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CFA is not for the people with empty pockets. Program enrollment and exam registration fees will cost from $990 to $1395, depending on the timing of application. Plus, it really helps to have some unofficial preps, like Schweser Study Notes, if you don't have time to go through the multi-hundred-pages official curriculum. So, it's really nice to learn that some of that material is now available for free. Investopedia.com now hosts CFA Level 1 prep, along with Series 6, 7 and 63. Even after spending 5 or so minutes browsing the site it became obvious to me that this is way too little to pass the exam, but it is still a very useful resource to gain an understanding of the topics covered and occasionally find one of the not-so-complicated formulas online whenever you need them. Not so bad for the times when salaries are not expected to increase for a while.

Some of the readers may remember my post People Needed to Manage the Fun , that I posted this summer. Apparently, whoever posted that job description may have been less mistaken than I thought. I am reading the AIMA's Roadmap to Hedge Funds , and one line there drew my attention: Some [absolute return managers] go even so far as to referring to the traditional asset management as "fun management" rather than "fund management"... Although I doubt that the pun was intended on the part of the job-poster, it is still quite amusing. On a more serious note, the attitude towards the traditional long-only managers described above is based on the fact that they are not held accountable for any losses, whereas the HF managers are, both by means of watermarks, hurdle rates and more often than not, co-investment of their own capital.

Last Sunday (Saturday for you in Americas) was the big day for the CFA Level 1 candidates. Sleepless nights came to an end, and ahead were 6 hours of exam. I was one of these candidates. Personally, I found this exam a little easier than the one I sat in July (and failed). There were fewer problems that required complicated calculations, and the Quantitative Methods section contained less difficult statistical problems. Interestingly enough, the pledge on the exam problems pamphlet (mandatory to sign) explicitly required candidates not to disclose contents of the exam, so I am not going into more detail, but my overall impression is that this time I may stand a chance. Although, this is the CFA exam, you can never be really sure...

What is a better way to pass the CFA exam - the official materials that you get shipped when you apply, and pay for even if don't want to, or the shorter unofficial materials such as (among others) Schweser Notes? CFA Institute recommends the minimum of 250 hours to prepare for the Level 1 exam. In my practice, this number can go way up, depending on your background and the availability of time. It is good if one majored in quantitative methods and already has a CPA, then CFA should be less of a challenge, but for the vast majority of candidates, it tends to be the first encounter with at least one of the topics on the broad CFA curriculum. So, it is safe to add up 30-50 hours for each area you are completely unfamiliar with. Plus, CFA exam-takers are usually employed, so they have to spread the study over their weekends and nights, and the total length of the preparation period is very long. Unsurprisingly, many people forget what they studied in the beginning by the time they get...

Forget about sophisticated financial products. Forget about CDOs, especially if they include (God forbid!) MBS. Investors are going back to basics. In the time when the allegedly absolute-returns Hedge Funds are making headlines with big drawdowns, and the Private Equity firms cannot figure out how to make a buyout with no credit lines available in the banks they had been dealing with for decades, what does it leave a sophisticated investor with to invest into? It comes down to the Real Assets. One of the most popular (at least as a topic of conversation) investments of this sort is Timberland Investment. The beauty of it is that once the tree is planted, it grows without any other cash expenses. All that investor has to do is to make a decision on when and how much of the forest should be cut to sell the timberland and get returns. Timberland investments a long-term, typically over 10 years, and thus fairly illiquid, and compared to Private Equity, for instance, they generate lower re...

Saw this pic in a presenation material and couldn't help googling it. Very persuasive! Found via Google Image search

Today's market opened with a surge, closely resembling the inverted version of the chart in my previous post. Source: http://markets.nikkei.co.jp/kokunai/ I find it hard to believe this is a sustainable gain, and my guess is Nikkei 225 will drop back below 9,000.

We all know that times are tough and bound to get even tougher. But when I was watching the Nikkei 225 plunging down 10% during the first hour of trading, it came to a point where I was seriously considering what I would do if the financial industry collapses altogether, and I will be facing the unpleasant task of finding a way to earn my living amid the World Great Depression II. Nikkei 225 Index first hour of trading Oct 10, 2008 Source: http://markets.nikkei.co.jp/kokunai/ Luckily, the stock market recovered just a little after that, suggesting the worst was over. Or maybe still to come.

To the Fed and the ECB: Congratulations, gentlemen! You have miserably failed. This is bad for you and for the world economy. Chart: First hours of trading in NY Dow, Nasdaq and S&P 500, % change d-o-d Source: Google Finance The markets reacted to the joint actio n by Fed, ECB and several European central banks with a moment of optimism, and then continued their way downwards. For the invest ors it was too late too little once again. Now it is really hard to tell when the bottom will be reached. Or if.

I read this story a year or so ago, and recently just stumbled over it on the Internet. Looking back at what happened over this year, the ibanker clearly had a lot to learn from the humble fisherman. The American investment banker was at the pier of a small coastal Mexican village when a small boat with just one fisherman docked. Inside the small boat were several large yellow fin tuna. The American complimented the Mexican on the quality of his fish and asked how long it took to catch them. The fisherman replied, only a little while. The American then asked why didn't he stay out longer and catch more fish? The Mexican said he had enough to support his family's immediate needs. The American then asked, "but what do you do with the rest of your time?" The Mexican fisherman said, "I sleep late, fish a little, play with my children, take siesta with my wife, Maria, stroll into the village each evening where I sip wine and play guitar with my amigos, I have a full a...

The Wall Street Journal's Asian Edition front page today features the world map, showing the countries where the stock markets tumbled yesterday in red. It looks like a one solid blood stain, because for all the countries shown, markets were down. So much for the decoupling theories... Source: Wall Street Journal

Revisitng the topic of CFA pass rates, below are the most recent pass rates as reported by the CFA Institute: June 2008 Level I: 35% Level II: 46% Level III: 53% December 2007 Level I: 39% The question is, will these change in 2009, when the three-choices answers replace the current four-choices structure? Below are some links arguing on the topic: CFA Institute claims that there will be no change, as any change in the absolute number of correct answers will be offset by the relative nature of assessment. However, Dr. R. Douglas Van Eatonon the Schweser CFA Blog provides a less straitforward, although similar viewpoint. In any case, there is a lot of hours to put into the exam preparation, no matter four choices or three.

Nikkei Shimbun, a leading Japanese business daily, reported today (original text in Japanese), that a plan to reorganize Morgan Stanley's (MS) securities business in Japan, including possibly bringing it under one roof with Mitsubishi UFJ (MUFJ), is under consideration. The strategy is to be elaborated by June 2009.

Bank of America is a big bank. In terms of total assets almost twice as big as Merrill Lynch that BoA is acquiring as a result of the unexpected deal arranged last month (USD 1,716 bn vs 966 bn; source: Google Finance ). And in terms of the current market cap, BoA is four times bigger. A giant and a dwarf, one might say. So, the deal looks logical in the American context. Not necessarily so in Japan, where BoA's both corporate and investment banking offices fit comfortably at the 15th floor of Sanno Park Tower, mostly known among financial professionals in Tokyo, as home to Deutsche Bank Securities; whereas ML has its iconic bull logo several feet across on the side of its office in Nihonbashi Ichome Bldg, an office in Osaka and several joint offices with Mitsubishi UFJ across the country. It is no coincidence that ML is so big in Japan. ML bought Yamaichi Securities in the late 90s, and the employees of the failed Japanese securities house are still the backbone of ML's Japane...

I am now reading The Handbook of Alternative Assets by Mark Anson. It provides a very good step-by-step explanation of rather complex universe of Alternative Assets. However, I would still prefer to see Real Estate included, even though I understand the author's reasoning for not doing so. Plus, more details on the funds legal structure would also be useful.

Great article on platinum price fundamentals: 'Oversold' platinum and uranium sectors may provide great upsides

Continuing the SWF topic, here are some useful links for everyone trying to keep track of the latest developments: Sovereign Wealth Fund Watch SWF Radar FT In depth: Sovereign Funds Sovereign Wealth Fund Institute TM If anyone is aware of other SWF-related resources, comments are welcome!

It seems that people always have to be afraid of something that is out there. When we are kids we are scared by the ghost stories, when we grow up we blame something more specific, that is out there, but what we wrongly take for something it is not. Take UFOs. Whatever the conspiracy theorists might have to say about them, they turn out to be planes or scientifically explainable atmospheric phenomena. But they are still spooky and scare some people. Now take SWFs. Also something that is (in common understanding) alien and mistaken for something it is not. And apparently, some people also find them spooky. This week IMF gathered the representatives of the world largest SWFs to agree on the draft of Generally Accepted Principles and Practices for Sovereign Wealth Funds. Although not to be made public until October 11, when they will be presented to the IMF's governing council, they are said to contain 24 principles on [quote] legal, institutional and macroeconomic issues, as well as...

I came across a job posting today, reading Senior Fun Manager. Sounds like a lot of fun, maybe I should apply. :-)

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A surprisingly large number of companies in Japan are into Russia-focused M&A Recently I had some opportunities to talk to the bankers in the second-tier companies, and I was surprised by how strong and practical their interest to M&A deals between Japanese and Russian companies is. Although I am not at liberty to mention the company names, I am aware of one Japanese bank that has formed a partnership with a leading Russian brokerage/investment bank and is currently sourcing deals, of one Japanese diversified financial holding that is keen on Russian real estate, and one German bank that apparently has a dedicated team for this kind of deals. And I have a suspicion that this is only the tip of the iceberg. What is most surprising for me, is that the two Japanese financial behemoths, to one of which I belonged until very recently, apparently talk about Russia more than actually do anything. It is the second-tier companies that walk the talk. It is definitely a good news for me...

The main drivers of the precious metal prices The prices of gold and platinum are closely correlated, but there are certain differences between their movement. As a lot of investors are apparently paying close attention to these metals as alternative investment, I tried to summarize the main drivers behind the rising prices. Gold: 1. Safe heaven for the US dollar holders 2. Increasing demand from Asian emerging middle class, particularly India (c. 20% of the world demand) 3. Decrease in annual production, to a large extent due to energy supply problems in South Africa Platinum: 1. Alternative asset for equity investors (also holds for gold) 2. Increased use in environmentally-friendly technologies, for instance hybrid cars 3. Decrease in annual production, to a large extent due to energy supply problems in South Africa, which produces up to 80% of the world output Seems like the high prices are going to be sustained for a while... For the reference, links to gold and platinum price quo...

After a long pause, I decided to resume this blog under a new title iBanker.jp The posts will be submitted on average once a week.

[Lead, story to follow] Oil going 100 USD/barrel, gold hitting highest price in years... What's the next big thing?