Average Fool

Obama Takes Pressure Off Health Insurers

I would like to nominate Donald Johnson for Heath Czar.

The U.S. Financial Accounting Standards Board ((FASB)) will discuss mark-to-market guidelines at a board meeting Monday. The FASB says it will focus on "additional application guidance that would clarify how mark to market is used in illiquid markets." Earlier today, FASB chairman Robert Herz told a House subcommittee that new rules could be implemented within three weeks.

Assets and liabilities that are not reflected properly reflected on the balance sheet are ultimately valued quite conservatively by investors. It took us a while to understand the magnitude of bank liabilities not on the balance sheet. Human nature dictates that we will overshoot the magnitude as investors impute a value for off balance sheet liabilities that is greater than the actual liability. Similarly, if we leave mark to market in favor of mark to model, investors will impute a lesser asset value than reflected on financial statements, lesser even than the market value. Investors fear the unknown and are conservative and pessimistic in valuing the unknown. For this reason, leaving mark to market will increase the unknown and cause stock values to decline not increase.

The Case Against Gold

The sellers are already out there. Each week, as I visit my coin shop, I consistently see sellers out numbering buyers by 2 or 3 to 1. My coin shop always has American Eagles for sale so the imbalance I see is not due to a shortage of bullion coins.

With the financial meltdown I began buying gold as insurance (survivorship). As I learned of Milton Friedman's "inflation is always and everywhere a monetary phenomenon" I accumulated more to protect against the dollar printing presses. Finally, I have reached the conclusion that gold and silver are a legitimate asset class that has yet to be recognized as a prudent way to reduce fluctuation and increase return. And just wait until the Chinese weigh in in a serious manner.

In any event, I am not concerned about the recent decline as it allows me to accumulate more coins and average down. I will be a buyer at 880 and if it comes to that at 680 as well. My grandchildren will thank me.

How Big Was the NYC Housing Bubble?

Jeff,
It is reported that Albert Einstein called compound interest the ninth wonder of the world. Using compound interst the annual amounts are much reduced:
Greenwich Village - 185.2% gain, or 11.0 % not 18.5% per year
Upper East Side - 209.5% gain, or 12% not 21% per year
Upper West Side - 200.5% gain, or 11.6% not 20% per year
Washington Heights - 1110.5% gain, or 28.3% not 111.1% per year
Harlem - 550% gain, or 20.6% not 55% per year
Midtown West / Clinton - 263.8% gain, or 13.8% not 26.4% per year