I am not very good at remembering some things.

There have been more than a few times where I have walked into a store to buy something and suddenly find myself standing in the middle of the store unable to recall what it was that I was supposed to buy. Luckily my wife never forgets anything and I can just call her and she will remind me. While this is a moderately effective method for remembering grocery lists, this poses a significant problem when it comes to the CFA exams. It turns out that the CFA exam proctors will not allow me to call my wife for help with questions and there are literally tomes of information to remember.

So how did I survive the first two levels of CFA exams?

Brute force memorization mostly and when that would not work I had to trick myself into remembering.

Sometimes it is a story or a diagram that get the job done. There are more than a few acronyms bouncing around in my head while other times I just slightly tweak things I have memorized via brute force.

I will share a few examples from my recent CFA level 3 exam studying.

First a diagram (apologies in advance for my toddler like scribblings). I draw a 2×2 box like this:

Government Policy Impact on Yield Curve

Next, I fill in all the information in alphabetical order from left to right and top to bottom. “L” before “T” and “Fiscal” before “Monetary”. My diagram now looks like this:

Government Policy Impact on Yield Curve

“L” stands for loose and “T” stands for tight. Lastly, I allow gravity to demonstrate how government policies impact the yield curve by pulling down on the right side, which looks like this:

Government Policy Impact on Yield Curve

So when the government’s fiscal policy and monetary policies are both loose, the yield curve is steep. If fiscal policy is tightened the yield curve is less steep. If monetary policy is tightened instead the yield curve becomes flat. Finally, if both monetary and fiscal policy are tightened simultaneously the yield curve inverts.

Violá, I just tricked myself into remembering how fiscal and monetary policy impact the yield curve.

For another example consider the following formulas:

Σ (Wpi  –  Wbi)(Rbi – Rb)

Σ (Wpi  –  Wbi)(Rpi – Rbi)

Σ Wbi * (Rpi – Rbi)

These formulas cursed me for several weeks until I figured out how to trick myself into remembering them. They are the formulas which help determine micro performance attribution. The first formula is used to determine the pure sector allocation impact. The bottom formula is used to determine the within sector selection impact. The center formula, which is presented last in the CFA curriculum and in Schweser Notes is used to determine the allocation and selection interaction. The allocation selection interaction is the least meaningful which is probably why the CFA curriculum and Schweser Notes list it last, but “my dog’s PAW” is easier to recall on exam day than PWA.

PAW puts the formulas in the order that I can remember them.

Pure Sector Allocation: Σ (Wpi  –  Wbi)(Rbi – Rb)

Allocation Selection Interaction: Σ (Wpi  –  Wbi)(Rpi – Rbi)

Within Sector Selection: Σ Wbi * (Rpi – Rbi)

Next, I just memorized the first formula via brute force: Σ (Wpi  –  Wbi)(Rbi – Rb)

Then I just need to add one piece, slide one piece over and delete some others. Here is a diagram showing how I get my other two formulas:


With that, I really only memorized one formula and the rest is an acronym, one new term (Rpi)and moving stuff around a bit.

Violá, my micro performance attribution formulas are seared into my brain.