--- title: "Meaning & Key Takeaway of: Derivative trading with mark-to-market…" description: "\"Derivative trading with mark-to-market accounting degenerates into mark-to-model. Two firms make a big derivative trade and the accountants on both sid..." image: "https://sms4smile.com/quotes/i/4f1/charlie-munger-458_accountants_derivative-trading-with-mark-to-market-a_1769653.jpg" --- # Derivative trading with mark-to-market accounting… ![“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.” quote by Charlie Munger](https://sms4smile.com/quotes/i/4f1/charlie-munger-458_accountants_derivative-trading-with-mark-to-market-a_1769653.jpg) [Download](https://sms4smile.com/quotes/i/4f1/charlie-munger-458_accountants_derivative-trading-with-mark-to-market-a_1769653.jpg) [Open image](https://sms4smile.com/quotes/i/4f1/charlie-munger-458_accountants_derivative-trading-with-mark-to-market-a_1769653.jpg) > “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](https://sms4smile.com/quotes/author/charlie-munger/) ## About This Quote This interpretation was drafted with AI assistance. It is one reading of the quote, not the author's own explanation. Mark‑to‑market accounting can turn real trades into fictional profits, obscuring true risk. **In simple terms:** Accounting tricks can hide real losses. Key Takeaway Beware of accounting tricks that misrepresent risk. Themes finance accounting risk management Mood cautious analytical Type advisory critical When to use this quote - investment analysis - risk assessment - financial auditing Key Concepts mark‑to‑market valuation financial reporting Questions to Reflect On - How do you verify the reality of reported profits? - What safeguards can prevent misvaluation? A Different Perspective Accounting methods can be manipulated, leading to false confidence. ★ ★ ★ ★ ★ No ratings yet [Both sides](https://sms4smile.com/quotes/about/both-sides/) [Customer](https://sms4smile.com/quotes/about/customer/) [Investing](https://sms4smile.com/quotes/about/investing/) [Profit](https://sms4smile.com/quotes/about/profit/) [Trade](https://sms4smile.com/quotes/about/trade/) [Trading](https://sms4smile.com/quotes/about/trading/) ## Related quotes > [Contractors always pursue large profit, the customer - a high-quality end product in due time and at a lower cost. This struggle never ends,…](https://sms4smile.com/quotes/vladimir-putin/contractors-always-pursue-large-profit-the-customer-a-high-quality/) [Vladimir Putin](https://sms4smile.com/quotes/author/vladimir-putin/) > [I'm a good learner. I can dig in. 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