Daily Dose of Optimism

Some Perspective on CFA Pass Rates

The CFA announced the results of the recent round of exams in mid-August (8/16). Bloomberg has the scoop:

The CFA Institute, administrator of the Chartered Financial Analyst program, said 52 percent of the 63,249 people who took the three levels of exams in June passed.

Of the 26,467 candidates taking the Level I exam in June, 40 percent passed, while 48 percent of the 20,499 taking Level II passed, the Charlottesville, Virginia-based institute said. About 16,283 people took the final Level III test, with 76 percent passing.

The overall pass rate climbed this year from 48 percent in 2005 in part because of better preparation by candidates, Robert Johnson, managing director of the CFA programs division, said in a statement.

Some perspective on  the CFA pass rates:

The way I read this is, using the pass rates given in this article, that for every 100 candidates who take the level one CFA exam, only 15 pass level 3. Thus, despite "better preparation by candidates," the test remains a challenge to see through from level 1-3. Good luck to those working on it! - Ed

Blog of the Week: Mark Klein, MD on HBS

Mark Klein, MD, has been posting comments on the NYT DealBook blog. Here's a sample:

DealBook: the famously outspoken hedge-fund manager, will soon have something new to brag about. The New York Observer reports [he...] is gearing up to move to a $45 million penthouse he is buying on New York’s Central Park West.

Mark Klein, MD, posts a comment:

Mark Klein, MD: Having such wealth today is little consolation for even the very rich. Their chances to enjoy a stable family life are as low as everyone else’s. [As someone who was] raised in an America when divorce was very rare, and common sense, delay of gatification, and self restraint still had social currency, [I find] today’s cultural milieu very creepy.

This piqued my interest: why is this guy trying to rain on the envy parade? After all, when DealBook (or any business publication) writes something like this, it is about hero-worship, not hard thoughts about social implications.

I had to investigate, and a Google search for Mark Klein, MD led me to (I assume) Dr. Klein's blog, Calling 'Em as I See 'Em. He looks a little like Dick Cheney, and he is running for president. Maybe he could run as Richard Harbert Wulker Cheyney, and get elected through the same mechanism that put President Bush the Second in office (ie: name recognition).

As far as relevant content for DDO readers goes, this post caught my attention:

HBS tuition and living expenses have more than doubled over the past decade while the buying power of graduates' starting salaries have more than halved when denominated in housing price dollars.

(Above chart--HBS median starting salaries for new grads.)

In practical terms a $100,000 salary before taxes in New York City, Boston, LA and the San Francisco would leave barely enough to rent a so-so 1 bedroom apartment.

This is why I'm skeptical high SAT and GRE scores measure anything about the capacity for critical thinking. I suspect they measure quite the reverse. High scorers are mostly those with finely honed skills to learn and identify with the received wisdom of the day.

Such folks end up staffing the grim dictatorship of the prevailing orthodoxy then get seriously bent out of shape by people like me.

Crazy, funny, and generally accurate? You decide. Can anyone confirm whether the MBA "starting salary" figure includes first year bonuses? I would guess that it does not, and thus skews the figure downward. - Ed

"Entrepreneurial Thinking" about an MBA

I've been recommended by more than a few people that I seriously consider going to business school.

There are those who recommend it as an "insurance policy" against mid-30s career failure, those who recommend it "solely for the networking opportunity", and those who recommend it as a launching point into "great career track jobs". (Oh yeah, and those who recommend it for the education.)

None of these reasons are to be dismissed, including the education.

In thinking about a move to business school, one of the ideas that keeps coming back to me is the phrase to be "entrepreneurial" about what one does in life.

In my experience - working at one of the five largest i-banks in the world - the word "entrepreneurial" is used as an adjective in mostly non-entrepreneurial corporate situations to mean things like being creative, taking the initiative, or just not waiting to be told what to do.

In the corporate environment, saying that we are "entrepreneurial" is sort of like a bureaucratic way of paying homage to the true spirit of business, to fool ourselves into thinking that we in corporations (who are by and large following in someone else's footsteps) are kindred spirits with the explorers who blazed the trails for our companies.

So, when I think about going to business school, I inevitably run into the phrase "being entrepreneurial about my education."

I must have read this on a website featuring student testimonials while doing research - which leads me to this stumbling block:

When I think about what it means to be "entrepreneurial" about a business education, I inevitably come back to the idea that the only entrepreneurial approach to a business education is to take out student loans for the full amount I would expect to spend on a private degree (taking full advantage of government-subsidized interest rates), and investing the proceeds in startup businesses, while using 5-10% of the funds to take night classes in business and other areas that I want to brush up on.

I don't have a great solution for developing a professional network, although conferences and friends-of-friends in the same practice area would be a decent start.

I would read books on business and non-business areas that I thought would be useful.

And, to top it off, I would force myself to write essays (or a blog) to reinforce what I was learning.

I figure the courses could be taken for under ~$5k, and could be completed in parallel with whatever startup I was working on.

After two years, I would have some priceless business experience, and assuming I did not sink 100% of my capital into one failed opportunity, I would potentially be able to fund at least three ideas. And likely, one of them would lead to something.

Of course, this approach doesn't solve "the question" of what to do with one's life, nor does it offer the easy road map that going to school does, nor are there any guarantees of any successful outcome through this approach.

But looking at an MBA from this perspective allows me to place in better context the time, expense, risk, and generally-expected outcomes to be had from earning a traditional MBA.

So here's the question to ask as a check: am I really being "entrepreneurial" in my career - or just describing it that way to make myself feel better about making safe choices? - Ed