Non-finance professionals pursuing CFA job, commitment, experience, motivation

hoangvu90

Just curious, are there any non-finance professionals with a lot (10+ years) of experience? If you are one, what is your motivation to pursue CFA?
I have 16+ years experience as a software developer, as of now I am working on some really cool defense stuff as a technical lead. I went for CFA to (a) see for myself what finance was about, and CFA was cheaper in time and money commitment than MBA, and (b) as a second string should I get fired and not find a software job. Unfortunately, (b) seems to be the reverse situation - plenty of jobs for US citizens in (US) defense contractors; while many experienced finance guys get the axe. But having lived through the 2001-2003 tech recession, getting laid off and managing to find a job; I am sure that this too shall pass. So in a nutshell, that’s why I decided to go for CFA (with the added bonus of getting much better insights into my own stock trades.)

johnnyBuz

I was not trained as a finance professional, and I did the CFA (though the goal was to build financial credentials and bridge a gap which - for me - it succeeded in doing).
However, I sometimes wish I could remember better what I thought investing was about before I took the CFA program, because I think it is somewhat representative of what the majority of non-professional investors think.  If I could remember that better, I suspect it would offer an opportunity to understand behavioral opportunities to outperform.
The CFA really does change how one looks at investing.  It tends to emphasize that you need to think of decisions not just on “is this individual asset/company good” but also on how you compose your portfolios and manage risk.  
It emphasizes the important role of valuation over things like “it’s a company that makes a popular product” or “it’s going to grow more and more over time.”  It tells you that you can get a lot of the benefits of economic growth and moderization by buying and holding an index levered up or down to match to your risk tolerance, and that to do any better than that requires a butt-load of work and might not even be possible even then.
It also points out that there are different types of investing goals, and although there is a goal to generate the most return that is possible given a set of constraints and accepable risks, the types of constraints can dramatically alter what you end up investing in.
The CFA program isn’t perfect - there’s plenty that isn’t discussed - but it covers a lot and definitely changes one’s approach to investing, even for those who ultimately reject things like the efficient market hypothesis, or the idea that there are such things as beta and alpha.

robjames1984

I know a PM with a CFA that doesn’t believe in CAPM at all.
And another PM, CFA that puts huge weight on technicals.

RealEstate_CFA

What does it mean to “believe in CAPM”?  It’s not a religion.

Nishant1

bchadwick, I think I am still in the middle of Financial Enlightenment I remember how my personal “investing style” (if you could call it that) has evolved over years since 1999, when I started paying attention to the stock market because all my friends were. Before that, I was dimly aware that stocks existed and that I put money in 401-K in stocks and bonds in funds that had outperformed in the past 5 years. One of them happened to be Fidelity Contrafund so even this follow-the-performance decision didn’t turn out to be that bad. During 1999, everyone was “investing”, so I bought a few tech stocks that my friends and coworkers (who didn’t know anything either) sunk their money into - like CSCO at 54, INTC at 75, JDSU at 88 - remember those? Then in the 2001-2003 recession I wised up a little bit, heard of something called the P/E ratio, and bought CVX and HSY (and HD, which then languished forever thanks to Bob Nardelli.) Looking back, luck played a major part since value was on sale. (Also, CHK, despite its CEO’s shenanigans, went from 5.41 to 63 - I got out at 39). For the last 5 years, I have been reading books such as the Intelligent Investor and listening to Warren Buffett on CNBC, so I wanted to see for myself if CFA can actually help.
One thing I am beginning to realize is what an enormous amount of work it is to analyze companies, even if you have access to ValueLine and SEC 10-K/proxy statements. Almsot as an experiment, I’ve been dividing my past and present 401-K/IRA money into individual stocks that I pick, and broard market indices (like Schwab SCHB/SCHD and Vanguard VTI) and so far, in the last 3 years, the individual stocks have beaten the indices by 2% or so. Which is pathetic considering I am not getting paid for this research (except the intellectual satisfaction.) But it’s fun, so I’d like to memorize at least the 1700 ValueLine stocks to the point where I can watch Jim Cramer’s lightning round and have some informed opinion on the stocks that his listeners ask him about. I already know I have better judgment than him I’d never advocate jumping in and out as quickly as he does.
Sorry for the long-winded post, to summarize, CFA has opened my eyes to how many facets there are to company valuation, from macro/top-down industry analysis to comparable multiples to liquidation value and so on, and then to guessing the intrinsic value of the stock, considering leverage and buybacks/dilution etc.

Nishant1

bchadwick wrote:
1recho, you brought up a point I’d forgotten, which is that outperforming indexes by even a few percent can be amazingly hard work.  I did not appreciate this before my CFA days, although my realization of this was not solely a CFA thing: it came from many sources.
Comparing yourself to indexes sounds like a smart thing to do.  Good job at trying to be rigorous. Separating your performance from market performance is surprisingly tricky to do, particularly if you start controlling for things like a stock’s beta to the market. Did you make more because you picked things better, or did you make more because your stock usually does 1.2x better (or worse) than the market as a whole?  It’s the question you want to try to answer for yourself.
its also worth remembering that you don’t have to believe all the assumptions of CAPM in order to use the SML as a returns estimating tool.  The index model simply asserts that if the market index captures the overall impact of events on the economy, beta then measures a stock’s sensitivity to these macro factors (as proxies by the market index).  That conclusion doesn’t require heroic assumptions about efficient markets, perfect information, optimizing behavior, and all those things that make CAPM suspect - in fact it is a highly plausible assumption - but it does end up with an equation that looks pretty much identical to the SML implied by CAPM.
+2

bchadwick

1recho, am almost same boat as yours mate! 10 years of IT, 2 years of Medical instrumentation experience - now writing level 2 Took up CFA for exactly the same reason as yours
Ive slowly understood that I need a frequent changes

former

1recho, you mentioned that you’re in defense contracting. Are you familiar at all with cybersecurity services for major intelligence agencies and defense entities? If so, would you mind dropping me an e-mail at numi.advisory@gmail.com? i’d be curious to pick your brain about a couple stocks I’m thinking about. Thanks.

rohitdoshi

i am 39 and have worked as a software developer and a lecturer at a community college and through persistance and a great deal of luck got a job with an iBank.  I didn’t even know long from short so I took the CFA up initially to get enough knowledge to understand the conversations around me (Level 1 was great for this) and continued through L3 because (a) I wanted some credentials in case I got fired and needed to find another job in the field and (b) because a friend told me how he was reviewing a resume with a job candidate who had only their L1 result on their resume and they passed 5 yrs ago and he said “Wow, you are REALLY good at starting things…” and I never wanted to be in that boat.
On the IT front, I think we all probably got into it around the same time - the boom, back when IT was really hot and sought after and special.  Now, the industry has become really commoditized and salaries have reflected it.  Unless you are an uber geek (much respect, mon!) then the field isn’t that compelling anymore.

Darien

I have the opposite sentiment. I feel like the way to get ahead is through an IT startup, breaking into finance is exponentially harder than it was in years past.
Back in 2008, I couldn’t anything with any of the banks whether it be back office, support roles, etc. I took a role as a bank examiner and moved into the advisory side after a few years. Now that I’m done with the exams, even getting a support role is still a stretch based on discussions I’ve had with headhunters.