CFA vs the stock market

I don't get the relevance of this other than as an exercise in Level 2 quant material. What does it matter if the growth in CFA candidates slows or even reverses? How will that cause a single persons daily life to change (other than perhaps the execs at CFAI not getting as big of a bonus?
 
the conclusion should be that CFA will lose its value, which is already occuring. in a few years, the CFA will be like the Canadian Securities Course or the Series 7. Everybody who wants to work in the industry will have it.

but we're faced with a prisoner's dilemma here, so people will continue to take it unless another designation arises.

I do think that the comparison with the S&P is inapt.
 
The CFA probably will lose its value as more and more people take it. HOWEVER, in the intermediate term (say 3-5 years), it should GAIN value as more people who were previously unaware of its existence become aware of it. In other words, I expect it's value to peak in about 3 years, and then begin to decrease before leveling off with a value possibly akin to an MBA from a school rated 50-100. Hence why, long term, the best thing to do is to get a top 5 MBA and the CFA. Top 5 MBA's will have more value and staying power.
 
The bottom line is that the CFA charter is required for 99% of the buyside jobs out there. I don't see that changing anytime soon regardless of how many "charterholders" have the desgination. I see the charter maintaining its value in the marketplace for a long time.

However, the bifurcation in the number of charterholders with "investment experience" versus the growing number of folks with questionable, but qualifying experience will continue to grow.

So, CFA + experience will always hold its value, while CFA + fringe experience will loose value over time--and likely at an increasing rate.
 
it ignores that there is more to the financial markets than equity indices. look at all of the recent financial innovations, CDS', MBS' etc. Do you think investors want some series 7 or CSC punk who doesn't know a tranche from a trench looking at that.Don't think so...

Besides Frank, not everyone in this inudstry can pass these exams, I think the fact that 20% get through it speaks volumes...
 
The value of the Charter is the difference between salaries and career expectations of people who have the charter and people who don't (or, more accurately, the sum of the discounted values of these). If the Charter becomes a prerequisite for all jobs in the industry, then the value of not having the charter goes to zero: therefore the charter actually increases in value, not decreases.

Arguably, that analysis doesn't include the stats of people who get the charter (or pass 3 exams) and are unable to find a job. That could reduce the value of having the charter.

On the other hand, the value of the charter as a differentiating tool within the industry does decline, and you have to demonstrate something extra.
 
"On the other hand, the value of the charter as a differentiating tool within the industry does decline, and you have to demonstrate something extra."

You mean like actually having experience for the job your applying for?
 
bchadwick Wrote:
-------------------------------------------------------
> The value of the Charter is the difference between
> salaries and career expectations of people who
> have the charter and people who don't (or, more
> accurately, the sum of the discounted values of
> these). If the Charter becomes a prerequisite for
> all jobs in the industry, then the value of not
> having the charter goes to zero: therefore the
> charter actually increases in value, not
> decreases.
>
> Arguably, that analysis doesn't include the stats
> of people who get the charter (or pass 3 exams)
> and are unable to find a job. That could reduce
> the value of having the charter.
>
> On the other hand, the value of the charter as a
> differentiating tool within the industry does
> decline, and you have to demonstrate something
> extra.

I think there is some bad economics here. If it becomes a prerequsite, the charter will lose any premium that it now has.

Think about how valuable the CSC is now. yes everybody has it. Do you see it as very valuable? nope.
 
It think it finally comes down to basic demand and supply. As long as the number of people with a CFA being sought after, exceeds the number of actual CFAs, the demand would always be there. Since CFA is certainly not degrading its exam standard (read: difficulty) and since its courses are regulary updated to mantain the relevance each passing year, i do not see a reason why CFA should loose its shine.

How should it matter if 100,000 have the charter or 500,000 have the charter as long as all those who have the charter, have it in them to deliver the goods. This of course is assuming that the number of jobs out there are greater than 500,000.

So its a classical case of pure demand and supply, and i dont think the law of diminshing marginal utility really comes into play (as some of you seem to argue).
 
FrankArabia Wrote:
-------------------------------------------------------
> bchadwick Wrote:
> --------------------------------------------------
> -----
> > The value of the Charter is the difference
> between
> > salaries and career expectations of people who
> > have the charter and people who don't (or, more
> > accurately, the sum of the discounted values of
> > these). If the Charter becomes a prerequisite
> for
> > all jobs in the industry, then the value of not
> > having the charter goes to zero: therefore the
> > charter actually increases in value, not
> > decreases.
> >
> > Arguably, that analysis doesn't include the
> stats
> > of people who get the charter (or pass 3 exams)
> > and are unable to find a job. That could
> reduce
> > the value of having the charter.
> >
> > On the other hand, the value of the charter as
> a
> > differentiating tool within the industry does
> > decline, and you have to demonstrate something
> > extra.
>
> I think there is some bad economics here. If it
> becomes a prerequsite, the charter will lose any
> premium that it now has.
>
> Think about how valuable the CSC is now. yes
> everybody has it. Do you see it as very valuable?
> nope.

funny thing is I don't have CSC lol. Don't think I ever will either!

CFA is ten x harder and more valuable
 
i disagree w/ you franky boy.
i believe that bchad is saying that it will become a commodity. economically speaking, a commodity is something that is useful and/or valued... no? however, i do agree w/ your point about losing its "premium." perhaps it will lose its "gold standard� status, but that does not = lost value.
 
care to enter into a CFAI swap?

I'll pay you cost of receiving a charter + 900 hours of study time @ analyst rate ($90,000/year @ 10 hour 250 working days = $36/hr * 900 = $32,400) if you agree to pay me the perpetual difference between charterholders and non-charterholders.
 
i think that CFA is just a comfort factor for employers these days. (atleast here in singapore).
Having a cfa does not mean that you'll become a good analyst.
It merely means that you are aware of the financial lingo and you'll be able to communicate in financial terms.
Yes, it is a value add, but with the large number of CFAs here in singapore, it is not your crown jewel.
 
Wait wait. If the CFA charter becomes a PREREQUISITE to work in the financial industry, then wouldn't it mean it has GAINED in value? Take the CPA license in the United States. 30 years ago, the CPA license was nice to have but by no means required to practice accounting. My father and mother both were successful accountants and neither studied a day in their lives for the CPA exam. Today, the CPA license is essentially required to practice public accounting in any significant way. A public accountant's value is about $50,000 without the CPA and about $80,000 with.

Same thing in law where a lawyer MUST have a JD and pass the bar exam in order to practice law. A legal practitioner's value is about $45,000 without having passed the bar exam and perhaps $120,000 if he/she passes the bar. If the CFA charter becomes standard to work in the industry, then my best advice to prospective finance professionals is to get the CFA charter because your career is dead ended without it. I don't at all get the "economics" behind the lost value of the charter if it becomes "required" or standard. It's illogical. What the crap did you guys get on your SAT verbal?
 
so you're essentially saying that it's all about the sweet talk and less about the substance? so true!

analysthangout.com Wrote:
-------------------------------------------------------
> i think that CFA is just a comfort factor for
> employers these days. (atleast here in
> singapore).
> Having a cfa does not mean that you'll become a
> good analyst.
> It merely means that you are aware of the
> financial lingo and you'll be able to communicate
> in financial terms.
> Yes, it is a value add, but with the large number
> of CFAs here in singapore, it is not your crown
> jewel.
 
cfaprincess,
if you give a financial statement to 10 cfas and ask them to do valuations, most prob they will come up with 10 different numbers (which are not even closely clustered).
But they would be able to read reports and understand what the terminology means.
If i were the employer, and i had 2 choices, a) an analyst with 10 yrs exp without cfa charter, b) an analyst with prob 3 yrs exp with cfa charter, i will prob go with analyst a who has better experience. However, if these 2 analysts had the same kind of experience i will go for the analyst who is a CFA.
 
analysthangout.com: get what you mean. maybe it's just me verbalising my bitterness, but reality (to me at least) has proven that it's the person who can do the sales talk who gets the job, not necessarily the one with the CFA background and the relevant experience!
 
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