Comments on: Using Their Illusion http://longorshortcapital.com/using-their-illusion.htm We dividend our ad money to you. Thu, 18 Mar 2010 16:35:58 -0700 http://wordpress.org/?v=2.9.1 hourly 1 By: Dirty Sanchez http://longorshortcapital.com/using-their-illusion.htm/comment-page-1#comment-90561 Dirty Sanchez Thu, 12 Jun 2008 04:00:36 +0000 http://longorshortcapital.com/using-their-illusion.htm#comment-90561 Check out RVI. They made a boatload this quarter because they are short their own warrants and the stock tanked. Check out RVI. They made a boatload this quarter because they are short their own warrants and the stock tanked.

]]> By: Jeremy http://longorshortcapital.com/using-their-illusion.htm/comment-page-1#comment-90551 Jeremy Thu, 12 Jun 2008 01:37:21 +0000 http://longorshortcapital.com/using-their-illusion.htm#comment-90551 The construct is sound. In the old days if you made a loan and the market rate of interest went up, you didn't take additional reserves against that loan. Therefore you didn't change the value of your liabilities. Today, due to mark to market accounting, you have to mark the position down when the market rate of interest goes up, but on the other side before this rule change you saw no benefit when in issuing $100 million of 30 year paper at the top of the market. There was really a mismatch of accounting concepts in regards to present value. It has nothing to do with the nominal amount that needs to be paid back when thinking about a liability, it's the present value of that nominal amount. If the market rate of interest one year after the issuance of a 30 year bond goes up 2%, then the present value of the money the company will have to spend to retire that bond is less. The construct is sound. In the old days if you made a loan and the market rate of interest went up, you didn’t take additional reserves against that loan. Therefore you didn’t change the value of your liabilities.

Today, due to mark to market accounting, you have to mark the position down when the market rate of interest goes up, but on the other side before this rule change you saw no benefit when in issuing $100 million of 30 year paper at the top of the market. There was really a mismatch of accounting concepts in regards to present value.

It has nothing to do with the nominal amount that needs to be paid back when thinking about a liability, it’s the present value of that nominal amount. If the market rate of interest one year after the issuance of a 30 year bond goes up 2%, then the present value of the money the company will have to spend to retire that bond is less.

]]> By: Ken Houghton http://longorshortcapital.com/using-their-illusion.htm/comment-page-1#comment-90511 Ken Houghton Wed, 11 Jun 2008 19:59:20 +0000 http://longorshortcapital.com/using-their-illusion.htm#comment-90511 Is this the follow-up to FASB's "you don't have to amortize Goodwill, but you do have to write it off when the rest of the world realises you made up the number (and were off by a factor of infinity) in the first place" rule? That one was a gift to balance out the "report your derivatives exposure in a footnote rule." What's the quo for this quid? Is this the follow-up to FASB’s “you don’t have to amortize Goodwill, but you do have to write it off when the rest of the world realises you made up the number (and were off by a factor of infinity) in the first place” rule? That one was a gift to balance out the “report your derivatives exposure in a footnote rule.”

What’s the quo for this quid?

]]> By: jag http://longorshortcapital.com/using-their-illusion.htm/comment-page-1#comment-90506 jag Wed, 11 Jun 2008 17:37:20 +0000 http://longorshortcapital.com/using-their-illusion.htm#comment-90506 The pair trade here is to be long the CFA Institute and AICPA, and short reality. The pair trade here is to be long the CFA Institute and AICPA, and short reality.

]]> By: rain http://longorshortcapital.com/using-their-illusion.htm/comment-page-1#comment-90465 rain Wed, 11 Jun 2008 14:46:41 +0000 http://longorshortcapital.com/using-their-illusion.htm#comment-90465 you are a little late to the "FAS 159 is stupid" party you are a little late to the “FAS 159 is stupid” party

]]> By: Anal_yst http://longorshortcapital.com/using-their-illusion.htm/comment-page-1#comment-90375 Anal_yst Tue, 10 Jun 2008 21:23:49 +0000 http://longorshortcapital.com/using-their-illusion.htm#comment-90375 Use Your Illusion I will be pretty solid, with one or two really great hits. The second time around though, will be 1 step away from the spaghetti incident, you mark my words... Use Your Illusion I will be pretty solid, with one or two really great hits. The second time around though, will be 1 step away from the spaghetti incident, you mark my words…

]]> By: Theoretical http://longorshortcapital.com/using-their-illusion.htm/comment-page-1#comment-90341 Theoretical Tue, 10 Jun 2008 15:53:42 +0000 http://longorshortcapital.com/using-their-illusion.htm#comment-90341 As someone currently studying and taking the CPA examination, I just love it when the FASB jerks us around like that! It makes all the stuff I learned in school obsolete, so I have the joy of relearning everything. I say long pointless learning as well. By the way, the CFA Exam Preparation Class Drinking Game also works very well for the CPA Exam Preparation Class, though since I chose to be an accountant, I should probably double the amount I drink..... As someone currently studying and taking the CPA examination, I just love it when the FASB jerks us around like that! It makes all the stuff I learned in school obsolete, so I have the joy of relearning everything. I say long pointless learning as well.

By the way, the CFA Exam Preparation Class Drinking Game also works very well for the CPA Exam Preparation Class, though since I chose to be an accountant, I should probably double the amount I drink…..

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