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Gold/Mining/Energy : Big Dog's Boom Boom Room

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To: Ken Ludwig who wrote (6324)	1/29/2002 4:32:17 PM
From: jim_p	Read Replies (3) of 206110

Look like the market just discovered what the term "mark to market" really means today. It's been used aggressively by most of the power producers, which accounts for a lot of P/E's of 5 and 6. Let say you build a power plant, and buy the NG under a fixed price contract for a period of 10 years. Then you sell the power under a fixed priced contract for a 10 year period and lock in the profit. Under mark to market accounting, you can recognize the entire profit on day one. (you hope you didn't buy or sell with ENE) It works great as long as you keep growing fast, but when things slow down you get killed. Be careful, Jim

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