CFA Level 2: Part Deux Re-deux

So the CFA exams are over and I’m enjoying closing all the open windows on the computer containing PDFs of mock exam questions, answers, and errata. I was hoping that another year of study would make Level 2 a cakewalk this time around, but it was anything but that. Hard, hard, hard!

The AM section seemed the most difficult, but perhaps I just started the whole AM itself off on the wrong foot. I woke up in a fog, feeling like I had jet lag after my body decided prematurely that 4 hours of sleep was all I would need for The Big Day. That’s not atypical and I’m still mostly functional when this happens so I told myself to relax and grabbed some coffee. Eating breakfast at the computer, I repeatedly missed easy, easy All-Current and Temporal currency translation questions from the Schweser problem bank. The coffee pot was empty so I decided to call in reinforcements by raiding the diet coke machine by the hotel elevator.

CFA Test Site

Pack-up, check-out, and departure took longer than normal and I arrived at the test center (a local high school) later than planned. Most of the candidates had already found their way to their classrooms but a handful of us last-minute stragglers were following the posted CFA Level II Exam signs complete with arrows -> pointing -> our path, only to end up at a locked gate. Standing nearby was a proctor whose only function seemed to be to inform us that the gate wasn’t supposed to be locked, but didn’t seem to be actively trying to do anything about it.

While waiting to see if something or someone would turn up, we noticed other late-arriving candidates now passing us on the way to their classrooms on the other side of the gate! We gave up on Frau Proctor, found a path into the school through a fortuitous unlocked door, and zoomed down a corridor, taking occasional turns wherever intuition led us. Something about sneaking along in an empty school hall, past rows of lockers, with a small group, on the weekend, gave the whole thing a sort of Breakfast Club detention time warp feel.

We eventually arrived on the other side of the gate and found our way to the classrooms. While we waited to check in I tried to make small talk with one of my Brat Pack compatriots. It didn’t work.

Me: “You feel ready?” (big smile, with teeth!)
Him: “Don’t matter now.” (no expression)

… silence … silence … silence …

Me: “Well good luck to you, all the same.” (smaller smile, no teeth)
Him: “… yep …” (eyes staring past me, into the classroom)

Eventually it was my turn to check in so I handed over my admission ticket, calculators, and passport (the preferred ID, according to the CFA Institute) and waited for the proctor to go through her TSA-lite checklist.

Proctor: “…um …”
Me: “hmm?…”

Proctor: “…um… uh….”
Me: “wha?…”

Proctor: “…sir, uh….”
Me: “WHAT IS IT?!!!!”

I look down at my passport, see what she sees, and my heart sinks. It’s a picture of my wife.




The all out panic gives way to Heart Attackus Interruptus as I remember that I also have my driver’s license in my wallet. My blood, which had all drained to my feet, begins returning to the other extremities. I hand my license to the proctor as she hands back my wife’s passport. I slip it into my back pocket and now it feels great to have on me – like a good luck charm since she’s not here. The shot of Relief Endorphins puts me in a wonderful mood so I tease the proctor about actually being the person in the passport photo since my hair is long too.

I sit down and notice that all the proctors are wearing bright yellow reflective vests this year, like elementary school crossing guards. Is this supposed to make them look official? Or keep the candidates from running over them on the way to the bar afterwards?!

I start chatting with the guy sitting in front of me. He works as a public accountant and says his firm is actually against him doing the CFA! It seems they’re afraid he’ll use it as a launching pad to some other career at some other company. Kinda like your girlfriend telling you NOT to exercise and get into shape because she’s afraid you’ll find someone better…

The accountant tells me he saw one candidate in a full pinstripe suit. I smirk internally at my greater maturity by not stooping to useless Jedi Mind Control tricks in an attempt to boost self-esteem and thus performance. No sir, nothing but good, hard studying for me!

Another guy starts telling stories of one of his co-workers who passed a December Level 1 exam, then turned right around and passed Level 2 six months later! Supposedly the Study Machine, as he was called, kept track of his efforts and logged an amazing 436 hours of preparation. Now I feel like a slacker and think I probably could do with the help of a fresh haircut, pinstripes, ANYTHING.

Final chatter before the test is about how many CFA candidates there are now. Someone spouts a statistic about more people sitting for CFA exams this year than there are actual CFA charterholders. I assume it’s true but don’t know what to make of it, so my mind tries analogies. What if there were more people currently in your college than had ever graduated from it? More people currently at the airport than had ever flown? Is this impressive? I still can’t really decide but it feels like I should be amazed so respond appropriately. “Wowwwww!!!”.

As for the test itself, well the proctors remind you more than once that you’ve signed a statement saying you won’t discuss its specific contents. But my general impression was that the Level II questions specialized in having some sort of twist, and we’re talking about a lot more than just re-labeling Cost of Goods Sold as Cost of Revenue! I’d come across a problem that I knew how to work backward and forward in the study guides, but there’d be some new element to it, like footnotes to financial statements or additional line items that were not obviously superfluous or important.

This was where pure memorization would fail you. You really have to understand the logic and theory behind “the rules” to hit the numerous exam curve-balls. You will not simply be handed β, Rf, and Re and asked for the required rate of return! I may very well be doing Level II again next year.

Lunch time is a quick trip to a local Publix for sushi and diet coke. I call my wife briefly but spend most of the break sitting in my car flipping through Schweser pages on Defined Benefit Pension accounting with my left hand while my right deftly chopsticks the spicy tuna roll. This revives me enormously and my jet lag disappears.

Back in the class room for PM Edition, a candidate is complaining that his boss, who earned his CFA 20 years ago, can’t understand why he’s having so much trouble passing the exams. Ha! ha! everyone laughs. It was soooo much easier 20 years ago! FAR less material! Ha ha! But do any of us really know that that’s true?

One guy says he would have passed last time but his inconsiderate wife decided to produce their first child just weeks before the last exam. Another has a similar story, with his previous Level II fail the result of an ill-timed marriage and honeymoon. My pity-party has been all about how being a self-employed contractor, I have multiple part-time jobs that add up to much more than one full time job. And I don’t sleep well. And…

And then I realize that all of us in the room are smart people who aren’t used to failing at much. It’s easier on our egos to paint ourselves as victims of circumstance. The reality is that (a) no one has enough time to study as much as they’d like and (b) the CFA program is HARD, even for smart people. Internally I say to all of them, and to myself, in my best Alabama accent: “Quit yer whinin’!”

Tagine and Rioja

The proctor hears us complaining and marvels at how dedicated we are to keep coming back. “There must be some sort of great thing you get when you finish, right?”

This strikes some existential terror in all of us, as to why we’re really here. Is it the pursuit of knowledge or ambition fueled ego? We’re all totally dumbstruck and silent. One candidate finally comes up with a response that seems conventional and acceptable. “Well, we’ll get more money.” Everyone else nods a silent “yeah, what he said!”

Post exam I meet back up with my wife, dog, and sister-in-law out at the beach. They’d been on a shopping spree and I discovered that I’m the proud new owner of a bottle of celebratory rioja as well as a new tagine and cookbook. Life is hard for the Luminous…

And life returns to normal since we’re all now all on summer holiday (with jobs). Good thing as I’ve played so much ukulele during study breaks that it actually hurts to shampoo. Only guitar players will understand what I’m talking about…