Post by unlawflcombatnt on Apr 26, 2008 15:33:26 GMT -6
Due to frequent references in the news to levels 1, 2, and 3 assets, a primer is in order. Below is a good summary written by Johnathan Weil for Bloomberg News.
"Under the rules known as Financial Accounting Standard No. 157 (FAS 157 ):
Level 1 means mark-to-market. You look up a market quote -- say, a stock price on the Nasdaq -- put it on your balance sheet and run changes through earnings each quarter.
Level 2 is mark-to-model. Quoted prices don't exist. So you estimate values using other inputs observable in the market....
Level 3 means the value of a given item includes at least one significant ``unobservable'' input, reflecting a company's ``own assumptions about the assumptions market participants would use in pricing the asset or liability.'' Or, as I like to say, mark-to-make-believe.
There isn't anything necessarily wrong with Level 3 measurements. By definition, though, they are less certain and more prone to bias. There's nothing new about Level 3 gains and losses either. They just weren't called Level 3 before FAS 157, which the major investment banks adopted last year, and didn't have to be disclosed."
The fact that Level 3 did not previously have to be disclosed, means that the "unrealized", imaginary value added from Level 3 pseudo-gains was never disclosed. The firm could simply add value and income based on hot air.
Like one author said about the late 90's bubble, the only limit to growth was one's imagination.
from: The Declaration of Independence: "all Men are...endowed by their Creator with certain unalienable Rights... to secure these Rights, Governments are instituted... whenever any Form of Government becomes destructive of these Ends, it is the Right of the People to alter or abolish it"
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Apr 14, 2021 1:41:25 GMT -6
Susan George: Thank You for your support!
Dec 21, 2020 17:18:51 GMT -6
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Nov 29, 2020 17:15:41 GMT -6
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Nov 13, 2019 16:18:54 GMT -6
ConGM: Please direct me to the full article by Susan George. Or email to firstname.lastname@example.org.The provided link is broken. I'd like to read it in preperation for a course. Much appreciated.
Nov 13, 2017 15:19:23 GMT -6
ace comando: Well, it took me several days and a lot of code writing to sift through the millions of achieved pages on the Wayback Machine achieves. Was about to give up when a colleague gave me mining script to look at all archived pages whether displayed or not. And
Feb 24, 2017 19:44:10 GMT -6
unlawflcombatnt: I've now changed the colors on the board to something more readable. At least now readers can find the sign-in tab.
Jul 6, 2014 22:58:23 GMT -6
unlawflcombatnt: OldUser-the sign-in area is in the dark area immediately under the red section that says Economic Populist Forum. It's almost impossible to see, unless you know where to look. This was ProBoards idea, not mine.
Jun 12, 2014 11:52:53 GMT -6
OldUser: There's no link on here to sign on or login. Where'd it go?
May 29, 2014 8:44:44 GMT -6
jeffolie: One might short a bull ETF to gain the decay but this requires a margin position subject to changes imposed by the exchanges & brokers
Oct 26, 2013 13:26:07 GMT -6
jeffolie: Holding a stop loss in these algo dominated markets almost always means the algos will hit your stops
Oct 26, 2013 13:20:09 GMT -6
jeffolie: Even so, these leveraged ETFs do not create margin calls nor expiration dates thus allowing one to hold indefinitely
Oct 26, 2013 13:17:52 GMT -6
jeffolie: Yes, the ETF features fading/leveraged decay because the futures and/or options used decay plus the administrative costs rise the decay, declining value ... I accept this as a cost and feature of all ETFs that purchase futures/options to maintain price
Oct 26, 2013 13:15:38 GMT -6
mimzy: jeffolie ~ I've been reading/lurking you for a year or three now and was wondering if your could you explain how you overcome quantum fading/leveraged decay in your ETF short position of the DJIA?
Oct 25, 2013 20:46:26 GMT -6