard.com/student/plan/boost-your-skills/10296.html
http://www.investopedia.com/articles/professionaleducation/07/CFAexam.asp

No One Cares About Your Degree...

Academia is boring. Studying is annoying. Degrees are useless. Kids go to school/college to socialize and hang out with their friends, hit on girls (if your privileged enough to go to a liberal (read Co-ed) school) and to avoid spending all day at home being shamed by their families into getting a job; the only people that attend school for the sheer purpose of academia are the ones whose best friends’ have names like Stanlake, Shakespeare and Farkhanda Noor. Not exactly the greatest conversationalists.

Now, I have no problem with these bright eyed few who equate educational water carrying to future greatness. I’d just like to point out that they are sorely mistaken if they think their hard work matters.

Why? Because in Pakistan, we don’t care about education. We pay lip service like every other country (good politics), but we don’t do anything about it (great politics). After all, why bother doing something about a ‘problem’ no one cares about?

Firstly, the numbers speak for themselves. We spend more on a single piece of military hardware than our entire education budget; Defense PKR 442bn versus PKR 34.5bn for education.....thank god foot soldiers are cheap…and largely uneducated. It’s also much easier to load up PSE’s with useless employees and then provide subsidies. Again, great politics, because people don’t care about education, they care about jobs. And you’ll always take time out of your day to help out the political party that gets you a job.

Secondly, contrary to popular opinion having a wall full of degrees doesn’t make you successful. It means you spent a lot of money and time in the hope that people will find it impressive. Pity that they don’t. “A's may pay, but D's get degrees”; wrong, a degree is a piece of paper. If one wants to succeed in Pakistan, they don’t need a degree. They need ‘contacts’, friends in high places and a liberal relationship with morals.

Dozens of officials are being slammed for possessing fake degrees. Instead of admonishing them, we ought to celebrate their brilliant complicity; after all, they didn't need a degree to be rich, successful and elected to parliament! The venerable Governor of Balochistan went as far as to claim that there is no distinction between a fake or real degree, after all, as he logically surmises, a degree is a degree. After all, they’re both a piece of paper. Never mind the difference between an elected leader and a military dictator…..after all, they’re both Presidents aren’t they?

On a financial stand point all of our Political head honchos are raging successes, and they did it without that measly piece of paper that everyone contends has value. Bill Gates and Steve Jobs didn't need one either. Education does not equate to success or measure ability, it measures time wasted, opportunities lost.

The Forever Talented Masses: I am tired about hearing how much untapped 'talent' there is in Pakistan. Now if there was so much talent, you'd think they'd be doing more with it. But they are not. In the unlikely scenario that this youth is more talented than your average vegetable, what have they done…. Other than complain? Verifiably awesome at that.

Pakistan is an agricultural economy. We grow stuff. We don't make computer chips. If you gave an average Pakistani farmer a fistful of $1000 Pentium chips, he'd dump them in his fields, and try to grow it...and they don’t, he'll blame the fertilizer , the government and the Zionists. We don’t need more computer science majors; we need people to work the fields and drive those Government subsidized Tractors, a computer programmer makes a terrible farmer…unless he plays Farmville.

Uneducated Electorate = Subservient sycophantic electorate. No Pakistani politician has ever democratically won his seat thanks to the 0.5% privileged rabble rousing educated segment of the population. They win because of the masses who couldn't tell the difference between a boti roll and a hot dog. Political parties have a greater scope to fool the masses if they haven't been taught how to think.

So, let's stop pretending that we education really matters. Over half our country is illiterate, and they seem to be doing alright. It's no biggie. There aren't any revolutionaries threatening to break down doors of parliament demanding things like good governance or any sort of Africa style famine pictures adorning our media's front pages. Things are A-OK.

In Pakistan degrees don’t matter. There. I said it. We don't need education. Well, let’s be generous and say we don’t need any more education (wouldn’t want those feisty ghost schools to go out of business). All we need is the Quran, and chaps that can interpret it for us, we tend to prefer the ones that we agree with.

Why bother investing in education when you can invest in bombs, bullets and government perks? No one cares about your degree; it’s just delaying your entry into the real world and considering the world we live in, maybe that’s not such a bad thing. No one cares, atleast not in Pakistan.

A Version of this Piece was Reluctantly Published on Dawn.com

Forever Proud to be Pakistani

I have rarely been one prone to self doubt (I'm fairly certain that I'd struggle to put together a workable definition), but even I am sometimes amazed about the stereotypes that foreigners (or locals, after all, I was in their country) had about Pakistan. In class, everyone tries very hard to be angelic, but once the class room vanishes, peoples prejudices have the ugly habit of rearing their elephant sized heads. Being a Pakistani, I generally enjoyed taking classes on politics; I dubbed it my 'genetic imperative', and whilst I was happily debating foreign policy, domestic policy the workings of governance, I never really took into consideration of what others thought of me, of my country, I naturally assumed that they thought I was brilliant were debating my idea's with a blind eye to my Nation. I was sadly mistaken in my naiveté, because you can choose to be whoever you want in college, but it doesn't change what others see...or worse, what they wish to.

I took a Political theory class on good governance, and as was custom, a bunch of the students got together and established a study group, or a 'think tank', as we liked to call it, though truth be told, there were relatively few thinkers and more jock 'tanks' in the group.

Since I knew some of the tanks through various joint activities, some of which involve this wonderful ..um... sport called cow tipping. I would typically give them a hand on their essays and edit their relatively un-impressive finished product (My nascent expanding ego was in full force). On one occasion a person who I had considered as a friend took some criticism I had on his paper rather badly, to be fair, I was in overly good spirits hence, couldn't help my self from amusing myself over vast number of spell checkable errors (which he has disabled because he thought it was 'dumb') and what was the last straw for him was his argumentation that in order to promote good governance, people ought to take a religiously principled morality test before they were allowed to join the government, elected or either wise. Now, I have no problem with a morality test, as long as it fits my morals. However, this particular 'Tank', felt that 'Does, Jesus guide you in your every day life' was an appropriate question for anyone desirous of joining the United States government.

Now, whilst I should have gently explained him the ludicrousness of the question and how it wasn't practical or ethical for a country founded on the principles of division between religion and government, (as most would have expected) I instead took a far more humorous route and made several satirical caricatures of how Jesus's guiding, could open the door for the government to be dominated by alcoholics and chemists trying to find the right formula for turning water into wine....as well as how Chris Angel could very well make the argument that as a master of walking on water, how he should be accorded the same status.

Needless to say, as funny as the rest of the group found my attention seeking antics, 'Tank' did not, he felt grossly insulted and felt that I was belittling his faith (I wasn't, just his stupidity). He immediately responded that I didn't have a right to criticize him as I came from a country run by terrorists. Now, to say I was shocked into silence would be accurate, but the truth was that I was fuming. How dare he criticize my beloved country, even with our imperfections, it was the only home that I had known. Unable to come up with a proper argument to admonish him for his ignorance, I retorted that my country wasn't the one that murdered thousands of civilians through repeated air strikes just to find one man.

My country wasn't the one that invaded nations to take advantage of their natural resources, my country wasn't the one that propped up Israel, despite the massive atrocities their forces commit in the west bank and finally that my country wasn't the one with the largest military and nuclear arsenal in the world (I may have forgotten to mention how his country collapsed the entire global economic system).

No, that was not my country. My country was the one that stood by the side of his country as an ally should, my country was the one that turned over suspected terrorists, and my country was the one that set up the meeting that ended the cold war. That is my country, what had his country done for the world lately other than throw money around, murder innocent women and children and prop up west-friendly dictators in the name of 'Democracy'. From that moment on, I knew who I was, I was Pakistani, and forever I would be Pakistani. It would be my home through disaster or prosperity and my love my nation could never diminish despite all the imperfections and negativity surrounding it. All countries are imperfect in their own way, just as they are perfect to each of our own.

In a media dominated world, we hear all the negativity, but we fail to see past our troubles and enjoy the small victories, whether it's an NGO providing environmentally friendly light bulbs or the fact that we have the cheapest tractors in the world to boost a strong, prosperous agricultural economy, we have many reasons to be proud, and it was a 'Tank' that made me really 'Think' about it. I know that despite the odds that I may live in many other places, that I am forever Pakistani and I will never doubt my own patriotism ever again.