I'm three weeks into a 10-12 week engagement in Bermuda - Though I've only been able to get to the beach 3 times, I thought I would post some of the pictures from those outings to keep my hopes of getting out of the office more often.

While here, I've been working in Banking, and have managed to read "Memoirs of a Geisha" on the plane back.

Me on the beach

Read on for more...

(more...)

Newsflash: Natalie Portman is simultaneously embracing myspace and microfinance. I came across the bit of news at one of my regular reads, dealbreaker.com. The best part, though, was located in the comments section:

how does one end poverty? isn't that like getting everybody to be above average? The redistributionists will always complain that people are in the bottom decile, quintile, quartile, whatever and that we need to take from the top and give to them. Seriously, when I hear people say we need to eliminate poverty I always scratch my head as to what that means.

Posted by: joe | May 3, 2007 05:23 PM

That's right Joe - it's a zero sum game. That's why when bums ask me for money I kick them in the nuts and take their change.

Posted by: BSD | May 3, 2007 05:34 PM

Am I crazy? This is the funniest thing I've seen all day. A beautifully sardonic response by BSD.

It's amazing to me how many people falsely believe that trade, or investment, is a zero-sum game (and microfinance is a form of investment, not charity or merely redistribution as joe mentioned above). Let's take a look at how value is created through trade, and subsequently through microfinance:

Trade in Undeveloped Economies

Here we have a simple barter exchange. Johnny trades his apples for Mahir's Chicken. Johnny chooses to make the exchange because he feels he is better off with the chicken rather than his apples – Likewise, Mahir feels better off with the apples rather than his chicken. In this example, as in all trades made under free will, all parties believe they are better off making the trade rather than not. There is no loser – they are both educated about the products they are buying, and have the expectation they will end up wealthier. The economic system has been enriched – greater wealth has been created, and Johnny didn't need to kick Mahir in the nuts.

Trade/Lending in Developed Economies

The process is similar in developed economies. Jasbir the banker has chosen to trade his little blue piglet filled with coins for a future cashflow from Ping the small business owner (who has decided to invest in his business). In this example, as above, all parties enter the contract expected to be better off, and a net creation of wealth occurs. In this example, as above, both Ping and Jasbir need to be educated of the risks they are undertaking.

Lending in Undeveloped Economies

Unfortunately, here is where the problem starts. Mahir, like many others in undeveloped economies, lacks two critical pieces to the wealth creation puzzle:

• Knowledge of the lending process (analogous to his knowledge of apples)
• Access to capital (analogous to the scarcity of apples)

Unlike when Mahir traded his chicken for Johnny's apples, Mahir now lacks the necessary knowledge to assess whether he is getting himself into a good deal. Mahir knows his chickens, but doesn't know his future cashflows; because of this, the risks to both Enrico and Mahir are increased. Enrico the usurious lender is in an advantageous position – He has a scarce resource and an informational advantage. Mahir does not have the opportunity to shop for other lenders, due to both to collusion and limited market size. In this case, either the deal will not go through (and wealth will not be created), or somebody will get kicked in the nuts.

Microfinance in Undeveloped Economies

Here comes Olga the microlender to even the playing field for Mahir. In addition to providing Mahir with greater access to capital, she also provides the necessary education for Mahir to understand the process of borrowing and the risks associated. With this information, Mahir is in a better position to invest into his business(He buys a cart to carry more chickens to the market improving his productivity), and successfully meet his obligations. Additionally, Olga, unlike Enrico, does not rely on usurious rates, and instead aims to perpetuate the microlending process by recycling capital and lending to others like Mahir – Her goal is one of sustainment, rather than either profit or charity. In this example, just as when Mahir traded with Johnny, wealth is created – Fortunately for others, the wealth created will be spread between Mahir, and the future trading partners of Olga.

It's important to also recognize that along with the increased risks associated with investing in undeveloped economies, there's my favorite benefit: Due to the lack of capital and excess of available labour in these economies, the marginal productivity of capital will greatly exceed that of developed nations. Unfortunately, this is partially countered by a lack of productivity enabling infrastructure. Opening countries up to more fluid investment will benefit all, but requires political stability, intelligent investments in infrastructure, and adoption of current technology.

Solow Model – Moving developing economies from K0 to K* makes more sense than moving us from K* to K1

That's enough of me playing with clipart today. I hope I made my point - There's no need to be kicking anyone in the nuts.

The CFA Institute has created some new ads, highlighting the difficulty of the achieving the designation.

My favorite parts of the ads:

• The Same cheesy pose is struck by both models
• Writing encryption code for a global security network wouldn't apply under the designation's required work experience

See the original ads here and here
(Both PDFs).

Although the post is long, it should appeal those considering the CFA designation (My current status is "CFA Charter Pending", meaning that I have passed each of the three exams, but still have to submit my sponsorship application for the Charter)

Below, you will find my response to a series of questions for an article at BCJobNetwork.com. My answers are in blue.

What made you pursue a career in the finance sector?

The focus during my initial time at university was to create as many options as possible; I saw that people with financial backgrounds move into many different industries, and often transition into leadership roles. Once I began studying finance, I enjoyed the material I was being taught, and I could easily see that the principles taught were applied practically by analysts mentioned everyday in the media.

Why did you choose to further that with a CFA?

Several factors led to the decision. Here they are in rank of priority:

• Strong program reputation - Beyond the widely recognized financial rewards for earning the CFA charter, Charter holders are held in high esteem for their analytical abilities, and strong ethical backgrounds
• Intrinsic educational value - To complete the required coursework, you've got to have discipline, and a desire to learn the material. Without a real interest in the material, it would be extremely onerous to stay motivated for 3+ grueling years.
• Ability to work while earning the designation - Early in my career, I wasn't ready to leave my job to go back to school. The CFA charter was a way to stay learning, and improve my financial credentials.
• Low relative costs - Although textbooks and exam costs are not negligible, relative to most other alternatives (and relative to the rewards of the program), the costs are less than one would expect. Costs are ~3-10% of the costs of an MBA.

What do you like about it?

I like learning the material on my own - being able to set they pace for my own learning. I also appreciate the relevancy of the material. Updated the curriculum (aka Learning Outcome Statements) every year means that textbooks are more expensive, but material stays fresh.

Also, the regional CFA societies offer many great resources - from providing selected conferences, to CFA job boards.

What are your day-to-day responsibilities at IBM?

My title is 'Financial Management Consultant'. Our consulting organization is organized in a matrix, so my functional area is Financial management, while my industry is Healthcare.

Day to day responsibilities vary depending on what kind of project I'm on, but there are some common themes - I have worked on many healthcare strategy engagements, where we usually have a team of 3-6 consultants, with each consultant specializing in a particular role. A team could include several of the following roles: a project manager, a financial analyst, a data analyst, an architect, a business analyst, and several SME's (subject matter experts). I would typically serve as the financial or business analyst, and would be responsible for developing financial models, stakeholder engagement materials, risk assessments, current state assessments, and coordinating with other team members for their respective responsibilities.

Our final deliverable is a report that outlines what recommended strategies the client should take - The recommendations are supported by a Current State, Future state, Gap, and Risk analysis. My projects have typically lasted up to 5 months, and I have worked in Ontario, Alberta, BC, and remotely with the US.

The teams are composed of individuals from across Canada, and the world - So I often spend much of the day on the phone, or on IM talking with coworkers. The team will come together every couple of weeks to meet with the client, or coordinate deliverables.

What are your long-term career goals and how are you getting there?

Long Term goals include developing both my people management and technical skills. I'm aiming to create quality work, and build a strong reputation within the industry. Right now, I'm working towards my goals by continuing to work on challenging projects, progressively increasing my level of responsibility within the projects I take, taking leadership roles for internal initiatives, and, most importantly, associating with people that have similar outlooks and expectations from their professional and personal lives.

And then with your education: What major did you have at university?

I graduated with a BBA from SFU - Concentrating in Finance

Why did you pick SFU?

My final choice was between UBC and SFU - The choice to go to SFU was made based primarily on the flexibility of the program (you can switch majors/ concentrations with ease; Co-op program offered; strong business faculty) and the school's academic reputation. I was also an athlete during my university days (Football), so the athletic situation also influenced my decision. I essentially considered SFU and UBC to be academic equals - personal preference was what determined my choice.

What were the major challenges you faced while going through the certification?

It can be very difficult to work heavy hours, spend up to week 12 hours traveling, and then have to study until 1AM every night in the hotel room. During the times where I was studying, social life took a back seat to studying. Eventually, I developed a comprehensive study plan that outlined what I would be studying for each hour of every day. There were several deviations from the plan however; two entire weekends were unexpectedly lost to the DVD collection of the TV series '24'.

What is the regulatory body called for the certification?

It was formerly known as AIMR, but has now changed to the CFA Institute http://www.cfainstitute.org/

And...

What kind of person/career seeker would you recommend to become a member of the finance sector?

The first requirement is that you must be an analytical person. Your personality type can determine what kinds of job you can have within finance (and should not be a precluding factor), but without and analytical background, you would be at a disadvantage.

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For more on the CFA, click here.

This is a classic video (circa 1948) on how the market economy works.

I've started studying spanish again, and to help in my studies, I devised an excel workbook to track vocabulary.

Although it is currently populated with Spanish vocabulary, it can easily be adapted to quiz you on anything you would use flashcards to learn.

It's quite simple:

1. Select the "Quiz" sheet and add new terms to the orange table as you come accross them
2. Use the buttons to randomly quiz you on terms within the orange table:
   • Next - This will randomly select a term from the orange table
   • Show - This will show the definition of the currently displayed term
   • Mastered - This will move the currently displayed term off of the orange table to the "Mastered Words" worksheet
3. To review mastered terms, just click on the "Mastered Words" work sheet and review the blue table

If you're interested in using this approach, you might want to read this webpage - It is full of great language resources.

Hopefully you can find some use for this little tool. In addition to helping you in the language you're learning, it would be great for those CFA LOS statements.

Download the Excel Quiz here.