DEFINITION of Long Market Value
The long market value is the aggregate worth, in dollars, of a group of securities held in a cash or margin brokerage account. Long market value is calculated using the prior trading day's closing prices of each security in the account. Although, in a liquid market, current market values on individual securities are available real time. However, most financial applications use the prior days ending balance as the current long market value of a portfolio.
BREAKING DOWN Long Market Value
Long market values include most common investment vehicles but exclude commercial paper, options, annuities and precious metals. In this sense, most standard margin accounts allow for vanilla or conventional securities only. Although options and similar instruments are regularly used in portfolio management, they are not standard securities available for use with margin accounts.
Convention dictates that if there is no previous closing price available for a given asset to be included in the calculation, a third party valuation or previous bid price can be used.
A margin account is a brokerage account in which the broker lends the customer cash to purchase securities. The loan in the account is collateralized by the securities and cash. Because the customer is investing with a broker's money rather than his own, the customer is using leverage to magnify both gains and losses. A "long" position describes when an investor owns a security and will profit if the security rises in price (buy low, sell high). Whereas a "short" position is the financial term used when a security is "sold," without actually owning the security. An investor can "short" a stock by borrowing the security from another holder, later buying the stock to close a position (Ideally: sell high, buy low).
When securities are held in a margin account, and an investor borrows a broker's money to buy even more (margin), the long market value is used by the broker to monitor the cash or equity position of an account holder. If an account's equity balance starts to slip, because long positions are losing value, a broker will issue a margin call to replenish equity.