In January 1945, a fundamental analysis-driven professor and practitioner from Columbia University and the Graham-Newman Corporation wrote an article in the precursor of today’s CFA Institute Financial Analysts Journal, making the case that people who research and manage portfolios should have some sort of credential to demonstrate competence and ethical behavior. This person was none other than Benjamin Graham, the father of security analysis and future mentor to well-known modern investor Warren Buffett.

Creating such a credential took 16 years. By 1963, 284 brave souls—all over the age of 45—took an exam and successfully launched the CFA credential. What many do not fully understand is that this effort was driven by a desire to create professional standards for practitioners dedicated to serving individual investors. In so doing, a fairer and more productive capital market would result.

Most professions—including medicine, law, and accounting—have certain hallmark characteristics that help to attract serious individuals and motivate them to devote energy to their life’s work. First, there must be a body of knowledge. Second, entry requirements must exist, such as those required to achieve the CFA credential. Third, there must be a commitment to continuing education. Finally, a profession must serve a purpose beyond one’s individual interests. By properly conducting one’s affairs and putting client interests first, the investment professional encourages general participation in the incredibly productive global capital markets. This encourages the investing public to part with their hard-earned savings for redeployment in the fair and productive pursuit of appropriate returns.

As C. Stewart Sheppard, founding executive director of the Institute of Chartered Financial Analysts, said:

For more than 40 years, hundreds upon hundreds of practitioners and academics have served on CFA Institute curriculum committees, sifting through and winnowing out all the many investment concepts and ideas to create a body of investment knowledge and the CFA curriculum. One of the hallmarks of curriculum development at CFA Institute is its extensive use of practitioners in all phases of the process. CFA Institute has followed a formal practice analysis process since 1995. Most recently, the effort involves special practice analysis forums held at 20 locations around the world and surveys of 70,000 practicing CFA charterholders for verification and confirmation. In 2007, CFA Institute moved to implement an ongoing practice analysis to update the body of knowledge continuously, making use of a collaborative Web-based site and “wiki” technology. In addition, CFA Institute has moved in recent years from using traditional academic textbooks in its curriculum to commissioning prominent practitioners and academics to create custom material based on this practice analysis. The result is practical, globally relevant material that is provided to CFA candidates in the CFA Program curriculum and published in this series for investment professionals and others.

What this means for the reader is that the concepts highlighted in these texts were selected by practitioners who fully understand the skills and knowledge necessary for success. We are pleased to put this extensive effort to work for the benefit of the readers of the Investment Series.

The investment profession, despite its relatively lucrative compensation, is not for everyone. It takes a special kind of individual to fundamentally understand and absorb the teachings from this body of work and then successfully apply them in practice. In fact, most individuals who enter the field do not survive in the long run. The aspiring professional should think long and hard about whether this is the right field. There is no better way to make such a critical decision than by reading and evaluating the classic works of the profession.

The more experienced professional understands that the nature of the capital markets requires a commitment to continuous learning. Markets evolve as quickly as smart minds can find new ways to create exposure, attract capital, or manage risk. A number of the concepts in these texts did not exist a decade or two ago, when many were starting out in the business. In fact, as we talk to major employers about their training needs, we are often told that one of the biggest challenges they face is how to help the experienced professional keep up with the recent graduates. This series can be part of that answer.

As markets invent and reinvent themselves, a best-in-class foundation investment series is of great value. Investment professionals must continuously hone their skills and knowledge if they are to compete with the young talent that constantly emerges. Further, the best investment management firms are run by those who carefully form investment hypotheses and test them rigorously in the marketplace, whether it be in a quant strategy, comparative shopping for stocks within an industry, or hedge fund strategies. Their goal is to create investment processes that can be replicated with some statistical reliability. I believe those who embraced the so-called academic side of the learning equation have been much more successful as real-world investment managers.

Quantitative Investment Analysis focuses on some key tools that are needed for today’s professional investor. In addition to classic time value of money, discounted cash flow applications, and probability material, there are two aspects that can be of value over traditional thinking.

The first involves the chapters dealing with correlation and regression that ultimately figure into the formation of hypotheses for purposes of testing. This gets to a critical skill that challenges many professionals: the ability to distinguish useful information from the overwhelming quantity of available data. For most investment researchers and managers, their analysis is not solely the result of newly created data and tests that they perform. Rather, they synthesize and analyze primary research done by others. Without a rigorous manner by which to understand quality research, you cannot understand good research, nor do you have a basis on which to evaluate less rigorous research.

Second, the last chapter of Quantitative Investment Analysis covers portfolio concepts and takes the reader beyond the traditional capital asset pricing model (CAPM) type of tools and into the more practical world of multifactor models and arbitrage pricing theory.

Equity Asset Valuation is a particularly cogent and important resource for anyone involved in estimating the value of securities and understanding security pricing. A well-informed professional knows that the common forms of equity valuation—dividend discount modeling, free cash flow modeling, price-earnings models, and residual income models—can all be reconciled with one another under certain assumptions. With a deep understanding of the underlying assumptions, the professional investor can better understand what other investors assume when calculating their valuation estimates. This text has a global orientation, including emerging markets. The second edition provides new coverage of private company valuation and expanded coverage on required rate of return estimation.

Fixed Income Analysis has been at the forefront of new concepts in recent years, and this particular text offers some of the most recent material for the seasoned professional who is not a fixed income specialist. The application of option and derivative technology to the once-staid province of fixed income has helped contribute to an explosion of thought in this area. Not only have professionals been challenged to stay up to speed with credit derivatives, swaptions, collateralized mortgage securities, mortgage-backed securities, and other vehicles, but this explosion of products strained the world’s financial markets and challenged central banks to provide sufficient oversight. Armed with a thorough grasp of the new exposures, the professional investor is much better able to anticipate and understand the challenges our central bankers and markets face.

Corporate Finance: A Practical Approach is a solid foundation for those looking to achieve lasting business growth. In today’s competitive business environment, companies must find innovative ways to enable rapid and sustainable growth. This text equips readers with the foundational knowledge and tools for making smart business decisions and formulating strategies to maximize company value. It covers everything from managing relationships between stakeholders to evaluating mergers and acquisitions bids, as well as the companies behind them.

Through extensive use of real-world examples, readers will gain critical perspective into interpreting corporate financial data, evaluating projects, and allocating funds in ways that increase corporate value. Readers will gain insights into the tools and strategies used in modern corporate financial management.

International Financial Statement Analysis is designed to address the ever-increasing need for investment professionals and students to think about financial statement analysis from a global perspective. The text is a practically oriented introduction to financial statement analysis that is distinguished by its combination of a true international orientation, a structured presentation style, and abundant illustrations and tools covering concepts as they are introduced in the text. The authors cover this discipline comprehensively and with an eye to ensuring the reader’s success at all levels in the complex world of financial statement analysis.

I hope you find this new series helpful in your efforts to grow your investment knowledge, whether you are a relatively new entrant or an experienced veteran ethically bound to keep up to date in the ever-changing market environment. CFA Institute, as a long-term, committed participant in the investment profession and a not-for-profit global membership association, is pleased to provide you with this opportunity.