RegulationAccounting StandardsBuffett backs mark-to-market

Buffett backs mark-to-market

Fair value accounting works for world's most successful investor

Warren Buffett, one of the world’s most successful investors and one of its
richest men has given his backing to mark-to-market accounting, even if it
contributed to the worst year for his investment company since it began trading
in 1965.

Buffett said in his highly personalised annual chairman’s statement to
investors: ‘We endorse market-to-market accounting.’

In relation to derivative contracts the statement said: ‘We have told you
before that our derivative contracts, subject as they are to mark-to-market
accounting, will produce wild swings in the earnings we report. The ups and
downs neither cheer nor bother Charlie and me. Indeed, the “downs” can be
helpful in that they give us an opportunity to expand a position on favourable
terms. I hope this explanation of our dealings will lead you to think
similarly.’

Buffett’s investment company, Berkshire Hathaway, recorded a 9.6%, or $11.5bn
(£8bn), fall in its book value – the worst result in its 44 year history.

Further reading:


Buffett’s statement

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