• Find sources you trust (the most) and consciously account for their biases – a glaringly obvious example: don’t read Krugman in the New York Times and think he doesn’t have a worldview to sell. Differentiate between reporting mostly facts (e.g. Bloomberg) vs. ‘news’ as (political) entertainment (e.g. Krugman, also nearly every daily paper). Place emphasis on sources that often openly declare their views if relevant (e.g. The Economist).
• Don’t buy into explanations of why things happened; reporters have mostly no clue either, it’s often just conjecture - just try to absorb the facts and try to make up your own mind (have you ever read ‘explanations’ of why flash crashs happened? It’s hilarious).
• Read a huge variety of sources, so that biases tend to cancel each other out – especially on politically charged topics, you need to get different viewpoints (e.g. read The New Yorker and The Weekly Standard).
• Make use of modern media – there is excellent reporting out there, you just have to find it (e.g. Felix Salmon for financial markets and business reporting), also use aggregators (e.g. Hacker News, Abnormal Returns; Long Form; Metafilter etc.), also read out-of-mainstream sources (the little crazy ones, e.g. Zero Hedge).
• Try an information diet as recommended by Rolf Dobelli or Nicholas Nassim Taleb, find out why it doesn’t work for you, but still improve your reading habits.

When I finally decided to register for the CFA (Chartered Financial Analyst) Level I exam this June a few weeks back, I spoke to a few charterholders and read several forum postings (e.g. at analystforum.com) about study methods. What I came to realize is how unsure many candidates are about the best possible way to study.

Although I have yet to sit for the exam, I decided to share a few thoughts based on the CFA learning experiences of others as well as my own experiences learning for my First State Exam as a German lawyer, which basically meant learning full-time for 1,5 years and then being tested on six five-hour exams as well as an oral four-hour exam five months later – the following is meant to be as much of a reminder for myself as a hopefully helpful overview for others.

I. Importance of a regular study routine

The amount of material a CFA candidate is supposed to know for each exam is staggering. It’s not the absolute difficulty of the subject material that gets to people psychologically, it’s the sheer amount of it. There are two important ways to deal with massive amounts of material, the first being a regular study routine.

You just have to have enough time to actually get through it. So start learning regularly. It’s too much material to just cram in a few weeks time prior to the exam. Learn to spread your reading somewhat evenly in the months beforehand.

What you don’t do on a daily basis, you don’t do.

Whatever it takes to motivate yourself, it’s worth it to establish a regular routine – the CFA exam is as much a test of your discpline and stamina as it is of your intellect.

II. Repeating & summarizing

You absolutely will not get the best out of your time spent reading the material if you don’t repeat what you’ve already covered before. Start reading the summaries of the last few readings before you begin a new one. This is the second important way to deal with massive amounts of material.

And it’s probably the most under-appreciated advice. It takes time to repeat and it seems so much easier just to get on with the next chapter. But it hurts your ability to recall the material in the long run.

In order to commit the material at least to a sufficient degree to long-term memory, you need to repeat it. Not once or twice, more like five to six times, with increasing intervening periods. So start reading the EOC summaries of the last few readings before starting a new one. You will thank yourself later for this.

If you want to go the extra-mile, start writing your own summaries of the readings. This helps you in multiple ways: You concentrate on the content of each reading by evaluating what’s important enough to write down; you remember much better later what you’ve written down yourself and you already repeat the material for the first time. Alas, it takes a lot of additional time so it’s not for everyone.

III. Why you need to do questions and mock exams

After you’ve gone through all the material and memorized as much as possible of it, you need to start memorizing it even better – by learning and applying the material in a different context and in the way it actually gets tested on the exam: Start doing questions and, later on, mock exams. It won’t be sufficient to just memorize what you’ve read. You need to be able to apply it to the style of questions the exam presents you with.

Lots of people preach doing this as early as possible. I’d caution that it doesn’t make much sense to do questions if you haven’t yet adequately committed the material to memory. It’s a good combination of learning and repeating as well as doing questions and mock exams that helps the most.

IV. So what does it all come down to?

Besides those general strategies, there are a few more practical tips worth keeping in mind:

1. Realize the differing importance of each book and start learning accordingly:

- Ethics & Quant, Equity & Fixed Income, and FRA together make up 69% of the exam

- Ethics is nearly twice as important as any other subject (as per exam weighting / number of pages)

2. How to Deal with each Reading:

- Review the summaries of the last three readings

- Read the LOS and the summary of the reading to spot main topics

- Read the reading itself and mark the important points, don’t just read

- Solve each EOC question

- Write your own summary of the reading

3. Finish your readings four weeks prior to exam time

4. Start doing questions about four weeks prior to exam time, review subjects you’re least sufficient in

5. Try to actually understand what each formula says, don’t just memorize it

6. As you do ever more questions, read all of your own summaries, the CFAI summaries and re-do each EOC question at least once

Hopefully, this helps you as much as putting it together helped me to figure out how to tame the CFA exam materials.

If you have any questions, feel free to comment or shoot me an email.

You could have been reading dozens of books and articles about the recent financial crisis and the U.S. government’s response to it and still be inclined to believe moral hazard and ‘bail-outs’ as a preferred mode of response to crises were something unheard of. Which just goes to show how ignorant one can be.

Joshua Green’s profile really helped me put events into perspective. Geithner learned first-hand about the dangers of taking a gradualist approach to a banking crisis as an assistant Treasury attaché in the U.S. embassy in Tokyo. He was part of the crucial team that helped Mexico sustain its troubles. And by the end of the Clinton era, a basic method of responding to financial crisis had emerged: quickly flood the market with money to restore confidence.

There is a lot more in that article to make you think, but that point really made me flinch. If you’re convinced that this exact response mechanism creates more problems than it solves, like I do, although you can just as well see things differently, then you have a much larger and much more established problem at hand than you previously thought.

This profile also reveals how much of our prevailing thinking about the origins of crises and whom to blame etc is shaped by story-telling that bears little to no resemblance to actual reality. As Nassim Taleb’ said, “the narrative fallacy [...] is associated with our vulnerability to overinterpretation and our predilection for compact stories over raw truths.”

The German feuilleton and ‘literary establishment’ have been discussing this for the last few weeks, accomplishing nothing. Whole magazine issues have dealt with the plagiarism charges, coming to no concrete result whatsoever.

Of course, art is an utterly subjective manner and basically follows arbitrary rules all the time.

But there is a clear distinction to be made between remixing the works of others and purporting that one has written an original novel. Both are forms of art, but while remixing derives its value at least to a certain extent from the parts that are remixed, originality by definition derives its value from creating something original.

It is a distinction that has to be made independently of any specific work as it’s a basic issue of authorship, originality and the moral compass of an author. Plagiarism is not limited to works of fiction. It is also – perhaps even more so – an important issue in academia and science. Both fields recognize the importance of acknowledging previous works and established authors. As original research is not possible without knowledge of the current status quo within your academic field, creating your own voice similarly consists of having acknowledged and imitated the voices and narratives of others beforehand.

But you accomplish originality only when you transcend incorporating the work of others and add your very own distinctive contribution to it.

I think the concept of originality has to be adamantly defended in today’s remix culture. One should always distinguish clearly between the concept and value of both remixing the work of others and creating something entirely on your own.

It’s perfectly admirable for a young author ‘just’ to remix the work of others. Many famous authors have slaved away for decades before accomplishing now famous works of originality.

Clearly establishing a moral straight line between copying others and standing on the shoulders of giants to add your own contribution is what’s lacking in recent discussions. I consider this to be a failure of the ‘literary establishment’ who have proven themselves to be moral relativists and therefore deemed themselves, at least for me, not worthy of any further consideration.

The operations, approved by President Obama and begun six weeks ago, involve several dozen troops from the U.S. military’s clandestine Joint Special Operations Command (JSOC), whose main mission is tracking and killing suspected terrorists. The American advisers do not take part in raids in Yemen, but help plan missions, develop tactics and provide weapons and munitions. Highly sensitive intelligence is being shared with the Yemeni forces, including electronic and video surveillance, as well as three-dimensional terrain maps and detailed analysis of the al-Qaeda network.

As part of the operations, Obama approved a Dec. 24 strike against a compound where a U.S. citizen, Anwar al-Aulaqi, was thought to be meeting with other regional al-Qaeda leaders. Although he was not the focus of the strike and was not killed, he has since been added to a shortlist of U.S. citizens specifically targeted for killing or capture by the JSOC, military officials said. The officials, like others interviewed for this article, spoke on the condition of anonymity because of the sensitivity of the operations.

Washington Post – January 27th 2010 (emphasis added)

Apparently, we are in an age where not only is it not frowned upon to freely roam and kill alien citizens on alien territory without having declared war on other countries, it also does not seem to provoke outrage if government – by which right? by whose decision? due to what evidence? due to which laws? – plots to kill its own citizens – and gets it done.

I strongly believe the world would be a much better place if people had a lot more liberties.

People who join you in an effort to further such a cause hopefully share your beliefs.

They may as well have other beliefs, which you adamently oppose but nonetheless see associated with the organization whose basic cause you would like to see furthered.

It’s been very upsetting for me to see a fellow Libertarian (?) – someone I neither know personally nor have met before – advocating various claims by 9/11 conspiracy theorists or 9/11 critics in a magazine article.

The reason this has been upsetting for me is that I strive to think as rationally and follow the scientific method and think logically as much as I can. Coincidentally, I have read up on the issue of 9/11 conspiracy theories over christmas, well before I read about the article. I have found the conspiracy theories – after much rational deliberation and considering the facts proven by the scientific method – to be totally wanting.

After careful consideration, there exist, in my view, no facts indicating any kind of conspiracy whatsoever and there are no rational arguments to be made for those conspiracies – and thereby against the facts which the public knows about 9/11 – which hold up under rational scrutiny and under adherence to the scientific method. There are no “facts” or arguments that can form a rational case for scepticism concerning 9/11.

I believe humans often think irrationally – sometimes understandably so, sometimes not. And they do seem to fall for conspiracy theories every so often.

But what I will never understand is why an author who supposedly spent “thousands of hours” on a subject still holds irrational beliefs contrary to all kinds of evidence.

I also believe that everyone has the right to hold his own views and express them. So Oliver Janich is absolutely free to state his own opinion, of course.

As am I. These are the major reasons I believe the conspiracy theories and purported “facts” about 9/11 (as stated in the Focus Money article “Terroranschläge vom 11. September 2001: Wir glauben euch nicht!“) are utterly irrational, to say the least:

1. The most basic premise the conspiracy theorists fail to understand is that the burden of proof is on them. They are the ones who try to dispute the facts and try to make one believe in a different explanation for the events, so they must prove that current wisdom is incorrect. Even if you buy into their “it’s a conspiracy, so how can you prove anything without being a conspirator” argument, they could still start with any minor detail that proves the facts and the official explanation for 9/11 to be wrong and work it from there. People cannot just make stuff up and expect other people to believe their premises and dispute their ridiculous claims. It’s the other way round – start disputing the facts.

2. Conspiracy theorists often play on people’s worries about governments playing tricks on them and other emotions. Playing on one’s emotions is a clever tactic, but doesn’t make their points any more believable, if considered rationally.

3. Conspiracy theorists assert that it is ‘impossible’ to hit the Pentagon with a Boeing in such a maneuvre. A Dutch TV show took a similarly inexperienced pilot and put him in a simulator and he accomplished it three times in a row. It may be difficult, but not as difficult as the conspiracy theorists assert.

They also assert that a missile hit the Pentagon, as aircraft debris is supposedly missing. The debris is not missing, it’s here and here and here. Passenger’s DNA was found all over those parts of the Pentagon, which were hit. Lamp poles were struck down by the plane as it approached the Pentagon.

And to the supposedly “many many security cameras” watching the Pentagon: please show on any satellite image where there should have been a camera whose footage has not been released yet! There is none. Conspiracy theorists all over the world tried and couldn’t find one. The only one showing the impact actually shows a plane – though the resolution is not good.

4. Flight 93 – Why was Flight 93 not intercepted? Because NORAD had no specific targets to go after, and was waiting on the FAA to name them, not being able to do so themselves. Shut-down order or not, no fighter planes were even close. Add to that the fact that communication between NORAD and the FAA was by no means easy or as fast as today, and the “mystery” of why Flight 93 was not intercepted unravels. And by the way, they didn’t have “about an hour” to intercept planes, as the author states in his article. It was – at the most – nine minutes, which NORAD had to possibly intercept Flight 11, which then crashed into the WTC.

Also, there is no evidence whatsoever that Flight 93 was shot down. Flight-data-recorder for Flight 93 indicates nothing whatsoever that the flight could have been shot down by a missile. Faking FDR data is not only immensely difficult but has not been proven to have happened in this case, despite many a conspiracy theorist looking into it.

Also, there is no “missing debris” – what do you think this and this is?

5. I am fairly fed up by baseless accusations by now and will stop here. Read all about WTC 1 and 2 and 7 on the links given. All accusations by conspiracy theorists have been disproven. One just has to actually go read about it instead of staying in a state of disbelief.

I didn’t think I would have to ever write about something as obvious as this – and I feel sorry that I have to -, but apparently some people hold some really irrationally beliefs about 9/11. Do not count me amongst them.

Why do I feel the need to point all that out? Because I endorse those organizations anyway, for what they stand for and for what they try to accomplish. I couldn’t care less about what others may think about donating to those institutions. I think they deserve more attention and I hope to help them get to that – with all of the ten readers a month I have..

So whom did I give to (in ascending order)?

Wikileaks

They may not care about journalists in jail. They may not help journalists who are under observation by secret police forces. But they ‘produce’ scoops. They have freed more documents who were kept secret and are often – supposedly – relevant to national security than any other publication. And they have been a game-changer for freeing (mostly governmental) information from confidentiality in general; though their fundraising methods have been controversial.

There is a ridiculous notion inherent in classifying documents produced by the government (and paid for by the people) from view by the public, which Wikileaks helps expose. After the Obama administration decided not to declassify millions of documents previously scheduled for that and after censorship laws gaining governmental (and sometimes even public) support in ever more countries, here is to hoping that Wikileaks grows stronger by the day.

Please donate to Wikileaks!

TrueCrypt

TrueCrypt is – to my limited knowledge – the best encryption program available to a regular user which works like a charm. With an ever-growing support of censorship approaches and laws worldwide, I believe it to be of utmost importance that anyone is able to secure his own privacy from prying eyes. I am an ardent believer that the debate about security in our current times is framed wrongly. There is a false premise in the prevailing mass belief that there is either ‘security or privacy’. The issue at hand is simple: It’s (a false sense of) security vs liberty. But no state whatsoever, not even a totalitarian one, can guarantee absolute safety for its citizens from all enemies. The more you let the debate be defined by fear, the more liberties you give away. This is why I stand for liberty any day and am ready to accept the trade-off: a more ‘dangerous’ world, but one with great liberties.

Please donate to TrueCrypt!

Zero Hedge

Every time someone gets called a “full-blown cult hero” and a conspiracy theorist, they are either completely nuts or spot on. In the case of the anonymous finance group blog Zero Hedge, my bet is on the latter. Sure, their posts are often controversial and there seems to be some kind of ardent followership. But that’s just perception. Are they controversial because they are perceived as being anti-mainstream or are their arguments controversial on their merits? Who truly looks at them without preconceived notions?

I think contrarian voices deserve to be supported in most cases, especially in an industry exhibiting as much conformity as the finance industry does. Zero Hedge not only exposed malpractice in the finance industry but balances out the financial information one can get by providing a contrarian viewpoint. The finance world would be a worse place without Zero Hedge.

Please donate to Zero Hedge!

The Seasteading Institute

In the words of Peter Thiel, “in our time, the great task for libertarians is to find an escape from politics in all its forms – from the totalitarian and fundamentalist catastrophes to the unthinking demos that guides so-called ‘social democracy’.” One form of escape from obviously corrupted politics lies in the possibility of settling the oceans. The underlying concept of encouraging competition between governments in order to achieve better forms of government by providing people the means to chose between them, deserves as much support as it can get. Charter Cities are another important means to achieve this.

I wholeheartedly believe humanity will be better of if people can choose between governments at free will. It will provide much-needed encouragement to start experimenting. Democracy in its recent form is quite new in an historical context. There has to be something better than that. But the only way to find out is to start providing people the possibility to choose.

Please donate to The Seasteading Institute!

I am deeply interested in the future of journalism. I think one aspect of Y Combinator’s take on this is spot-on:

What would a content site look like if you started from how to make money—as print media once did—instead of taking a particular form of journalism as a given and treating how to make money from it as an afterthought?

I think the best way to make money is to tailor the content individually to each user. News and journalism (i.e. essays, op-eds, original reporting etc.) are abundant. But why should you care what the New York Times thinks is relevant about what’s going on in the world? You may be interested in a lot of different topics or you may be very deeply interested in a single topic.

One-for-all just doesn’t cut it anymore. People crave personalized experiences.

Ever more people need to stay on top of what’s happening in the world or in business. But with a growing amount of news, it gets more difficult and more time-consuming to do so. I think people will pay to have an accurate filtering mechanism pre-determine what they need to consume.

To shorten the amount of time they need to get and consume (eventually) all the relevant information they need, they will pay. It frees considerable time otherwise spent browsing websites or paper editions of the world’s newspapers and magazines.

The end result is a daily executive summary of the world’s news and information, compiled and provided individually for each user. It is tailor-made, medium-independent personal content, presented as an individualized summary with links to all relevant content. That’s enough buzzwords for now.

There are two takes on this I thought of:

1. The “easy” one, or the premium market: GetAbstract for news. Users can subscribe to summaries of any number of newspapers and magazines they want. They get spared the time needed to browse and read the content themselves and instead are provided with an abstract / a summary of the major articles. Users can choose from different options, i.e. different topics may get special coverage or more or less depth of the summaries. There are legal and scaling problems with this idea and it’s not very ground-breaking, but I think there is enough value for it to sell. Obviously, this only makes sense for users who value their time financially high enough to warrant paying for such a service.

2. The “futuristic” one, or the mass market: A daily summary of the world’s news, fully automated – like your personal reading assistant. It’s a combination of several mechanisms which, individually, have proven to work but which, each on their own, are very very hard to get right: (1) Amazon-like recommendations (liked that article about Nancy Pelosi? What about reading on Harry Reid?); (2) delicious-like content recommendations by your friends or social circle, this may include a voting mechanism to not miss what’s popular right now; (3) content selection based on data (keyword) analysis of what you previously liked; (4) content selection based on categories / keywords you provided. All of this should you compiled into a single summary for each user with links to all relevant content. I am no coder, so this is just a conceptual idea with no clue on technical feasibility. It’s just something that I think would be totally awesome to have. Because I read religiously, and I would love to have something like that. I might even pay a little bit for it.

That’s it. Here is the preliminary descriptorum.com. Thanks for reading and please feel free to comment, mail me or further journalism on your own!

Every time someone experiences a mishap or failure, something astounding happens: People who have no business lecturing and criticising the very people who went out and at least tried do it anyway. Chairmen of political parties, authors or entrepreneurs nearly get slayed by dumbasses every time something doesn’t go according to plan, or, as you might call it, reality happens.

Why is that so? It’s just that much easier to criticise and to condemn than to think for your own and let other people be.

Criticising others makes you feel superior and you gain emotional satisfaction from the fact that others fail. It lets you off the hook for not even trying to make your own dreams come true. It makes you feel good in playing it safe.

Intellectually, it’s also that much easier. Just take a look at Gawker or Techcrunch (or many other often snarky publications). Have you ever seen them consistently reporting on people’s successes or investigating thoroughly? They don’t because you can ridicule and critique in a much shorter time and it sells that much better. Gawker doesn’t sell news or gossip. It sells emotional satisfaction.

It’s intellectually lazy and emotionally dishonest to stick with criticising others. You can do so much better. You learn, you grow, you keep your self-respect. All by just keeping your mouth shut more often and thinking before opinionating on any topic you don’t know enough about to provide real value. As Marcus Aurelis said, “the best response is not to be like that”.

Critical thinking is an oxymoron. What passes for critical thinking these days is often intellectually lazy, snarky witticism in disguise. You need knowledge to warrant thinking.

I think it’s just a totally different argument to make – at least in these spheres, where I think you have to differentiate between concept and adoption. Either you critique the original idea or you argue that its adoption is flawed. But to combine those two arguments just makes your critique seem lazy and to be a foregone conclusion.

Judging ideas on their merit is, of course, much more difficult as you need to be intimately aware of their context and of the creator’s intentions. This requirement for deep understanding not only makes it harder to argue your point, but also exposes your incapability in case you go ahead nonetheless.

Apparently though, it’s much easier to get published by mainstream publications if you just make shallow and sloppy arguments which sound good and go nicely with pre-existing world views.