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Harnessing Your Memory for the CFA Exams - Part 1


Photographic memory doesn't exist.

I hate to tell you but unfortunately photographic memory is a detestable myth. It doesn't exist. Don't let anyone convince you otherwise. Surely a memory like Mike Ross's is confined to the realm of TV.

Or is it?

A 101 on the History of Memory
A long time ago when teaching how to memorize was still taught to school children. Roman senators used to memorize their speeches and medieval scholars memorized entire books (wouldn't that come handy with the CFA exam). So before you lambaste me for advocating "memorizing" and not understanding the material and citing and that the CFAI is moving towards comprehensive and not rote memorization. I know, but hear me out!

A long time ago when the ability to memorize was valued and not just a neat trick, it was believed that memorization techniques were used to etch into the brain foundational texts and ideas.

Tony Buzan founded the World Memory Championship in 1991 and believes, "what we have been doing over the last century is defining memory incorrectly, understanding it incompletely, applying it inappropriately, and condemning it because it doesn't work and isn't enjoyable".

"The general idea with memory technique is to change whatever boring thing is being inputted into your memory into something that is so colourful, so exciting, and so different from anything you've seen before that you can't possibly forget it".

Why does it work like that? Because we are extremely good with remembering visual imagery but terrible with remembering words and numbers - unfortunately CFAI missed this memo. That is why formulas fall out of our heads but we remember the grinning people on our Schweser study notes (or whatever study material you are using - why are they all always smiling?!). We have to take our formulas and transform them to something that does leave a visual impression.

A Couple of Examples
Maybe you are still skeptical so I'll share a few of my own tricks. I apologize for the very level two centered examples.
  • An autoregressive model you can't use the Durbin-Watson statistic to test for autocorrelation. Why, this is when I whip out one of my favourite childhood show. Where Arthur (AR) and his sister DW rarely were agreeable with each other, just like autocorrelation doesn't agree with Durbin-Watson.
  • With all the rules thrown at us in the financial reporting analysis section imagine how helpful it would be to remember that GAAP doesn't allow for partial goodwill but IFRS does. (US GAAP being only for the US it makes sense they are confined to partial recognition of the goodwill just like they are confined to terrible cup of java - the image of US GAAP being drowned into a partially filled cup of java makes me chuckle every time. I image that US GAAP is a city slicker with hard features and a wickedly deviously sense of intellect or why else would LIFO be allowed ... but I digress).
No, it isn't exciting but it works for me - find what works for you. It takes awhile to do this, but it pays off!

Next Week
Another method that can be used is the memory palace also known as the "method of loci". You didn't seriously think there was only one way to memorize, did you? See you next week guys and happy studying!

Quotes and Ideas taken from Moonwalking with Einstein - The Art and Science of Remembering Everything by Joshua Foer


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