Back Again

I have realized that I am not very passionate about writing. While I do have a bit of a philosophical dent, writing is not my way of expressing it. In fact, "not expressing it" is probably my way of expressing it.

But I do value good writing and hope to be a good writer some day. Why? Because its a allows me to organize my thoughts, and more importantly, remember them. Thoughts like "DOW at 9644 is surreal". Well, I still think 9644 is surreal, but not exactly for the same reasons.

Anyways. Enough meandering. To update my non-existent readership:

I passed my Level I CFA exam. I honestly felt that it was a very easy exam. I studied for 80 hours and voila. I also sat for my CFA Level II in June and am waiting for my results. But that was an easy exam too. I was expecting to fail it, but now I am hopeful about actually passing it.

People make too much of a deal out of these exams. Ok, I can see how it might have been difficult had I not had finance as a major. But still.

Speaking of which, people make too much of a deal out of financial knowledge. I wont profess to have a lot of it, but I think the most important lesson in finance is common sense. And the formal curriculum just does not focus enough on it.


Take investment banking for instance: despite being touted as a hardcore financial profession, the most important skill required for banking is not financial knowledge, it is people skills. The excel models that the bankers build are just tools for negotiations. The profession boils down to people skills and showmanship: figuring out what someone wants, behaving nicely with the clients, fuzzing their brains with complex models, creating nice "books". I daresay one could be a pretty good i-banker without ever studying valuation. At the end of the day, the value really is not what the model says but what you can bargain it to be. If investment bankers really had any superior skill in valuation, they would not have to spend so much time on creating presentations and complex models.

In my humble opinion, most models have way too much assumptions built into them to be of any use than to show someone else that the banker has put some thought behind it. It builds confidence in the banker and his/her clients -- and stops others from accusing them of hasty decision making.

Consider on the other hand, Warren Buffett who can decide on an investment in 5 minutes. I am pretty sure that he does not have msft excel implanted in his brains. He doesnt spend brain power deciding whether to use weighted average cost of capital (WACC) of 5% or 6%, because he knows that its useless. And the gibberish about CAPM, he hates it.

I ll have to end here and catch some zzzzzzs. But I know what to write on next.