Category Archives: General

Your two-week CFA Exam Rocky Balboa Montage!

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Remember the great training montages in the Rocky movies? Where the champ could come back from a defeat to overcome a stronger boxer by just going through three minutes of training set to some kick*#@ music.

Ah, if only studying for the CFA exams were like that. You could slide through the first four and a half months of the year with your mind decidedly not in the game and then crank out a hardcore two weeks to beat the exam! Epic!

While you can’t expect to pass the exam with just two weeks of studying, what would your montage training program look like?

Eye of the Tiger
Picking up on the montage scenes in the movies where Rocky turns everything he can find into an exercise, you really need a diversity of study resources. Rocky’s montage may only last three minutes but yours will be two weeks and only doing practice problems is going to get boring. You need to be using flash cards, condensed reviews, practice problems, and single-sheet summaries. Just as you can’t expect to get well-developed pectorals from just a bench press, you need to hit the CFA curriculum from different angles to assimilate it.

Do you see Rocky taking it easy during the montages? No, he’s sweatin’ and pushing the limit lifting a 500 pound cart with Paulie in it. You can’t take it easy in your montage either. By now you know which topic areas are your most difficult. While it wouldn’t make much sense to spend a lot of time on something worth less than 10% of your score, you can’t afford to neglect any one section. Be realistic here and divide your time between those topics that carry a lot of weight and those in which you need the most work.

The beginning few sequences in Rocky’s montage sometimes start with him attempting a really heavy lift or exercise and not quite being able to get it, only to succeed with the same lift later on. For your montage, this means looking deeper into those practice problems or mock questions which were missed so you can answer them correctly if they come up again. It does you no good to just take a mock exam and look at your score. You have to actively study the questions you missed and understand what material you need to work on.

If you haven’t already, you absolutely need to take a practice exam now. Better yet, take two exams to make sure that your score in any particular topic area in the first practice wasn’t just luck. This is going to give you a good idea of where you stand for your grasp on the material.

Once you know how well you are doing on the material, start your two week montage hitting those practice problems, flash cards and review sheets.

At the end of your montage, maybe Wednesday/Thursday of next week, take another couple of practice exams to see your new, improved score.

Then get ready for the big day!
If the exams were a Rocky opponent…
Level 1: Apollo? Many Level 1 candidates are surprised the first time and fail but then come back for the win

Level 2: Mr. T? For most, the hardest exam and many candidates get overconfident after a passing Level 1 score. I pity the fool that don’t take Level 2 seriously!

Level 3: Ivan Drago? Still a tough exam but at this point, we all know that you are going to beat the exam though it may feel like you’ve got brain damage afterwards.

Ah, if only Stallone could live forever, “Rocky XXV: Clone Wars”

‘til next time, happy studyin’
Joseph Hogue, CFA

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Are the actual exam questions easier or harder than mock exams or practice problems?

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Leading up to the exams, I always wondered if my success on practice problems and mock exams would carry through to the actual test. My strategy of taking at least five full-length exams, one that I have written about on the blog, helps to build a confidence interval around your possible exam score. You’ve all been through the quant material so we won’t repeat how to use a collection of scores to estimate an average and predicted score.

Unfortunately, this method of prep is only as good as the tests you use to make the estimate. If the questions within the mock exams or the practice problems are significantly easier than the actual test questions then you’ll get an inflated estimate and may be in for an unpleasant surprise come June 1st.

So how do you know if the practice problems, mock exams or question banks are easier or harder than the actual exam?

From my own experience, the practice problems in the curriculum were probably the closest to the actual test questions in terms of difficulty. The problem with these is that taking a few singular questions provides a poor estimate on how you will do across 120 questions and 18 study sessions. You really need to complete a handful of practice problems from each topic and all at once.

The CFAI mock exams seemed a little harder than the actual exam for the years I took the test (2009-2011). Taking the mock exams each year, I was always a little disappointed in my score but then had no problem on the actual exam. I don’t know if it is intentional, but the Institute did a good job of making me study a little harder in the last couple of weeks.

I used Stalla and another prep provider (which I won’t name but it’s the most widely used) when I took the exams and before I knew about FinQuiz. The question bank problems did seem to be easier than the actual exam and much easier then the Institute’s mock exam. I was usually well into the 80% rate on practice exams through the software and was a little surprised when I took the actual exam.

Having helped prepare some of the questions for the FinQuiz mock exams, I think they are about the same level of difficulty as the actual exam. I have looked at samples across all three exams and there is a good range of easy to difficult problems, similar to the exam.

Your own experience may be different and there are other posts on the forums to help you with the question. One thing to remember when looking at your scores is that you will probably do better on an exam when relaxed in a study area with no consequence to your score compared to the 6-hour mental aerobics on June 1st. This is why I always liked to target a higher percentage score on the mock exams and practice problems than was necessary. If you are regularly making 75%-85% on these tests, you can be confident that you will do well on the actual exam.

As we’ve talked about previously, try not to worry during the exam even if the actual exam seems harder than your prep questions. You’ve done everything you can to prepare and getting nervous during the test will not help. I’ve talked to many candidates you came out of the exam feeling disappointed that it was much more difficult than they anticipated. They spend the next couple of months distraught because they think they failed, only to find out that they passed and put themselves through so much anxiety for nothing.

Spend the next two weeks finishing up your review. Keep to your plan and try to cover as much as possible, then don’t worry about it.

Good luck on the exam,
Joseph Hogue, CFA

 

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CFA Exam Day, What to Expect and How to Prepare

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Unfortunately, more than a few candidates have failed an exam not because they didn’t know the curriculum but because of a test day hurdle.

You’ll hear stories every year of the candidate that is refused admission because they don’t have the proper identification, arrived late or don’t have their admission ticket. On top of these problems, you also run the risk of being so distracted from test day jitters that you can’t focus on the exam.

Knowing how to prepare for exam day and what to expect can go a long way to having a successful June 1st.

Unless the testing center is within walking distance, don’t assume that you can get their without any planning. If you can, try to drive the route a few days before test day. You may be surprised to see detour signs or that construction will start over the weekend. Google maps or other GPS services are good but not infallible and they aren’t going to refund your hard work if you get lost and miss the exam.

Play it safe on the food. That big meal the night before might just keep you up all night with indigestion. Eat a good breakfast but nothing heavy on grease or sugar. If you drink coffee, have a cup to avoid caffeine withdrawal. You are allowed to use the restroom during the exam but it comes out of your allotted time.

Don’t forget to print out your admission ticket (available by clicking here). In fact, open a new internet window and do it now. Put it in a safe place and do not write on it. After you’ve done that, look for your passport. Go ahead, I’ll wait……

Ok, visually check to make sure your passport does not expire through the test day then put is with your admission ticket.

Some candidates bring ear plugs for the test. I never had a problem with noise distractions but it is a good idea just in case. I have heard horror stories of open windows and lawn mowers distracting candidates. If you are at all distracted by small noises, bring ear plugs.

On test day, you’ll all arrive and wait outside the exam room. There will be a table of exam admin to check people in. Just before the exam begins, you’ll all file into the room showing your admission ticket and identification. You’ll be given your seat assignment and put your materials in front of you on the table. Test procters will also check your calculator and any materials you have with you. There is usually a separate area outside the exam room to leave your personal items not allowed in test room but I’d recommend leaving your stuff in the car if you can.

The proctor will read off the test instructions just before the exam. From this point forward do not talked to anyone or look around for any reason. I know it may seem rude but you really cannot risk being flagged as a cheater. It does happen.

I wouldn’t get too anxious about what to do or not to do over lunch. Don’t be afraid to talk to other candidates, these are the best peers and connections you’ll have over your career. Obviously, don’t talk about the test or any specific questions but just use the opportunity to get to know people and what they do.

Just eat as you normally would for lunch. Stay as close to the test site as possible and don’t get in a rush.

Above all, do not second guess any answers you worked on in the morning session! It’s over, don’t worry about it. If you prepared, you did fine. Worrying about the morning session will only lose you points in the afternoon.

I usually studied flash cards for about 20 minutes during lunch. It helped refresh some of the more detailed formulas, but at this point don’t worry too much about learning new material.

The CFA Institute is always the last word on exam day do’s and don’ts. Linked here is the Main Exam Page, where you will find links to print your exam ticket and other useful information. Linked here is the main page for policies on identification, calculators, materials, personal belongings and the candidate pledge. Lastly, the link here is to the Institute’s FAQ page for the exams.

We’ve still got a couple of weeks to the exam. We’ll spend them reviewing and talking about how to squeeze out those last points. Stick with it and get your study time in and you’ll go into the exam confident and ready to pass.

‘til next week, happy studyin’
Joseph Hogue, CFA

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Finding the Motivation the Second Time Around

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We’ve had a lot of emails about finding the motivation to review the same material after you’ve failed the exam. This is a tough one because you’ve already spent a ton of time and the material doesn’t really change much from year-to-year. If it wasn’t interesting enough to stick the first time around, what’s a candidate to do the second time?

As for motivation, I wish I could tell you that repeat testers have a higher pass rate than first-timers. You’ve got to think it’s probable but there isn’t much data to go on. I recently conducted a poll on the LinkedIn group asking candidates on which subsequent try did they pass. Of the 17 votes, 55% of the retesters passed on the second attempt with another 11% on the third attempt.

The best advice I can offer, for anyone studying those arduous 300 hours per exam, is not to think of it as an exam. Going into this as an exam, where you rationalize the hard work just to get through the next test, is a sure recipe for boredom. You’re not really enjoying the material, just muddling along thinking of it as a job.

I’ve talked on the blog a few times about the reward to your professional ability that comes with the CFA curriculum and I think that’s really the way you need to approach the exams. Looking for the quick payday or job opportunity from achieving the CFA designation is going to leave you surprised when you realize that even us charterholders have to work for it. Yeah, you will have more opportunities and will probably see a higher income but the charter isn’t something that is going to set you on easy street.

When you accept that the time you spent studying becomes ‘research’ after you pass the exams, the idea of covering the curriculum becomes a little easier and a lot more interesting. Embrace the fact that time spent learning about asset classes, risk management and portfolio management is just a part of your career. Time spent covering topic areas outside the narrow view of your current job or the job you think you want will make you a stronger professional and open up tons of opportunities in the future.

As for the practical side of studying the material, the best way to avoid boredom and frustration from covering the same material multiple times is to focus on practice problems and question banks.

Coming up to the final month of studying, this is also the method I’d recommend everyone wrap up their study plans. Time is critical at this point and no one can afford to keep covering material that they already understand. Complete at least 30-60 problems at a time to give yourself a good idea of how you are doing within a specific topic area.  By keeping track of your score within the individual topic areas and even down to the reading level, you can focus your reviews where you need it most.

Five weeks left. Stay strong and push through to the end. You’re almost there!

‘til next week, happy studyin’
Joseph Hogue, CFA

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The Best Vacation You Ever Had

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With a little over a month left to the tests, I started to get nostalgic for the bygone days of last-minute cramming for the CFA exams. I always took the last week before the exam off from work to dedicate my time to studying. A 40-hour plus week of mock exams, flash cards and review sheets may not sound like a vacation, but it beats the normal 9-5 routine and the curriculum can be pretty interesting if you let it. My full schedule is described in a prior post and linked here.

Instead of rehashing my own schedule for the last week, I thought I would pass along an idea from a friend in Chicago on how he spent his last week before the exams. I’ve talked to others about their last-week plans, but his yearly ritual wins hands-down.

Instead of staying in Chicago and locking himself away at the library for the six days before the exam, my usual approach, he would hop a flight to San Diego for a real vacation. He still put in the 8-10 hours of studying but spent it relaxing in the park or at the beach. Mornings would start early with a run on the beach at 6am followed by breakfast and studying by 8am. He would study through the day to about 4-5pm, stopping an hour for lunch. After relaxing for a few hours, he would put in another hour or two studying before bed.

Talking through his daily routine, it struck me that it really wasn’t that different from others. Mock exams every other day help to fine-tune the review and focus on those topics where you need the most work. Flash cards and condensed summary sheets help to break up the monotony of practice problems and reading. There are a lot of advantages to going away on a trip though.

First, all your meals are prepared for you so that’s one less thing to worry about or on which to spend time. Your friends and family know you are away so they don’t expect you to go out and party (I had more than a few friends that couldn’t understand why I wouldn’t want to stay out later during a week off from work when I was studying). Finally, you’ve spent the last five months (more or less) studying in the same place. Spending that last week studying at home as well can be extremely boring.

Of course there are risks to the vacation plan. My friend said he did enjoy a drink or two at night but never gave in to temptation and drank too much. A couple of drinks isn’t going to kill too many brain cells but be careful not to stay out too late. Don’t spend too much time worrying about where you are going to study or what you want to see. Pay a little extra for a nice hotel that is well-centered on the places you want to go. One caveat is to plan on coming back home Thursday to make sure flight cancellations do not keep you from getting home on time.  

The idea is to relax and have as much fun as possible over that last week while still hitting the curriculum hard for those last points to put you over. Going into the test with burnout and just ready to get it over with isn’t going to help you pass.

‘til next week, happy studyin’
Joseph Hogue, CFA

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How to Pass the CFA Exam in Six Weeks

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With just six weeks left to the exam, candidates are asking themselves if they have studied enough and what their chances are at passing the exam. For those that have followed our 21-week study plan, you should be starting the last few study sessions and tracking your progress through practice problems.

There are many candidates who have just recently started working through the curriculum and are wondering if six weeks is enough time. The short answer is probably not unless you are able to completely devote yourself to the exam over that period. Remember, the average candidate spends about 300 hours studying for each exam. Even if you are particularly bright, and not just overconfident and can get by on 250 hours, that is still more than 40 hours a week.

Even candidates that have been studying over the last several months may want to re-evaluate their progress. Our study plan has covered to study sessions 14 in the exams but this is still just the first time through the material. Candidates retesting material seen in the first couple of study sessions may find that they have forgotten some of the important concepts.

This is why you may want to change things up for this last six weeks and incorporate a few other resources. You’ll still need to finish the curriculum to the last study session, but you need to revisit the concepts in earlier study sessions through practice problems, flash cards and study notes.

 The resources below are some of my favorite for quick review and being able to get the most important parts of the curriculum in the most condensed form:

  • Study guides are still going to be your ‘core’ resource. Hopefully, you don’t need to re-read all the material but you should try to get through your problem areas again.
  • Flash cards! I’ve covered these in a previous post. This is one of the most useful resources at this point because you can carry them around easily and focus on specific questions/formulas.
  • Topic area summaries are worth the cost for their portability. Not quite as useful for formulas (practice is best) but you can easily review a summary page a few times a day and get core concepts down.
  • I would be spending the majority of time on practice problems and mock exams. Don’t just grade your answers but study the guideline answer for those you got wrong. I cannot think of a better way of focusing in on the stuff you don’t know yet.

For the most efficient use of your study time, I would start doing at least one mock exam or practice test each week. Sit down with a question bank of practice problems in the approximate weights from the exam and complete two, three-hour sessions. For each topic area, you need to be aiming for at least 70% but you’ll want to score higher in the core areas like ethics, financial statements, and equity analysis. Knowing approximately how well you are doing in each topic area will help you to allocate your study time over the next week.

Of course, the last week before the exam is still the ‘superman’ week. You might want to consider taking the entire week off from work and planning an intensive review of the material. We’ll cover how to plan the last week in a coming post. Let me know if you have any questions or comments.

‘til next week, happy studyin’
Joseph Hogue, CFA

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The CFA Exams and Questions that aren’t Really Questions

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Right about this time of year, about eight weeks until the June CFA exams, a group of questions pop up on the exam forums. Questions like, “which is better, the CFA or MBA?” and “Is the CFA designation even worth it?” Of course, these are relevant questions and should be asked but it strikes me how much more frequently they come up half-way through the study season. The fact that I’ve seen them asked by many that have already started studying for the exams, or are even passed the first exam, confirms that they may not be questions at all.

What? When is a question not really a question?

When it’s an excuse or a plea for motivation.

Believe me, I’ve been there. You are putting in your 40+ at work, your family wants more quality time and you’re starting to feel a bit like a hermit. You still have another nine weeks of study just for this test and another 300 hours for each of the other exams.

So, the questions start coming. Is it worth it? Will I ever use it? And the possibility that the answer is no becomes easier to imagine.

In the past, I’ve looked for answers to give candidates. The statistical evidence that charterholders make more, on average, than their peers. The fact that many job requirements call for the charter or progress towards attainment signaling that it is valued in the industry. Even anecdotal evidence from my own experience where I have gained consulting work based on the designation.

This time, we’re going to put aside the data and facts (not an easy task for an analytical nerd like myself).

At this point, presumably well into your study plan this year, you need to keep going just to see if you are up to the challenge. Because over 400,000 candidates have passed one of the exams and you are just as good as any one of them. Understand that those questions you’re asking is just your doubt trying to get the better of you. Push through it and be a more confident person for having beat it.

Two months is nothing. Two months is less than two-tenths of a percent of your life but I guarantee that if you quit now, you will wonder about what could have been for the rest of your life.

We’ll be starting week 13 of our 21-week study plan next week. Stay strong and keep studying.  

‘til next week, hang in there.
Joseph Hogue, CFA

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Taking a Break from Studying, Without Taking a Break

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I don’t know about you, but with 12 weeks left to the exam and about half way through our 21-week study plan I am tired of talking about the CFA curriculum! It was always around this time when studying for the exams that I started feeling a little burnt-out and needed something to give my mind a rest.

One of my favorite past-times (if not a way to procrastinate) is by following some of the financial blogs on the internet. With upwards of 15-20 hours a week spent studying the CFA curriculum on top of whatever else life throws at them, candidates have a tendency to feel out of touch with the current world. Following a financial blog is a good way to keep updated on the mood in the markets and the practical side of the curriculum. Following the financial sites gives you the opportunity of taking a break from the curriculum, but still keeping your mind on the industry. It always motivated me by giving me a glimpse of the world for which I was studying so hard.

Below are my favorite resources for light reading or learning outside the curriculum.

http://isharesblog.com/
Most of the contributors to the iShares blog are charterholders and I’ve noticed that BlackRock must value the designation for as many charterholders that work there. The blog covers a range of topics including the economy, ETFs, fixed-income and general investing.

http://blog.alliancebernstein.com/
The AllianceBernstein blog is another favorite of mine. The posts generally focus on more generalized issues than the iShares blog and do not recommend specific funds.

http://blogs.wsj.com/
The Wall Street Journal publishes 27 blogs on its website under three categories: business, news & politics, and markets & economy. The posts tend to be a little longer than other blogs but still fairly light and quick reading.

http://www.cfainstitute.org/learning/Pages/index.aspx
The Institute website hosts one of the best and largest libraries of research and advice you’ll find on the web. Most of the resources are free with your candidate login and ranges from brief 15-minute videos to full research publications. The search tool is a little clunky but just about every topic search results in many sources.

Bloomberg has always been my go-to source for news. They’ve got a pretty cool radio app that comes in handy on those long commutes as well.

Would love to hear your favorite sources for financial news and analysis. Connect with us on LinkedIn or use the comment section below.

We’ll start study session 10 next week across the three levels of the CFA exams. Let me know if we need to review any of the prior readings or if you have any questions.

Until next week, happy studyin’
Joseph Hogue, CFA

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How to Find Time for the CFA Exam

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Since our first child was born in August, I have repeatedly thought of how fortunate I was to have taken the CFA exams when I had a little more time. Sure, I was working a full-time job and married while studying for the three exams but at least I didn’t have to balance my CFA study plans with changing diapers.

Come June, time is what many candidates will say held them back from doing well on the exam. More specifically, the lack of study time in their busy schedule to prepare sufficiently.

Thinking about this and my own situation, I realized that it is just another excuse. Those with families wish for more help with the kids. Those with jobs envy the students. The student-candidates wish they didn’t have to juggle studying for the CFA and their other academics. There is never enough time.

That’s why, you have to MAKE time!

Taking a ‘no excuses’ look at my own schedule, I found plenty of time that I could rearrange and devote to studying for the exams.

I found that a few of the below were my best sources of ‘found’ time to study:

  • Flashcards are probably the best resource for finding extra time to study. Anytime you have a few minutes, you can run through a couple of topics. If you can stomach taking the bus or train to work, that can be a huge boost to your total prep time.
  • During my three years studying for the exam, I made a list of ‘essential’ tv shows (Simpsons!) and cut out all the other crap.
  • Encourage the rest of the family to take up activities or classes. This will give you an extra hour or two per week of alone time.

A lot of the exam prep is just finding the time and using it wisely. Practice problems are always going to be time well-spent and study guides are a good source of the important stuff. With the right level of commitment, you have to make it your second ‘job’ to study for the exams. Set a reasonable schedule and meet it every week.

It’s only three years and time sacrificed now will be rewarded.

Good luck. We’re almost half way through our 21-week study plan and will start study session 9 across the three exams next week. Let me know if you have any questions.

‘til next week, happy studyin’
Joseph Hogue, CFA

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Help! You need an internet intervention!

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According to the good people at Merriam-Webster, many of you have an addiction. You have, “a compulsive need for and use of a habit-forming substance.”

The addiction…social media and web browsing.

While it may not be as devastating as an addiction to narcotics or lead to financial ruin like an addiction to gambling, the compulsion to surf the internet can also have huge consequences for your preparation of the CFA exams.

Candidates love to talk about the exams. They talk about which level is most difficult and why. They ponder the minimum passing score and trends in the pass rate. I have even seen forum posts on the best beverage to drink while studying.

The real problem is that these activities are done with the guise of productivity. Yes, you need to understand the topic weights on the exams. Yes, there are some great tips and tricks out there on how to approach the CFA exams. The problem is that candidates too easily use the web as a subtle form of procrastination and an excuse to get out of actual studying. How many hours have you spent ‘researching’ how the tests are conducted, how to approach each topic area, the earliest one should start studying, or a myriad of other questions about the exams?

Don’t be too hard on yourself. You are not alone. The average U.S. internet user spends 32 hours per month online and total time connected from sea to shining sea was measured at 121 billion minutes in July 2012. That’s 230,060 years spent online by internet users in one month alone. Americans spend approximately 19% of this time on email and 22% of it across the social networks.

I have to be careful here. Your internet addiction is what brought you to the blog and I want you to come back regularly to listen to my ramblings. But I also want you to pass the exams and I have seen too many candidates sabotage themselves by spending too much time on the forums and not enough time actually studying.

Everything in Moderation
As with most habits, the first step is understanding the behavior and approaching it with moderation. There is some great advice out there and it can make your life incredibly easier come the first Saturday of June. You need to know the general process involved and the idiosyncracies within each exam, but you also need to know when to get off the forums and get to work studying.

Give yourself an hour or two every week to answer questions about the exams. You might take a little more during the first couple of weeks to familiarize yourself with a new level and you might take less time toward the end after you’ve learned what you need. The important point is to understand how much time you are spending and to make sure it does not come at the expense of studying.

  • If you have a specific question about the exams, especially while studying the curriculum, do not stop studying. Write the question down and address it later, after studying.
  • When looking for the answer to a specific question, try searching for the question using the forum’s search bar rather than making a new post. This will help answer the question quickly and will not bring you back to the post every time someone leaves a reply.
  • Find a couple of good sites (I hope this blog will be one) that you visit once or twice a week to see if there are any updates. Finding a new site can be helpful but don’t spend too much time surfing the web for new places to visit.

Would love to hear your own checklist to kick the habit.

Next week, we review study session eight across the three levels of the CFA curriculum. We’re coming up on the half-way point in our 21-week study plan so let me know if you have any questions.

‘til next week, happy studyin’
Joseph Hogue, CFA

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