07/07/2016 – Basics

When one reaches an advanced stage of professional practice it’s easy to forget the basics because they are no longer needed or have already been done by entry analysts for you. Although it’s not crucial that one should retain everything, it’s quite useful to reacquaint oneself with the fundamentals from time to time.

Here are some of the finance books I’ve been flipping through recently:

  1. Finance, by David Whitehurst – this textbook contains decent summary of capital risk, structure, financing methodologies, and some derivatives. It also includes some elementary financial planning and mergers&acquisitions which doesn’t have much substance but good as a light read on industry expectations.
  2. Introduction to the Economics and Mathematics of Financial Markets, by Jaksa Cvitanic and Fernando Zapatero – you have to expect some hardcore materials when one of the authors’ last name sounds Eastern European, and I’m expectantly trudging through it at a slower pace than the other books. Luckily I’ve encountered a lot of its notations when I was studying for actuarial exams so it’s been making it a bit easier to read. It touches on mainly portfolio modeling techniques, asset pricing, risk mitigation, and a bit on probability theory. The book dedicates two chapters exclusively for fixed income hedging and option pricing, signifying the amount of past research done for these two fields.
  3. Finance, by Zvi Bodie and Robert C. Merton – aha! Written by one of the Nobel Laureates who revolutionized the options pricing world and also crashed the world markets with the same idea, this book is surprisingly light in terms of difficulty…if it were in English. I’m reading this in Chinese (yes!) to A) get a deeper understanding on modern finance theory, and B) improve my Chinese. So far I’m checking google translate every 2 to 3 pages which is not too bad considering I haven’t yet used it in any professional capacity. The book actually doesn’t go too much into theories but looks at the markets as a whole from both a quantitative and qualitative perspective. The book looks at the evolution of financial markets, then delves deeper into its various components such as accounting, investing time frames, and valuation models. It’s one of the classic reads so I’d recommend it if you are interested in the topic (and perhaps read it in a language you are more adept in).

My GRE is coming up soon and I’m debating whether I should write the GMAT instead, dilemmas!

02/29/2015 – Path to CFA: Level 1, PART 2

One might guess by the lack of posts that I’ve been hard at work studying for my CFA, for the most part, that is true. Being bogged down in administrative responsibilities isn’t fun, but definitely part of an adulthood that I’m becoming more comfortable with everyday (for example, cleaning up after the cat).

So far I’m a little behind schedule, I’m supposed to have finished Accounting, Economics, and Equity sections, with Corporate Finance/Portfolio Management deadline coming up soon. The accounting section took longer than expected due to extra time spent on understanding taxes and its many connections to other financial statements. I can see why people don’t like studying taxes, but it’s a necessary component of our financial system that keeps it alive; they just need to make learning it a bit more sexy.

I’m almost done with Economics, and luckily most of the materials are quite intuitive and relatively easy to understand. Its “hardcore” mathematics section is relatively straightforward, the difficult part is sifting out the irrelevant portions of economic mathematics (which there is a lot of).

One thing that struck me as a CFA characteristic is its sheer volume of information. The material isn’t difficult, but takes great discipline to go through this much material within a short time frame. This is more of a test of personality than intellect (at least, for Level 1). It reminds me of the premise for the movie Limitless (2011) featuring Bradley Cooper, where the main character (Cooper) became a genius through the use of drugs but underwent a painful recovery after forgoing sleep and food regularly (side effect of the drug). Now if I could only get my hands on some of that stuff 😉

I intend to complete the Economics module by the end of this week. Then move on to the rest of the course, where it would be covered in a faster pace since the bulwark of the course material would be behind me.

Currently experiencing on and off recovery from a minor cold, but expecting some alleviations from the warm Canadian weather this week.


01/06/2015 – Path to CFA: Level 1, Part 1

Late last year I decided to study for the Chartered Financial Analyst (CFA) designation, so despite the unfavorable CDN/USD exchange rate I signed up for the early bird June 2016 sitting of the CFA Level 1 examination. It still cost me almost 40% higher in exchange rates.

My study plan is roughly as follows:

  1. 01/09/2016 – 01/23/2016: Financial Reporting & Analysis
  2. 01/23/2016 – 02/13/2016: Economics
  3. 02/13/2016 – 02/20/2016: Equity
  4. 02/20/2016 – 03/05/2016: Corporate Finance & Portfolio Management
  5. 03/05/2016 – 03/12/2016: Derivatives
  6. 03/12/2016 – 03/19/2016: Practice Questions
  7. 03/19/2016 – 04/02/2016: Fixed Income and Derivatives
  8. 04/02/2016 – 04/16/2016: Alternative Investments and Ethics
  9. 04/16/2016 – 05/30/2016: Practice questions (includes reviewing more important topics)
  10. 05/30/2016 – Test Date: Review and rest

The schedule looks extremely packed, but having studied roughly 30% of the exam material already in my previous studies it shouldn’t be too difficult to follow. I’ll spend roughly 6 days a week studying the material, and the final day as a day for review and rest. The strategy is to go through the majority of the materials, taking notes on material relevant to the Learning Outcomes Statements (LOS) of each chapter. Then work on a large number of practice questions and reviewing the material. Someone suggested studying for Ethics last because it’s the seal that puts together all the other topics together, hence I put it after Alternative Investments. I should have roughly 1.5 months of practice time before my test date, which should be more than enough based on what I’ve seen.

To deal with the boredom of long term studying I’ll be regularly summarizing here the basics of what I’ve learned and my personal experiences in dealing with the more difficult topics, although from what I’ve researched none of the material would be too difficult until CFA Level 2. It’ll be a nice way to review the study material as well as checking how well I’m following my own study schedule.