One Small Step

A couple weeks back, I signed up to take the first (of three) exams to earn my Chartered Financial Analyst (CFA) certification. I’ll take that first test in June 2008.

And I thought it might be interesting to others if I blog about my experiences along the way, since earning a CFA is known to be somewhat difficult.

I became interested in investing about 4 years ago when the thought hit me that the same skills I was using as an EE to develop digital communications algorithms could be put to use developing stock market algorithms too. Once I learned how to download historical stock data into Matlab I started devoting all lunch hours to stock data mining and backtesting, and shortly began trading with real money.

My initial results were good but eventually I ended up with a series of losses that put me deep in the red about halfway through one particular year. I lost faith in technical indicators (mostly), switched to value investing, and ended up recovering all of my losses and finishing the year, barely, back in the black.

I have continued to have good results using a value methodology and continue to read and refine my investing style. What started as a lunch time experiment has grown into an all-consuming passion. I sulk all day whenever I log in to catch the opening bell, only to learn it’s a market holiday. 🙁

But I’ve had the feeling for quite some time that my investing education has huge holes in it. Often I come across an informative passage in an investing book and think “Of course! Great! I will use this principle from now on!” This eureka moment is followed shortly thereafter by a sinking feeling that what I’ve just learned is so basic, it’s probably taught in Finance 101, and is a principle I should have learned a loooong time ago.

So I’m hoping that the concepts I’ll learn to pass the three CFA exams will fill those gaps. To get the actual CFA designation you also need a few years of work experience specifically managing assets. I’ll cross that bridge when I come to it.

Update: I finally passed all the CFA exams and wrote an eBook about the program. If you’re interested, click here.