Reply #3: What he meant to say was "Marked" to market", not "market to market"

[A HERETIC I AM]

When a security is marked to market it means simply its value is adjusted for the daily changes trading has caused. A Mutual Fund's share price is marked to market every evening after the markets close. The tally of all the equities (and/or bonds, preferred stocks, convertibles, whatever) in the fund are collated and the mutual funds share price is adjusted for the days activity.

The problem with many of the Hedge Funds making news is that they do not go through the same process. They don't have to, legally and that is part of the problem. It is a fact however that many of the Hedge Funds contain publicly traded securities so the managers can actually know what they are worth. There is simply no requirement to disclose. Why? Because they are private Hedge Funds, sold to select investors who are able to withstand substantial risk for substantial reward. Many Hedge Funds utilize particularly sophisticated strategies that are able to produce returns whether the market is rising or falling such as covered call writing and naked put options as well as involving commodities, futures and currency trading.

Papau is wrong however on one point. They won't continue if the investors that participate see them as too risky or otherwise not worth it, whether they are marked to market or not.