Rob Langrick, CFA, CIPM on LinkedIn: CFA Level I uber-tip: do-re-me, ABC, 123 Every game has tricks. In Risk… | 18 comments (2024)

Rob Langrick, CFA, CIPM

Chief Product Advocate | CFA Institute

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CFA Level I uber-tip: do-re-me, ABC, 123Every game has tricks. In Risk there’s Kamchatka. In Chess there’s removing your King from the board when your opponent goes to the bathroom.But what about entry-level sales & trading interviews?In his recent book “The Trading Game” star London-based Citi FX swap dealer Gary Stevenson detailed how he broke in (he would go on to become Citi’s most profitable trader).Citi Sales & Trading hosted a card game for five players where the goal was to guess the total value of eight cards when you could only see your card and three upturned cards on the table.Gary cracked the game ahead of time. He first learned that you don’t bid what you think a hand is worth because that reveals what you hold. Instead you bid just above or below the prices being quoted by the group.Come the final, once everybody had mastered this, he learned a new trick. He realized that he could manipulate the price by shouting bids more loudly than the others.Such tradecraft made all the difference to say the least. It's a fun read.When I speak with prospective candidates about the CFA Program, I am surprised that they are surprised that Level I is simply 180 multiple choice questions with three options: A, B or C. Many repeat it back to me in disbelief, thinking it must therefore be easy 😊It’s not. But here’s my pro tip.While doing mock exams, tag each question as you do it as:·“Slam dunk” – you are fairly certain you got it correct·“Coin toss” – you ruled out one of the three answer choices·“Crap shoot” – you have no clueThen calculate the sumproduct:# Slam dunk * 100%+# Coin toss * 50% +# Crap shoot * 33%While we do not publish minimum passing score (which changes anyway by exam window), go with your brainwashing from college. 70% is respectable. Your score simply boils down to mix.33:33:33 gives 61%, 45:45:10 gives 71% and so on.Because you make your appraisal *before* seeing the answer key you realize that you don’t get all the “slam dunks” correct. But also that you score a bit better than 50% and 33% in the other two buckets. Because studying helps you eliminate wrong answer choices more than you think. And because these two phenomena offset, you will find this methodology is creepily accurate in particular if you do all 8 mocks.Three takeaways:FIRST, if you don’t study you will get something close to 33%. Captain obvious. And as 50% is likely below the passing mark, you need a lot of “slam dunks” to pass. Knowledge is power.SECOND, do this math during the exam itself and you will have a pretty good sense of how you did on the day. If you can estimate Nvidia's earnings next quarter you are more than capable of ballparking your odds of passing LI.THIRD, the right mouse button in the exam is your best friend. Right click to cross out any answer choice enabling you to avoid distraction while debating the remaining two. And as 40:60:0 means 70%...behold the power of the “strike out” feature.

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Lucas de Oliveira

Corporate Finance | Strategic Planning | Valuation

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During the November 2023 Level II I suppose I estimated my results perfectly. But it could have been just randomness. I weighted the probablities of "Slam Dunks" and "Coin Toss" and "Crap shoot" using 90% / 60% / 40% - the same reason we do not get every slam dunks right, educated guesses work in favour.Turns out I left the exam with the feeling that if I passed, it was going to be very close, I was never anxious about the results because of that estimation (72% of right questions). That was exactly what happened. Just barely crossed the MPS!!😀😀

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Sofian Hamdy

Credit Analyst | Credit Certified

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wonderful , many thanks for the tips and tricks ❤️

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David Harper, CFA, FRM

Principal at Brainy Chief LLC. Founder of Bionic Turtle, a CeriFi company. Investor, content creator, data scientist, coder. Author (writing): The New Frontiers in Financial Risk: Foundations, Future, & AI Innovations.

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I just started reading this but I must interrupt myself to say THANK YOU for this tip, i can't believe I never thought of this: "In Chess there’s removing your King from the board when your opponent goes to the bathroom"

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Enjo Faes, FRM

Advisor Financial Risk Management at KPMG Belgium

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Good tips! A week ago, I also noticed someone reading ‘The Trading Game’ on the beach in Kos, Greece. It’s definitely been added to my reading list now. Thanks for the recommendation

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Jeremy Davies

Fintech futurist - Wealth and Investment

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You should do a Nicolai Tangen and interview these people.

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Sriram Somayajula

Co-Founder & CEO IndigoLearn

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Wonderful post Rob Langrick, CFA, CIPM 😀Sharing it with my students….

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Ilan Aisen

Finance | Banking | Credit Analyst - CFA Level I Candidate

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Great advice, thanks for sharing it!

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Harsha K

Attended University of madras

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Thanks for sharing

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Olushola Ogunniyi

Chief Executive Officer at Leenkaz Insurance Brokers Limited

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Insightful! Rob Langrick, CFA, CIPM

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    The day the Queen visited HogwartsEvery decade in June I head to JFK terminal nine-and-three-quarters to reunite with my class from the Gild of the Holy Cross.Each time we swig Polyjuice Potion, crack open the secret door on column “M” of the Great War memorial plaques and squeeze our way through the cobwebs and past the gargoyles onto the roof. This year at the chapel Penseive we were reminded of the time we very nearly lost our 400+ year old Royal Charter.In woodwork class a pupil carved a statue of the dragon from theschool coat of arms.Perhaps recognizing powerfully protected perpetual Crown copyright material (the same mythical fire-breathing Welsh beast from her own coat of arms) the Queen asked the boy “what’s that?”It’s ewe ma’am.

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    Ivy League ChinaThe “C-9 League” is the Middle Kingdom’s answer to the Ivy League. Well known alumni include premiers Xi, Rongji & Zemin, Robin Zeng founder of CATL (which makes the battery in your Tesla) and NBA player Yao Ming.Mao Zedong was library assistant at Peking University (PKU), ancient seat of the Qing Dynasty (pictured).I toured four of the C-9 last week. Each time I go to China I learn something new.My first trip was in 1995. My blond-haired friend and I were standing on the Beijing train station platform trying to figure out how to get tickets to the Great Wall.Leaning on our Lonely Planet book we asked a man on the platform “how much for a one way ticket to Chang Chun?”He responded by doing the sign of the cross in our faces with his two index fingers.He then brandished his clenched left fist in our faces.We decided to move on.It was only 26 years later while studying HSK1 that I realized that the sign of the cross and a single clenched fist both mean the number 10.Ahhh the price was 10 RMB I thought to myself.Lucky I didn’t ask the price of a return.The brand new LectMate AI-driven live translation app consigns such misunderstandings to history. Compared to my last trip in 2015 the skies were deep blue. The skies in Beijing have mostly been azure since Eileen Gu’s 2022 death-defying 1620-left ski jump in front of that decommissioned coal power station.One obvious reason is that I estimate about one in seven cars are EVs, identifiable by their green license plates. Unlike in the West there is a Cambrian explosion of EV model competition. The BYD Seagull (yours for $10k). The Ora Funky Cat (a fun second car for Juke owners). The Li Xiang (front like a Lucid, back like an R1S).No wonder China’s carbon dioxide emissions peaked in March, 5 years ahead of target.That’s what happens when you treat emissions reduction like a business opportunity. Although I was almost knocked over by food delivery guys on silent electric bikes text messaging their way along with sidewalk.Top scorers on the Gaokao (SAT equivalent) were until recently doing finance. Now they do STEM. And the STEM and Finance classes I attended had a more even gender balance than similar classes I attended this spring at Yale and Columbia.Just like at the US Ivies, the number one question was whether AI would mean fewer jobs in finance. The concern is global.During keynote speeches at both Tsinghua and PKU I asked the students: “What’s the world’s hottest new programming language?”They gave the same answer as the American students. “Python”.And laughed just as much when I gave them the correct answer."English".As I left the willow-lined Tsinghua campus the exquisite tastes of the campus architect were on full display.The “Grand Auditorium” and lawn at the heart of campus is modeled after Jefferson’s Rotunda building at the heart of UVA – spiritual home of the CFA Program. Subliminal advertising at its best.

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  • Rob Langrick, CFA, CIPM

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    Which school is #1 for placement into institutional finance? Many years ago I attended the renowned “Wharton follies” hosted that year by fellow Bainie Ameet Konkar.The main refrain from the opening skit video (set to the “America…” song from Team America) went: “HBS and NYU which is where you go when we reject you…”.In jest of course....or was it?Besides NYU rhyming with “reject you”, why did the mighty Ivy UPenn feel the need to poke fun at a non-Ivy?Would you be smart going to NYU if rejected by Wharton? Heresy: Could it even be smarter to choose NYU over Wharton?You would sooner teach a wolf to eat breakfast cereal than keep me away from this question.So when I saw a poll earlier this month from Pat Curtis over at WallStreetOasis, it caught my eye. “Which school is most frequently hired by bulge bracket banks?” He gave three choices. UPenn, Harvard, NYU. In that order. Besides the crafty order of the answer choices, I spotted the trap because I have done my homework on this one years ago.Let me share three data points with you.First off, Bloomberg users. Go to PEOP, select school, select the “Bloomberg users only” checkbox then cycle through the “usual suspect” schools. I love this because it’s real, live data.Bloomberg users school league table as of this morning:1.Columbia 3,2242.UPenn 3,0633.NYU 2,6054.Chicago 2,0435.Harvard 1,971An exercise I did several years ago was to look at LinkedIn profiles of finance professionals and generate a league table that way using big data.Undergraduate only from LinkedIn1.NYU2.UPenn3.Oxford4.Cambridge5.LSECombined undergraduate and b-school from LinkedIn1.NYU2.Harvard3.UPenn4.UC Berkeley5.OxfordA clear pattern emerges. NYU and UPenn make every top five.Here is what WallStreetOasis survey respondents said.1.UPenn 54%2.Harvard 29%3.NYU 17%Predictably, the crowd got it very wrong. Pat knew what he was doing.The correct answer per WSO was NYU which matched my finding years ago from the LinkedIn study.How can a non-Ivy be so badass?For the same reason that Baruch (fondly referred to as “UCLA” or University on the Corner of Lexington Avenue) punches above its weight like no other school.It’s right round the corner from NYU.There is a single simple factor in finance recruiting which is overlooked by almost everybody.Location, location, location.If you live near Washington Square Park you quite simply get more shots on goal. More first round interview.

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  • Rob Langrick, CFA, CIPM

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    Man City v Tottenham and short-call butterfly option spreadsNothing beats a perfect analogy from the sporting world to make arcane financial concepts pop.Mark “Boardy” Boardman at Bloomberg unforgettably brings Vega and Theta to life by telling the story of when the ball goes from one end of the pitch to the other in extra time of the World Cup final with a one goal difference. High stakes! One side screaming and whistling at the ref to blow the whistle (promoting time decay “theta”), the other cheering on breaks and corners and making impassioned pleas for free kicks (stimulated "vega"). November 2022 Argentina (as usual) pushing theta while France was pushing vega.But I could never figure out how to teach a butterfly option spread.Until today.At 3pm New York time (8pm in London) Man City plays Tottenham Hotspurs in the EPL. City is vying with Arsenal for the title. Hotspurs meanwhile are vying with rivals Villa for their place on the table.Tottenham “wins” either way.If they beat City, they have a shot at besting Villa this season. If they lose to City then they help deprive Tottenham cross-town rivals (Arsenal) of the title.But what if it's a draw? That would be bad. City would no longer have a shot at the title and Tottenham would get pipped by Villa.Hmmm.... little bit like a short call butterfly spread isn’t it? Sell one ITM call with lower strike, buy two ATM calls and sell one OTM call with higher strike.Lose money in the case of a draw. Profit maximized either when City wins EPL or Tottenham pips Villa.

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  • Rob Langrick, CFA, CIPM

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  • Rob Langrick, CFA, CIPM

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    Deus ex machina: portfolio reporting using GenAI“Productized” use-cases of AI within the PM workflow are thin on the ground.Which is what makes FactSet’s first ”Focus” user conference in six year (underway in Miami) so special.CEO Phil Snow, CFA has been showcasing their latest LLM-powered time-savers.“Portfolio Commentary”, released yesterday, stole the show. The brainchild of Chris Ellis, CFA, founding father of the Portfolio Analytics suite.FactSet has for a long time been the leader in performance attribution and performance reporting and up to now has equipped PMs and performance teams with charts and tables to tee them up to write their own commentary. Manually.Like performance reviews in Workday, it is perhaps the least favorite routine task of any PM. It takes time away from bringing in the (Carl) Bacon.Chris said it would take him 25 minutes to write a report. Every quarter. Multiplied by the number of portfolios.FactSet found an “incredible mosaic” of techniques used.But the goal is always the same. To demonstrate a deep understanding of what is driving performance against the benchmark. With your portfolio uploaded, you select any given historic data range and benchmark.Amongst the 400+ in the auditorium, you could hear a butterfly landing on a marshmallow when Chris clicked the new “generate commentary” button.A right pane slid into view. A green circle spun.Deus ex machina, the automated portfolio commentary appeared. Gasps.There are three sections. Executive summary detailing magnitude & trend, “step back” and “step in”.Exec-summ contained the magic word of Investment Consultants, Asset Owners and CIPMs the world over: persistence. How was performance persistent?Step back explains performance against the benchmark. What were the key groupings that drove the good/bad and how did the portfolio do?"Stepping in" highlights which issuers were particularly important to the out/underperformance.Unlike ChatGPT4 everything is linked to source documentation so you are not left hanging out to dry.Click on any blue link, any bips number and the PA table tabulates and disaggregates the “effect” called out. There are links to news and filings to explain any highlighted security moves.These blue links are the true killer app. It’s not a black box. It is sourced.You are able to “bend it, twist it, push it, pull it” to answer client questions. Change groupings. Put in exclusions. Group by analyst assignment. Carve out countries etc.You can feed it your own “voice”, hallmark adjectives & adverbs that your PMs/CIOs use. Cubic zirconium never looked this good.Robot can do the six main types of Brinson attribution. They are working on fixed income, top-down, tracking error and VaR with expected tail-risk flavors.My favorite feature. The “kittens, puppies and rainbows” dial. Accentuate the positive? Turn clockwise. Preview a nit-picking client? Turn the other way.We’re starting to get past the hype.

    • Rob Langrick, CFA, CIPM on LinkedIn: CFA Level I uber-tip: do-re-me, ABC, 123Every game has tricks. In Risk… | 18 comments (40)
    • Rob Langrick, CFA, CIPM on LinkedIn: CFA Level I uber-tip: do-re-me, ABC, 123Every game has tricks. In Risk… | 18 comments (41)
    • Rob Langrick, CFA, CIPM on LinkedIn: CFA Level I uber-tip: do-re-me, ABC, 123Every game has tricks. In Risk… | 18 comments (42)

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  • Rob Langrick, CFA, CIPM

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    No internship? No problem.Every year at this time many undergraduates find themselves either without an internship that they are truly stoked about or after repeated rolls of the dice, without an internship at all.While it may not feel great in the moment, all is not lost.And no, I am not promoting the Red Cross' Certified Pool Lifeguard program.We benchmarked Level I of the CFA Program for the first time a couple of years ago.Upon advice from leading education leveling company ECCTIS, we opened eligibility to the CFA Program August Level I exam window to undergraduates with two more years to go. The non-stick frying pan was a famous spin-off benefit from the space program.CFA Program eligibility easing had a no-less-delicious spin-off benefit.This brand new Level I summer study option not only gives student in this situation an achievement of real substance to work towards over the summer (and way to dodge awkward questions at family barbeques) but also something they to tell future employers in job interviews.“What did you do last summer?” becomes I Know What You Did Last Summer.“But are they ready?” I hear some of you whispering at the back.Beside the ECCTIS study, we now have the segment pass rate data from the August 2023 Level I to give a clear answer to that question. YES!As the NASA human calculator team discovered many decades ago, there is an inverse relationship between mathematical dexterity and age (NASA would automatically fire people from that program on their 24th birthday – not sure about cake and candles).Full-time students are, after all, happy warriors when it comes to exams.Pass rate is not even the best bit.Those who do sit the August Level I exam get their results in early October timeframe.Besides the twinkling vermilion and lustrous golds of the leaves turning, what other leaves are dropping on campuses in early October?That blizzard of resume drops for internships the following summer, Hallowe'en being a popular deadline.And I assure you, robots are just as lazy as humans. They love to detect our trademark-protected three letter acronym.Because it proves out the gate that the applicant is smart and hard-working and reduces the risk of shortlisting you for interview.That’s how the magic happens.Can we prove it?We surveyed the first crop of rising juniors to sit the CFA Program in the August window. Two thirds (66% to be exact) said that their CFA LI pass was “pivotal” to their subsequent internship or full-time job search.CFA Charterholders - if you know any undergrads coming up empty-handed in their internship search for summer 2024, the deadline to register for the August 2024 Level I exam is rapidly approaching on 14 May. One tactic for them might be to hold off until the last day registration is open to maximize the coverage of the 14 day no-questions-asked refund protection in case that dream internship materializes last minute.No internship? No problem.

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  • Rob Langrick, CFA, CIPM

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    Which latter-day abacus did you bring to your CFA Exam?

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Rob Langrick, CFA, CIPM on LinkedIn: CFA Level I uber-tip: do-re-me, ABC, 123Every game has tricks. In Risk… | 18 comments (53)

Rob Langrick, CFA, CIPM on LinkedIn: CFA Level I uber-tip: do-re-me, ABC, 123Every game has tricks. In Risk… | 18 comments (54)

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Rob Langrick, CFA, CIPM on LinkedIn: CFA Level I uber-tip: do-re-me, ABC, 123

Every game has tricks. In Risk… | 18 comments (2024)
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