Talking to Myself

Now claaaaass!
Less than 4 months to go till I get the chance to to repeat CFA Level III. I’ve put in a handful of hours of re-preparation (32, to be exact). For the longest time it was hard to figure out what the proper game plan needed to be.

After my crash-and-burn at my first attempt at Level II, the strategy for the second go-round was obvious. I hadn’t used 3rd party study materials like most other candidates, ergo my downfall.

Sure enough when I used 3rd party the second time around, I passed!

Can’t do that with Level III as I began with an even more expensive 3rd party package right out of the starting gate and it didn’t do the trick.

To be sure, my problem with Level III Attempt #1 was surely not so much what material I used to study but how little studying I actually did. What did I log, 240 hours? I can hear the CFA Guidance Counselor tsk-tsking me for such slim preps. I could just re-order the materials for Attempt #2, but repeating the same actions while expecting a different result is a definition of… well… you’ve probably as sick of that saying as I am.

Then I happened upon this advice that gave me a shot in the arm. Actually, skip to Lesson 2: The #1 Technique for Raising Your Grades.

The suggestion is excellent and I know this because it’s what got me through undergraduate and graduate engineering studies with respectable grades. How could I have forgotten?!

Back in those days I had a huge dry-erase board in my 1-bedroom apartment that I would spend time working problems on in preparation for an upcoming test. Initially, I found it was helpful to talk out loud to myself while trying to solve the problems. Eventually, as I had no roommate to mock me, this evolved into my working the problems as the professor, chewing on the corner of my glasses, explaining out loud to an imaginary class what I was doing in each step and why – complete with imaginary questions from the audience and multiple! exclamation! marks! next to points! I found interesting!!! as I worked myself up into a Charlie Epps frenzy!!!!!

Not convinced that this approach is Efficacious Maximus? Let me tell you a story… In our electrical engineering classes, we didn’t have many girls. Therefore I noticed when they – errr, she – was in class and when she wasn’t. I noticed she was present for all lectures but absent for all exams! I didn’t consider it any of my business until after a particularly horrible test when we were informed there would be no curve because someone (guesses?) had scored very well. Now very much my business, thank you! I pounced after class and demanded to know what the disappearing act was all about.

    “Ummm… I was diagnosed with ADD so I have to take the exam separately.”

    “You mean a different test?!”

    “Same test…”

    “SAME TEST?!”

    “I have to be able to talk out loud to myself!”

Presumably she did the same when preparing – and it was working.

Well I’m doing an – ahem – more mature version of Herr Professor these days, going to my home office, shutting the door, and teaching each of the problem sets out loud as I work them. When I walked out the other day, my wife asked how the students were. “THEY WERE ACTUALLY PRETTY QUIET TODAY!! HA! HA! DIDN’T SAY MUCH! HA! HA! HA HA!!!!!”.

With the CFA material I’m usually not a professor, but something closer to Director of Research. I substitute the name of my LLC for the name of any fictitious trading companies in the problem sets. If the problem has me doing an equity swap to reduce portfolio exposure to a single stock, it’s re-written to be the portfolio of my largest client to make it feel important. I work the problems as if I’m explaining to a new hire why, for example, we’re only buying 283 shares to hedge 500 call options due to the low delta.

What’s that? Having trouble remembering what all the Greeks refer to? Let’s go through it again then, starting with delta and gamma. Now I like to think of gamma being to delta what acceleration is to velocity…

The time passes much more quickly this way since I’m having fun. And to be honest, this is more in line with why I signed up for the CFA program in the first place. The goal was to pass the tests as a byproduct of learning the material and not the other way around. It sounds equivalent, but it isn’t quite.

It might not be the charm for the exam in June as it’s quite slow for the quantity of material I have to master in the remaining time. But there’s no better way to make sure I remember what I do cover almost permanently. In 1996, I taught Electronics I & II classes to undergraduates – got rave reviews (really!) – and I bet I could teach them today with very little preparation. Each day I taught, I taught twice. Once to an empty apartment, once to the lecture hall.