No, that’s completely incorrect especially with new accounting standards. Cash flow is much harder to fake than earnings and new GAAP standards mix the two.
My comment in relation to the comment that stated GAAP earnings are more sane. I think using GAAP as a standard for valuing an investment fund is a little asinine. Unrealized losses/gains yes, but GAAP doesn’t save you from mark to market. There’s a reason PE returns are smoother than public equities. Public PE firms wrote down assets way less than the decline in public equities in Q4. My problem with the new GAAP rules is that it distorts operating earnings and investment earnings. For example, when Stripe goes public, Amex will have fluctuating security in its earnings statement, or Booking and Ctrip, etc.
Unrealized gains on private, illiquid investments are neither earnings, nor cash flow.