Thursday, October 15, 2009

Mark to Make Believe...

The market got a pretty good goose at the end of the day and might take a breather pending the interpretation of IBM and Google's numbers (Google was ok, IBM was a little disappointing).

I've talked about the mark to mark scam for the better part of the past year, but it's worth a little review. When assets fall in value a company historically has had to adjust for that change in value and book a loss. However, early last year the Financial Accounting Standards Board caved and decided that this policy was just too painful for companies to follow so poof!!! It's gone. Now when assets fall in value, you just ignore it and report massive profits.

This is one of the reasons why this market has become so frustrating. Reality has taken a vacation.

Via Bloomberg: Mark to Make Believe turns Junk into Gold


1 comment:

The Hermit said...

It's like buying a fake Rolex. Oooohs and aahhhs until you take it to the pawn shop, and if it still runs, it's worth $20 bucks.
Anybody wanna buy a used Rolex? :)
Same can't be said about 1 oz gold bars, huh?