stvcomment

Obama's TARP 2 Signals an End to Mark to Market

seems you could have a sort of moving average type mark to market to smooth out the excesses whether up or down.


On Jan 15 12:41 AM johngonole wrote:

> With all the great comments here I can't believe I still get to make
> this suggestion. Keep in mind I don't know what the current accounting
> rules are regarding mark to market but bear with me anyway. First
> we must have mark to market accounting otherwise the markets, investors,
> speculator, and even management of companies will have no idea how
> good or bad their company's financial condition is. Without mark
> to market accounting we might as well torpedo the economy now. Who
> should get a loan, etc... The structural problems with this type
> of or lack of accounting are endless.
>
> The problem with mark to market accounting is that sometimes markets
> are irrational or inefficient due to liquidity or lack of information.
> The solution is obvious. Depending on what type of security is being
> held one uses the long term beta (a measure of volatility) to adjust
> the market value of the asset based on a moving average. The more
> volitile the term beta of underlining asset the shorter the moving
> average used to price the asset. For example a stock with a beta
> of 2 would basically have to be marked to market at the current trading
> price. However a stock with a beta of 0.5 might be allowed to be
> marked to market with a 360 day moving average.
>
> In the current mortgage situation I heard of some mortgage backed
> securities being priced at 9 cents on the dollar mainly due to the
> lack of demand when fear was at a fevered pitch. This instant mark
> to market destroyed financial institution balance sheets causing
> everyone to unload these types of assets at the same time. This
> caused prices to plunge further setting off a devestating chain reaction.
> Now if mortgage values were priced using a 2 year moving average
> then the downward spiral would have never happened to the degree
> it just did. Likewise banks couldn't have written up the value of
> their securities as fast as they did. The point is that we need
> to eliminate the potential for illiquid markets to force companies
> to write off investments that everyone knows are worth more than
> they are in the long term.
>
> If I plan on holding a 30 year mortgage security backed by someone
> with excellent credit who has been steady in making payments for
> 20 years and has plenty of equity does it make sense that the security
> should have to be written down because of speculative forces in the
> security marekets.
>
> I just think there can be some commen sense written into the mark
> to market accounting rules to reduce volitility of company balance
> sheets thus allowing for the markets in whole to adjust to realities
> gradually.
>

Of Guarantees and Printing Presses

Why are ambacs guarantees worthless. There is no one doing business with them ?

The Short Case on KBH Homes

whats wrong with a collar...these home builders will start moving up before most people will recognize the pent up demand out there.

Ambac Collapse: Anticlimax of the Week

Rating agencies, I recal, several years ago,l one life insurance company maintaining an excellent rating all the way up to their bankruptcy.

Rating agencies vs analysts ratings compare and contrast...discuss

3 Dividend ETFs That Are Resisting the Bear

is it selling off today as a result of your blerb...sell on the blerg ?

Reevaluating Coal

the average estimate for next year is over $6 so when ACI hits 60 bucks the forward p/e will be 10...right now its 57 so the forward P/E is under 10.

whats all the talk about 20 and 50 P/E's ?

China Digital TV Issues Guidance 'Disaster'

you might want to show some other metrics for valuing the stock price. The PEG for example coupled with the cash is very attractive.

You are long STV ?

The Bear Reaches Out for Commodities

Dux said it. Those Chinese and Indians and South Americans and Mexicans and so on and so forth are all going to want the same things we have. How will they be made and how will they run after there made.
Pickens said we need bridges to gap the switch from fossil fuels to solar and wind and God knows what. Well those bridges will be needed for a good 10 more years, at least.

Manitowoc Offers Investors Growth at a Discount

Your comparisons with TEREX are weak and have no basis in fact. TEREX is also way undervalued. In my opinion the comparisons to make your point would have been better vs Deere or CAT

China Digital TV: Red Flag Warning?

I think those risk factors have always been in their filings. Read the Oct 5th 2007 filing as its very similiar

Solar Again Under Attack

little to say about nothing. Please stick to facts

LDK Solar: Material Discrepancies in Analyst Coverage/Media Reporting

When Barrons and others raise questions on accounting issues with LDK should they also be in contact with the KPMG Global Code of Conduct they must know that they can confidentially report any hint of shoddy accounting via the KPMG International Hotline.

Sunrise or Sunset for LDK Solar?

uncertainty caused by some anal ists who shoot first and figure things out later