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Derivative trading with mark-to-market accounting degenerates into mark-to-model. Two firms make a big derivative trade and the accountants on both sides show a large profit from the same trade.

Charlie Munger

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Charlie Munger
Age: 100
Born: 1924
Born: January 1
Business Person
Financier
Investor
Lawyer
Omaha
Nebraska
Charlie Thomas Munger
Charles T. Munger
Charles Thomas Munger
Two
Models
Accountants
Make
Mark
Degenerates
Large
Accounting
Trade
Trading
Sides
Firm
Show
Model
Derivative
Bigs
Profit
Firms
Shows
Market
Derivatives

More quotes by Charlie Munger

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You've got to have models in your head and you've got to array you experience - both vicarious and direct - onto this latticework of mental models.
Charlie Munger
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We tend to buy things - a lot of things - where we don't know exactly what will happen, but the outcome will be decent.
Charlie Munger
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Spend each day trying to be a little wiser than you were when you woke up.
Charlie Munger
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Missing out on some opportunity never bothers us. What's wrong with someone getting a little richer than you? It's crazy to worry about this.
Charlie Munger
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In fact I've probably never seen such a wide moat.
Charlie Munger
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Financial institutions make us nervous when they're trying to do well.
Charlie Munger
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This is a good life lesson: getting the right people into your system is the most important thing you can do.
Charlie Munger
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I don't want to sell credit to people who are going to hurt themselves with it. You should only sell products that are good for the people who use them. Some disagree with this, but I know I'm right. That is to say, you're talking to a Republican who admires Elizabeth Warren.
Charlie Munger
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Move only when you have an advantage. It's very basic. You have to understand the odds and have the discipline to bet only when the odds are in your favor.
Charlie Munger
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Litigation is notoriously time-consuming, inefficient, costly and unpredictable.
Charlie Munger
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The liabilities are always 100 percent good. It's the assets you have to worry about.
Charlie Munger
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Fancy computers are engaging in legalized front-running. The profits are clearly coming from the rest of us - our college endowments and our pensions. Why is this legal? What the hell is the government thinking? It's like letting rats into a restaurant.
Charlie Munger
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Sears had layers and layers of people it didn't need. It was very bureaucratic. It was slow to think. And there was an established way of thinking. If you poked your head up with a new thought, the system kind of turned against you. It was everything in the way of a dysfunctional big bureaucracy that you would expect.
Charlie Munger
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I'm not entitled to have an opinion unless I can state the arguments against my position better than the people who are in opposition. I think that I am qualified to speak only when I've reached that state.
Charlie Munger
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For years I have read the morning paper and harrumphed. There's a lot to harrumph about now.
Charlie Munger
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...being an effective teacher is a high calling.
Charlie Munger
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We don't have an isolated group [of senior managers] surrounded by servants. Berkshire's headquarters is a tiny little suite. We just came back from Berkshire's board meeting it had moved up to the board room of the Kiewit company and [it was so large and luxurious that] I felt uncomfortable.
Charlie Munger
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If mutual fund directors are independent, then I'm the lead character in the Bolshoi Ballet.
Charlie Munger
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A lot of share-buying, not bargain-seeking, is designed to prop stock prices up. Thirty to 40 years ago, it was very profitable to look at companies that were aggressively buying their own shares. They were motivated simply to buy below what it was worth.
Charlie Munger
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It's a rare business that doesn't have a way worse future than it has a past.
Charlie Munger