Saturday, July 30, 2011

Do you need to be a CFA to be a Better Investor?

Does the CFA helps with the numbers?(credit: Dreamstime)

Do you need to be a CFA (Certified Financial Analyst) to be Better Investor? A man dubbed as the "next Ben Graham" by the Forbes, Vitaliy N. Katsenelson has some insight into that. I have posted a review on his book "Little Book of Sideways Investing" here.

Here is the relevant excerpt from his interview with the Kirk Report.
"Kirk: Is it realistic to suggest that individual investors have what it takes to do the type of homework you and other professionals do, without a CFA?

Vitaliy: In short – the answer is YES.

I am a Chartered Financial Analyst, and I learned a lot from going through the CFA program (as well as from getting two finance degrees); but the problem with the CFA program is that half your time is wasted on useless concepts, and since there is an exam, the program also requires you to be a good test taker (I was never good at that).

It is probably still the most relevant program if you want to be an investor; but in all honesty, you can take the CFA curriculum, pick relevant subjects, e.g. economics, accounting, valuation (excluding Modern Portfolio Theory), statistics, behavioral finance, and derivatives, and study them on your own and just not worry about taking the exam. You’ll learn a lot, won’t waste your time on irrelevant academic and politically correct topics like ethics (all you need to know is to always put clients’ interests first, and err on the side of the perception of wrong doing vs. legality. When people trust you with their life savings, you never want them to question your true motives).

But that would be just a start. Then you’d want to read a lot on value investing (books, blogs, newsletters/interviews, presentations, etc.) and finally, take as much money as you could afford to lose and start investing.

Paraphrasing Charlie Munger, learning about investing only from books is like learning about sex from romantic novels."


Hm, so perhaps, I should re-think the CFA after all..! Lol!

Well, not quite. The main reason why I'm doing this is give me an internationally recognised qualification. A CFA to me is the Gold Standard in the investing world and would open up a career in investment. So, it's not a bad deal - personal improvement and career development to me. If I want to pursue a career in finance, this bolsters my CV/reputation.

Currently, locally, there are only 400 CFA charter holders in Malaysia. While this means there is a demand here but it opens windows to other countries within Asia too, ie: HK, Singapore.

So, be clear on that - you don't really need a CFA to be Better Investor but it helps. Just ask yourself, perhaps there is a cheaper and less time consuming way to improve yourself in the skill-sets offered within the programme?For those already sitting for it in Malaysia, all the best!

(Of course, remember, with or without CFA, remember your due diligence has to be "CFA-like" before investing. That's another take-away from the excerpt above!)

To read Vitalsky's full interview, check it out here :

If you like what he has to offer, sign up for his email newsletters or his RSS feed while you're there!

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