A long boring day

Today I am doing reading 31 which focuses on financial reporting standards. It seems like a straightforward reading and it's only 30 pages long, but I still haven't finished it. I'm writing this as a way to procrastinate..

The reading basically describes the authorities responsible for setting accounting standards, and what their goals are. They are typically the same except for a few differences, and you can guess they set standards based upon making financial statements fair and full representation of the respective company.

But it is a pain to go through because it isn't very interesting. Nevertheless I'm not prepared to skip over the section because every mark counts in the exam, and it is important to understand where managers can make judgements and estimates, and how these can impact the financial statements. I have half an hour before I go out, so I'll get back to it.

100 days until the level 1 exam

Book 2 completed

Today was a great day because I finished reading 28, the end of economics, and the end of book 2! The economics section is very broad and covers material from econ101 to econ211. The last couple of readings covered topics we haven't studied for econ211 yet, so I am slightly ahead with my university work :)

The last study session was concerned with the U.S. Federal Reserve Bank. They are primarily responsible for maintaining price stability and promoting sustainable real GDP growth. It was quite interesting studying this in detail because the Business section in the newspaper often has articles relating to the Reserve Bank and prediction of whether they will change the OCR or not.

Another interesting topic covered was fiscal policy and how government spending affects the economy. With the elections coming up this year, I will be able to use what I've learnt to analyze the parties' policies use it to make my decision of who to vote for.

One thing I noticed was the economics section did not delve deep into the mathematical side. It seemed to focus more on the basic concepts. This could be a reason why many people do poorly in the economics section when they majored in it at university; they remember all the equations but didn't take the time to understand the concepts clearly. I'm just guessing though, that's probably not it at all.

Tomorrow I start financial statement analysis which is the biggest topic for level one; it makes up around 20% of the exam so taking it slow and understanding it all is very important. The good news is from next week I have a 2 week mid-term break. I need to use some of this time to study for a test, do a couple of assignments, and start planning an essay, but I will use the time wisely and aim for doing 2 readings a day.

How are your studies going? Are you on track or are you falling behind? I have found it tough to keep up with the high pace and will finish a couple of weeks after I planned to (which was the beginning of October), but I believe it's important to thoroughly understand the concepts before moving to the next section. This will make revision easier.

103 days until the level 1 exam.

Busy Day

Today is one of the rare days where I managed to do two readings in a day. I have caffeine, subway and lack of university classes to thank for this. Today I did the first two readings for study session 6. Reading 24 was concerned with money, the Federal Reserve, and the tools it has to accomplish its goals. It was pretty much all covered in econ 111 so it didn't take me that long to get through it (and yes, we learned about the Fed and not the Reserve Bank. That's how unimportant the NZ economy is)! Reading 25 was about what happens when the Fed uses its tools. It built on the aggregate demand and aggregate supply model which was covered in reading 23 (which is an important reading for economics). This was also covered in econ111 which is probably how I got through both readings.

If you didn't cover any economics in your senior years of High School or in University then I think economics may be a tough section. Looking at the marks for level 1 on analyst forums, it's a section many people find difficult. 10% of the exam is on economics and since it's now one of my majors, I'm relying on going against the majority and getting a high mark for this section.

I may be a bit preemptive since there are still 3 readings to go, and I have not looked ahead to see what's in store for me.

On a side note, the level 2 and 3 results are out. 46% passed level 2 and 53% passed level 3. Congratulations to you all, and a special congratulations to those who have met all the requirements to receive your charter. You thoroughly deserve it.

To those who did not pass, you have a while to build on the knowledge you already have. You can work on comprehending your weak areas, and make the areas where you gained high marks even stronger.

108 days until the level 1 exam.

Studying and Caffeine

When you receive the curriculum, you also get postcards to give to your friends and family so they know why you've gone into a hole for 3 or so months. Here is one of them:

I'm not much of a coffee drinker, but I drink V in the morning at work sometimes and I usually drink V during my exams. Now I am regularly drinking V to help me concentrate while I'm studying for the CFA exams. I am now addicted to caffeine, as well as guana, taurine, and all the other chemicals they put in energy drinks.

Having a dependence on a $2.50 a pop drink is like smoking. V may be slightly healthier (but not by much), but it is just as expensive and addictive. This could be a problem when it comes to the exam. I know you are not allowed to take drinks with you to the desk and I'm sure you are only allowed to have water from the dispenser at the back of the room. Will I be able to concentrate at my highest level for 3 hours without the regular dose of chemicals to stimulate my brain, which I have grown accustomed to? Probably not.

So I need to set myself a goal to ween myself off energy drinks. When I finish going through the curriculum and making my notes, I will cut myself off cold turkey and condition my body to function without any energy drinks, coffee, or anything similar. I will also condition my body to wake up at the same time every morning. This method sounds like a good idea and I will try it. The idea is to only go to bed when you are tired and ready to fall asleep. This means no TV, music, reading, etc. You set your alarm every morning for the same time and get up when it goes off (no hitting the snooze button). After a week or so, you will start to feel sleepy when you need sleep and you should wake up at the same time and not need the alarm clock after a while. The article explains it much better than I can so check it out.

Are you addicted to coffee or energy drinks? Do you plan to give it up or did you give it up before you took your exam? Do you have any routine you plan on putting in motion for the weeks leading up to the exam? Let me know..

115 days until the level 1 exam.

Deep into Book 2

It's been a long time since my last post. I have been busy with university, soccer and of course CFA study so I haven't had time to post. However I will try to post at least twice a week from now on. When soccer ends in September, I should have a lot more time to dedicate to this as well as CFA study. That's what I'm hoping at least..

Today I finished Reading 19, which means I'm behind the revised schedule I talked about in my last blog. Doing a reading on Saturday while soccer is on is a tough ask, and I have to get my act together to study on Sunday. Work cannot be an excuse for no study. As a result I think I'm going to finish the curriculum in the middle of October as opposed to the start. I think that 6 weeks or so will still be enough time to revise and peak in time for the exam.

Study Session 4 was composed of 5 readings! Reading 14 was mainly focused on efficiency in markets and what can cause markets to act in an inefficient way. The most interesting part of this reading was the end where they introduced two groups of ideas about fairness. One school of thought is the utilitarianism approach which says "it's not fair if the result isn't fair." In other words, we should strive to achieve the greatest happiness for the greatest number. The benefit from the millionaire's millionth dollar has less value to him than it would to someone who has no money. So, it should be transferred from the millionaire to the poor person to achieve greatest sum of "marginal benefits." This is partly done in society today where the government taxes people with high incomes, and distributes it (through benefits) to people with lower incomes. This is not efficient because people will be inclined to work less (and there's transaction costs from the running of the IRD).

The other school of thought is the symmetry principle which says "it's not fair if the rules aren't fair. People in similar situations should be treated similarly. For this principle to work, there needs to be two rules in regard to fairness. The first is "the state must enforce laws that establish and protect private property." The second is "private property may be transferred from one person to another only by voluntary exchange." This means once you own a good or service you can do what you like with it and if you wish, you can sell it for whatever price you want. There shouldn't be any price ceilings or floors, or taxes, etc.

Which theory do you think you agree with more?

Tonight I did a test with 18 questions on ethics, and 14 on quantitative methods. Altogether I scored 28/32 (88%) in 31 minutes (with an allocation of 48 minutes). I didn't score under 70% in any section so I was pleased with that. However I did some revision on GIPS and I failed the quiz on that, even after reviewing it! GIPS is a weak point of mine and I'm going to have to revise more deeply if I'm going to do well on the exam (which is getting closer and closer each day).

117 days until the level 1 exam.