No Price? No Problem. GS Creates Pricing.

Goldman Sachs Level 3 Assets Rose to 39% to $96 billion in the first quarter. It's headlines like these that make me doubt the positive earnings reported for the first quarter. According to recent accounting changes, dealers have to classify their assets into three categories, Level I (mark-to-market, or securities that have a price in the market), Level II (mark- to- model, securities that have no current price in the market but are marked based on known inputs) and Level III (mark- to- I-have- no- idea, I'm- just- making- it- up.) The fact that GS moved around $36.4 billion of its assets from another category into Level III means that they have no idea what those assets are worth and are just guessing at their value. That, my loyal readers is precisely why I can't buy into this idea of the worst being behind us. In fact, on this headline alone, I just upped my mattress allocation in my portfolio to 60%.