stvcomment's Comments RSS Syndication from SeekingAlpha.com http://seekingalpha.comuser/159929/comments http://seekingalpha.com/article/114697-obama-s-tarp-2-signals-an-end-to-mark-to-market?source=feed#comment-358842 358842

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.
> ]]> Sun, 18 Jan 2009 09:08:13 -0500

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.
> ]]> http://seekingalpha.com/article/99698-of-guarantees-and-printing-presses?source=feed#comment-281359 281359 Mon, 13 Oct 2008 12:16:18 -0400 http://seekingalpha.com/article/97760-the-short-case-on-kbh-homes?source=feed#comment-277141 277141
]]> Wed, 08 Oct 2008 15:37:31 -0400
]]> http://seekingalpha.com/article/96507-ambac-collapse-anticlimax-of-the-week?source=feed#comment-261165 261165
Rating agencies vs analysts ratings compare and contrast...discuss]]> Mon, 22 Sep 2008 07:13:05 -0400
Rating agencies vs analysts ratings compare and contrast...discuss]]> http://seekingalpha.com/article/94948-3-dividend-etfs-that-are-resisting-the-bear?source=feed#comment-251966 251966 Thu, 11 Sep 2008 15:54:44 -0400 http://seekingalpha.com/article/92030-reevaluating-coal?source=feed#comment-235833 235833
whats all the talk about 20 and 50 P/E's ?]]> Thu, 21 Aug 2008 15:07:39 -0400
whats all the talk about 20 and 50 P/E's ?]]> http://seekingalpha.com/article/89667-china-digital-tv-issues-guidance-disaster?source=feed#comment-224756 224756
You are long STV ? ]]> Thu, 07 Aug 2008 07:47:06 -0400
You are long STV ? ]]> http://seekingalpha.com/article/89412-the-bear-reaches-out-for-commodities?source=feed#comment-224333 224333 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.]]> Wed, 06 Aug 2008 15:06:16 -0400 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.]]> http://seekingalpha.com/article/88210-manitowoc-offers-investors-growth-at-a-discount?source=feed#comment-219080 219080 Thu, 31 Jul 2008 07:45:22 -0400 http://seekingalpha.com/article/84082-china-digital-tv-red-flag-warning?source=feed#comment-200476 200476 Tue, 08 Jul 2008 08:43:38 -0400 http://seekingalpha.com/article/79699-solar-again-under-attack?source=feed#comment-178405 178405 Tue, 03 Jun 2008 07:55:48 -0400 http://seekingalpha.com/article/67192-ldk-solar-material-discrepancies-in-analyst-coverage-media-reporting?source=feed#comment-122300 122300 Wed, 05 Mar 2008 07:54:58 -0500 http://seekingalpha.com/article/67008-sunrise-or-sunset-for-ldk-solar?source=feed#comment-121887 121887 Tue, 04 Mar 2008 09:24:16 -0500