wilmott.com

I think you have framed the issue well, but let's do it in a positive way rather than negative.Passive investors do not need information about their companies. They should invest in low-fee index funds and spend no more time reading accounting reports than they do forecasting the interest rate they will get on their money market funds.Sophisticated investors should invest privately, and negotiate accounting standards any way they like.Both of these are fine solutions, but they leave out a middle ground of investors. eRaider is aimed at those near the sophisticated investor side, but who have a little less money, a little less time to devote to investments or need a little more liquidity than private investments afford. We need accounting reform not so much for ourselves, although we would like it, but to help us organize the other half of middle-ground investors.If eRaider fails, the danger I see is the split above will become exclusive. We will have a few big public companies that become more and more like the nationalized concerns of the 1960s and 70s. Most other business will be done by private companies, because their capital costs will become lower.

I usually find Aaron's stuff insightful and pointed. This article, however, left me blank. What's the take-away, that investors would like better accounting, and finance quants can help? Investors have always wanted, and will always continue to want, better accounting, so that's not really interesting. As per quants having special skills that could help, I'm not clear how; I don't think the problem with accounting is an inability to understand brownian motion, or arbitrage relationships, or gauge-theory. Perhaps better information systems, but that's pretty mundane. No offense. Perhaps the dead cat himself can explain. E

Lot's of excellent points here. I would add that another issue is that the organization that promulgates these rules in America (FASB) is subject to intense lobbying, which combined with the lack of expertise a practioner would have (eg do they really know the energy market well enough to validate mtm accounting treatment), opens the door to many of the potential loopholes of the type exploited by Enron. I also feel that it is important to bifurcate Enron's financial engineering from their trading operations. The unfortuate demise of merchant energy in America results largely from Enrons misuse of SPEs, rather than more fundamental flaws in those markets (California's limited deregulation disaster excluded).

Could this be it?"Pepsi sponsors billion dollar quiz show"

I wonder how much the marked cans will sell for on ebay? Classic Saint Petersburg paradox

QuoteOriginally posted by: Aaron The main point of my article is that people should be thinking about ways to generate large amounts of new wealth.... I prefer to think about how we can all make a billion dollars.I like this expression more than any other discussions about accountancy. This is the point about any business: planning for future keeping experience in mind, rather than reflecting constantly on the past.as R.Branson says: "protect the downside and diversify"nik