In Defense of Mark to Market

As a value-oriented investor, I love mark to market accounting. It prevents companies from manipulating or inflating asset values to distort their balance sheets. It provides a better "apples to apples" comparison between companies. Most importantly, it better reflects a company's real value at this very moment.

I know many conservatives despise mark to market, such as Rush Limbaugh. He claims mark to market distorts a company's true long-term value because it is subject to asset pricing fluctuations that may vary wildly from quarter to quarter -- especially during economic contractions.

Rush may have a point, but his implied solution -- stopping mark to market accounting -- would prevent investors from knowing how much their stocks are really worth, and open the door to asset valuation manipulation. That would be terrible for value investors.