Dog Says…

Dog: I don’t know why you’re still killing yourself with this CFA program, always on the lookout for new information (sooo methodical investor!), hoping to learn how to beat the S&P. They’ve already told you how to do it!

Me: They have?!

Dog: Put all your money in the S&P for beta, borrow more around the risk free rate, put some of it into the beta too, and give what’s left to a 5-star small cap emerging markets active manager with positive security selection attribution, and short EWX so that you’re left with levered beta + portable alpha. Problem solved – NEXT!

Me: “But sometimes there’s contagion and currency-”

Dog: “Hedge it all with forward contracts! *switching to a whisper* That is… unless the forwards are showing an arbitrage situation. In which case, we’ll borrow more and…!”

Me: “WAIT! What about interest rate risk?! I’m borrowing at a floating rate!”

Dog: “Buy a cap!”

Me: “But the cost of the cap will offset-”

Dog: “Sell a floor! NEXT!”

I go over to my wife and make a joke about one particular learning outcome statement. “Describe how the phases of the moon affect short term and long term capital market expectations…Ha ha..” This is hard stuff, I tell her. Maybe you should get a life insurance policy on me in case I croak during the exam.

Wife: But you work in finance where salaries are tied to performance and are lumpy along with the market. And since lumpy equals high standard deviation, and high standard deviation equals high risk, the present value of all your future salaries are worth very little due to the high discount rate. Negligible present day financial impact, I’m afraid, should you snuffeth.

Doorbell! There’s the mailman! A care package again – this year from my parents. I tear it open quickly to find…

Dog bones. I get no respect.

10 thoughts on “Dog Says…”

  1. Best of luck to you too, Reb! I’ve got 185 hrs under my belt for this year. Add that to last year’s 238 hrs for a grand total of 423. Of course I should probably be applying some shrinkage factor to last year’s…

  2. Can’t sleep so I thought I would check if you have another post. Thanks! I really enjoy them. Good luck to you…and me L2, 3rd try. Your opportunity cost post resonates well with me.

  3. I’m done! I have no idea how many hours I did study (or tried to..). hopefully I am done for good, but anyway I’ll enjoy this summer starting from tomorrow at the beach! I have been reading your blog since I started my adventure with the CFA, it was hilarious at times, and it was nice to virtually share the pain.. people who don’t do it cannot understand… Thanks for entertaining and making me not feel all alone! and I hope we can all celebrate!

  4. Thanks for the entertaining narration of the happenings around CFA preparation life .. can relate a lot to those .. And also for some of the explanations that you helped me with ..

    Looking forward to your L3 exam experience as mine was dicey at best .. But my L2 was a positive surprise and I am hoping that my L3 will be too .. will know in another 3 months ..

  5. Lumi, i believe your blog has provided a great deal of comfort and peace of mind to readers over the years. Ouch, did I say years? Yes i did.

    L3 went ok today.. . The morning was rushed, but i felt good about it. The afternoon was tougher, actually i felt they were really ytricky in their selection of the testing content,

    I dont know if i passed or not, but all in all,I would give the CFA program A B for quality, relevance, and program testing. I found My MBA much more enjoyable and in some was taught more… But it was also more$$$

    Have a great summer

  6. I walked out of both AM and PM feeling confident… which I realised this morning is probably a very bad sign… 89 days and we will find out.

    Good luck everyone and enjoy having your lives back (hopefully for good!).

    Matt.

  7. reb – thanks for the kind words

    sam – thanks to you too. i’ll have to see if i can throw together a Level 3 exam day experience post soon

    vancouver – yes, YEARS. i’ve always found the practice test and test questions much trickier than the end-of-the-chapter problems

    aussie – i’m with you. i hate to actually be optimistic about the exam this year, but i walked out thinking it was challenging, but not impenetrable

    ed – hope we all do too – please let us know how you did!

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