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{{anat|isda|{{image|marky mark|jpg|}}}}The [[market value]] is the value of an [[asset]] by reference to its [[market price]] — ie what folks are prepared to pay for it at the particular point in time, rather than by assessing the value of the fundamental components of the asset. The latter involves ineffable wisdom, technical analysis and cojones of steel — and at times of stress is apt to make an owner feel aggreived at the world; the former is a bit like sticking something on eBay — hence, “[[Mark to market|marking-to-market]]” — and yields an instant answer if not necessarily gratification.
{{anat|isda|{{image|marky mark|png|}}}}{{quote|{{d|{{PAGENAME}}|/mɑːk tuː ˈmɑːkɪt/|n., v., adj|}}


Marking-to-market is a method of accounting to value an asset. In the absence of a better idea, it is to treat the value of something you have ''not'' sold as if you ''had'' sold it. Regular readers will not be surprised to hear that this can lead to confusion, disappointment and colossal regret. They may, however, be surprised to hear there have been many financial professionals — ones who, similarly, should not have be surprised to hear that — who, in fact, ''have'' been surprised to hear it, and have had the frights of their lives finding it out the hard way over the 30 years since mark-to-market accounting became ''de rigueur'' — re-popularising itself in the hands of accounting wizards like [[Jeff Skilling]] and [[Andrew Fastow]] in the 1990s, President Roosevelt having banned it, at the [[SEC|SEC’]]<nowiki/>s urging, as long ago as 1938.  
1. The [[market value]] is the value of an [[asset]] by reference to its [[market price]] — what the market will pay for it at the particular point in time, rather than by evaluating the fundamental components of the asset. The latter involves ineffable wisdom, technical analysis and cojones of steel — and at times of stress is apt to make an owner feel aggrieved at the world; the former is a bit like sticking something on eBay — hence, “[[Mark to market|marking-to-market]]” — and yields an instant answer if not necessarily gratification.
 
2. A British born serial award-winning Chocolatier and proprietor of ''Demarquette Fine Chocolates''. With over 70 Gold awards under his belt and Category winner of several esteemed awards over the years, '''Marc Demarquette''' (https://www.marcdemarquette.com/) has raised the bar higher and higher, being [[Results-driven|driven by results]] with no better way of demonstrating his excellence than winning [[awards]] for his creations and his clients.  Also a fully trained facilitator and speaker. Relationship with famous French financial markets chocolatiers ''[[Maple, Maple et Cie|Les Frères Maple]]'' unclear. }}
===As a method of portfolio valuation===
“Marking-to-market” is a method of accounting to value an asset. In the absence of a better idea, it is to treat the value of something you have ''not'' sold as if you ''had'' sold it. Regular readers will not be surprised to hear that this can lead to confusion, disappointment and colossal regret. They may, however, be surprised to hear there have been many financial professionals — ones who, similarly, should not have be surprised to hear that — who, in fact, ''have'' been surprised to hear it, and have had the frights of their lives finding it out the hard way over the 30 years since mark-to-market accounting became ''de rigueur'' — re-popularising itself in the hands of accounting wizards like [[Jeff Skilling]] and [[Andrew Fastow]] in the 1990s, President Roosevelt having banned it, at the [[SEC|SEC’]]<nowiki/>s urging, as long ago as 1938.
====How it works====
====How it works====
If a market bid is “[[firm bid|firm]]”<ref>Meaning the person making the bid is prepared to trade at that price.</ref> and the market [[liquid]]<ref>Meaning there are lots of people in the market for that asset at that time</ref> then however estimable your fundamental valuation techniques, you can’t argue about a [[market value]]. In financial markets one can do without a firm bid for your own asset if there is an public market for assets exactly like your one where one can see trading prices every day. Like the equities market, for example.
If a market bid is “[[firm bid|firm]]”<ref>Meaning the person making the bid is prepared to trade at that price.</ref> and the market [[liquid]]<ref>Meaning there are lots of people in the market for that asset at that time</ref> then however estimable your fundamental valuation techniques, you can’t argue about a [[market value]]. In financial markets one can do without a firm bid for your own asset if there is an public market for assets exactly like your one where one can see trading prices every day. Like the equities market, for example.
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But these values are generated on the assumption that, generally speaking, Londoners do not want to sell their homes, and that tiny fraction who do so so for reasons unrelated to their bearish view of the intrinsic value of their property - they are either trading up to a bigger house, trading down to a smaller one — in either case, net flat the London market itself — and a few are arriving, or leaving moving to retirement villages in Milton Keynes. But the net “view” expressed by these activities is more or less neutral.
But these values are generated on the assumption that, generally speaking, Londoners do not want to sell their homes, and that tiny fraction who do so so for reasons unrelated to their bearish view of the intrinsic value of their property - they are either trading up to a bigger house, trading down to a smaller one — in either case, net flat the London market itself — and a few are arriving, or leaving moving to retirement villages in Milton Keynes. But the net “view” expressed by these activities is more or less neutral.


Now, what would be the mark-to-market view of the average North London property if all 1.5m owners decided to sell at the same time? We postulate quite a lot less than £824,540.
Now, what would be the mark-to-market value of the average North London property if all 1.5m owners decided to sell at the same time? We postulate, quite a lot less than £824,540.


===Cost===
===Cost===
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There the temptation might be to [[mark-to-model]] — cue much jiggery pokery and [[opacity]], because you value your positions based on what your clever models — the same ones that did all that lovely [[backtesting]] — tell you. But [[Models.Behaving.Badly - Book Review|Models don’t always behave themselves, do they]]. Especially when they’ve been ginned up by self-interested credit derivative structurers or fanciful Enron employees.
There the temptation might be to [[mark-to-model]] — cue much jiggery pokery and [[opacity]], because you value your positions based on what your clever models — the same ones that did all that lovely [[backtesting]] — tell you. But [[Models.Behaving.Badly - Book Review|Models don’t always behave themselves, do they]]. Especially when they’ve been ginned up by self-interested credit derivative structurers or fanciful Enron employees.


[[Mark-to-market]] has its drawbacks, especially in [[Illiquidity|illiquid]] contracts or for speculative new business lines for which there isn’t yet a market. This did not stop [[Enron]] recognising $110 million of estimated profits from a 20-year deal with Blockbuster Video<ref>Remember them</ref> for on-demand entertainment to various U.S. cities by notwithstanding dubious technical viability and no evidence of market demand.<ref>''At the time''. In fairness, it ''was'' an idea before its time. But let not rose-tinted shades of 20:20 hindsight distract you from the essential fact: no-one knew that then, and it ''was'' accounting fraud.</ref> When the network failed to work, Blockbuster withdrew from the contract. Enron continued to recognize future profits, even though the deal resulted in a loss.
[[Mark-to-market]] has its drawbacks, especially in [[Illiquidity|illiquid]] contracts or for speculative new business lines for which there isn’t yet a market. This did not stop [[Enron]] recognising $110 million of estimated profits from a 20-year deal with Blockbuster Video<ref>Remember them</ref> for on-demand entertainment to various U.S. cities by notwithstanding dubious technical viability and no evidence of market demand.<ref>''At the time''. In fairness, it ''was'' an idea before its time. But let not rose-tinted shades of 20:20 hindsight distract you from the essential fact: no-one knew that then, and it ''was'' accounting fraud.</ref> When the network failed to work, Blockbuster withdrew from the contract. Enron continued to recognise future profits, even though the deal resulted in a loss.


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