CFA traders

[M.W.]

Also stopped after passing level 1. Started because I thought it broadens my horizon but did not). Never saw the point of studying for level 2 (imo the most time intensive stage in terms of study requirements) given I was at that time trading fixed income derivatives at a prop group inside a bank with a master's in computational finance (fin engineering).

The material prepares well to understand all the regulatory nuances but it won't prepare well to assess value and pricing.

I took level 1. It's useful for those who don't have a background in finance, because it'll get you caught up to speed on 75% of the foundational stuff you should know.

 

[newwurldmn]

no. The foundation is financial statement analysis.

Somehow the EMH imprinted on you in a significant way.

Most long short PM’s at hedge funds have a CFA and didn’t have to unlearn anything.

The foundation of the CFA program is the efficient market hypothesis. That obviously needs to be "unlearned" for trading to make any sense.

If I had adhered to the foundation of the CFA program, I would have worked as an employee for the last 16 years and I would most likely have earned a lot less. (That may look different in the future do to increasing power of computers.)

 

[newwurldmn]

Buy a corporate finance 101 book and read it cover to cover.

then buy an accounting 101 book and read it cover to cover.

Then sign up for an intro to portfolio management online class (at mit or coursea).

You will have a better framework than doing the CFA curriculum

Thanks all for contributing to this thread so far.

My main takeaway so far are:
- good if not better-than-nothing to do it for the learnings (even if only considered as a launchpad to other topics if one wants to go deeper)
- definitely a nice to have from an employment/career perspective

Then in the context of trading, anything goes

Glad to see my rationale for embarking on this journey was not nonsensical then (I'm doing it for the learning as well as the piece of paper that says "guy knows X, should be able to do Y and can legally do so because of Z").

 

[JonLivingston]

Buy a corporate finance 101 book and read it cover to cover.

then buy an accounting 101 book and read it cover to cover.

Then sign up for an intro to portfolio management online class (at mit or coursea).

You will have a better framework than doing the CFA curriculum

Oh interesting. I will do that as well then

 

[TheDawn]

That is correct.

However, the CFA program does not teach portfolio managers to beat the market. You are taught you cannot beat the market. You are taught ethics, economics, financial statement analysis etc., but not to beat the market - only to manage risk.

I see the CFA program as I see most educations particularly within social sciences. It is something employers use to hire employees and employees use to get hired. I invested sweat in this. Pick me. Nothing wrong with that. It is signaling and that has value.

Well in a way the CFA program is not wrong in that we know that trading is a zero-sum game so at the end you might really win anything so all you can do is be able to manage your risk in that when you lose, you won't lose too much and when you win, you win more. I mean it's better to work off a premise that you won't win anything and be prudent and be pleasantly surprised when you end up winning rather than the other way around that you will win most of the times so you can go wild LOL.

The majority of the people that go into the CFA program I find are portfolio managers (cuz I see that designation most often beside mutual fund managers' names) so most likely they would be managing OPM in the future. It's best to be prudent. Slow and steady does it.

 

[Maverick2608]

no. The foundation is financial statement analysis.

Somehow the EMH imprinted on you in a significant way.

Most long short PM’s at hedge funds have a CFA and didn’t have to unlearn anything.

Are financial markets assumed to be efficient (that is you cannot beat markets without assuming more risk) or are they not efficient as a basic assumption in the CFA program? The answer is a resounding yes. If your answer is no you have not read the CFA curriculum.

I know most portofolio managers at hedge funds have a CFA. I told you why I got it? But since they are trying to beat the market, by definition they have unlearned this basic assumption.

It is a simple fact. It is not up for debate.

 

[longandshort]

Are financial markets assumed to be efficient (that is you cannot beat markets without assuming more risk) or are they not efficient as a basic assumption in the CFA program? The answer is a resounding yes. If your answer is no you have not read the CFA curriculum.

I know most portofolio managers at hedge funds have a CFA. I told you why I got it? But since they are trying to beat the market, by definition they have unlearned this basic assumption.

It is a simple fact. It is not up for debate.

I think by definition alpha is a return in excess of beta returns. So for you to claim to generate alpha you have to be harvesting some type of anomaly to beta returns. This is beyond active risk (choosing different betas), and is consistent with EMH.

 

[M.W.]

Requiring a CFA at a hedge fund or as PM at a buy side firm is an antiquated relict, and especially often found in the US. Lesser so in London and particularly Asia. Almost the same as having played lacrosse or having been at at a fraternity. A CFA does nothing to elevate the skill set to identify good investments or to place profitable trades.

If a hedge fund or buy side firm requires a CFA for someone to make investment and trading decisions then this is oftentimes a reflection of the lack of better screening methodologies on the firm's side. Any experienced PM or trader should probably steer clear of such firms. I held multiple professional trading and PM positions at different firms and not once was CFA required. To the contrary, I was several times asked why I stopped after having passed level I and got the impression that my rational and explanation was very well received and agreed with.

From my experience, firms and teams in the B leagues often times pose those useless requirements in order to conveniently trim the applicant pool. A CFA at least filters out those who can't even study and memorize material but at the same time a CFA does not correlate highly with those who have the ability to generate out sized, risk adjusted returns.

Are financial markets assumed to be efficient (that is you cannot beat markets without assuming more risk) or are they not efficient as a basic assumption in the CFA program? The answer is a resounding yes. If your answer is no you have not read the CFA curriculum.

I know most portofolio managers at hedge funds have a CFA. I told you why I got it? But since they are trying to beat the market, by definition they have unlearned this basic assumption.

It is a simple fact. It is not up for debate.

 

[newwurldmn]

there was a whole section on portable alpha for the year I took level 3.

Are financial markets assumed to be efficient (that is you cannot beat markets without assuming more risk) or are they not efficient as a basic assumption in the CFA program? The answer is a resounding yes. If your answer is no you have not read the CFA curriculum.

I know most portofolio managers at hedge funds have a CFA. I told you why I got it? But since they are trying to beat the market, by definition they have unlearned this basic assumption.

It is a simple fact. It is not up for debate.

 

[JonLivingston]

@longandshort

by definition alpha is a return in excess of beta returna.

Are we saying that to get alpha you first need to get beta?

harvesting some type of anomaly to beta returns. This is beyond active risk (choosing different betas)

What do you mean by harvesting some type of anomaly to beta returns? Can you give an example please?

What do you mean by "beyond active risk"?

@M.W.

If a hedge fund or buy side firm requires a CFA for someone to make investment and trading decisions then this is oftentimes a reflection of the lack of better screening methodologies on the firm's side.

What's a good screening methodology? What does it entail?

firms and teams in the B leagues

Example of A league firm? Example of B league firm? Thx