Online commodity trading – This practice is defective in these respects: First, prices as of one moment in time are fortuitous.

Such prices are determined by the conditions of the market on but a single moment of one single day. Changes in prices on any one day may be attributable to factors of a most temporary character: the statement of some political leader, reported changes in credit policy, an oversupply of new security offerings, unexpectedly favorable or unfavorable earnings statements of two or three important corporations, and the like. Secondly, everyone knows that the net asset value at the close of the market is at best an approximation of the prices which would be received if immediate liquidation were to take place the following day. Thirdly, and most significant for the investor’s appraisal, it must be realized that the investor uses the net asset value as a measure of what management has done, or what effect the course of the market has had on the value of the company’s portfolio. The record as of any one date is not a trustworthy measure. In the case cited, let it be assumed that the net asset value on the last day of the preceding quarter was $9.

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[tags]Commodity Trading Book[/tags]