Monthly Archives: May 2016

Running A Sprint Planning Meeting

Agile, Idle Speculation, Internet Culture, Nostalgia, Programming, Teaching, Thoughts on Thoughts

It’s the little things that sometimes make a difference. When I was teaching standardized test math so many years ago, I noticed as I was drawing problems on the board, all the little habits that I had picked up. Habits which make solving problems easier, habits which reduce the chance for error.

Things like the curve on the leg of the lower-case ‘t’, so that it doesn’t look like a ‘+’. Curving your ‘x’ so it doesn’t look like a ‘*’ sign.

I think some of this (probably sometimes annoying) attention to detail had carried over to Sprint Planning meetings[1].

Planning Poker is a method for a group to converge on a time estimate for a task or group of tasks. There are a number of ways to do this. The ‘canonical’ way we were taught to do this was to use Fibonacci-numbered cards (1,2,3,,5,Eureka!). This involved a discussion of the task(s) to estimate until everyone had a reasonable idea of their complexity, then each person would choose a number estimate, all of which would be revealed simultaneously, to hopefully reduce bias. The discussion before estimation would not include estimates of how long things were estimated to take, to also try to reduce bias.

While we were running our planning meetings, I noticed that we would start to slip away from this ideal, perhaps because certain things were not important, perhaps because we didn’t see that certain things were important. For example:

We moved from cards to apps, and then to fingers. Using apps for estimation is less annoying than finding the cards each time, but fingers are even faster to find. I/we tried to get around the bias effect by having everyone display their fingers at once, and that worked reasonably well. Even making each person think about their estimate before display can help a lot with reducing the impact of what others might think of them.

One thing I tried which never really caught on when other people were running the meeting was saying ‘A,B,C’ instead of ‘1,2,3’, with the idea that it would be less biasing on the numbers people were choosing. (This may have mostly been an impression of mine, as the moving of the estimate from a mental number to a number of fingers may cement it in a slightly different mental state…)

If one is not careful, and perhaps somewhat impatient in meetings[2], one can start suggesting estimates before they are voted on. It can take considerable discipline and practice to not do this.

Another thing I noticed was how difficult JIRA was to use when one is not practiced in it, especially in a room with many people watching. Something that any experienced[3] demo-giver would know like the back of PowerPoint’s hand.

That’s all I have for now. For more minutiae, tune in tomorrow!

[1]For those of you who have not had the pleasure, these are the meetings at the start of an iteration, where the team sits down in a room, estimates a bunch of priority-ranked tasks, and decides (generally by consensus) how many of them they will commit to getting done in the next two weeks. Like all meetings, they can be good or bad, and the meeting chair (I feel) can make a large difference.

[2]I am probably as guilty of this as anyone. I would recommend Randy Pausch’s ‘Time Management‘ for those who feel similarly.

[3]Read: ‘Battle-scarred’

Goal-less Games

Uncategorized

A couple of days ago, we were talking about different ways of making computer games challenging, and the question came up:

How do you design a goal-less game[1]?

One step along the way is to remove all of the explicit goals. You could make a sandbox game like Minecraft, and only allow ‘Creative Mode‘, but people will just use that ‘sandbox‘ to build things, or to define their own goals, which they can then achieve.

Here, we are attempting to design a completely goal-less game.

You could start the game by removing all the in-game knowledge of the player character, a la System Shock, or Planescape: Torment. However, this merely focuses the player on the goal of ‘figuring out what is going on’.

So, you want a game with no explicit goals, where the player is enjoined from forming goals of their own.

S and I talked about a few ways to do this:

You could try something like ‘Papers, Please‘, where the goal is survival, but very difficult to navigate. S suggested something along the lines of a ‘Kafkaesque‘ game that we had been discussing, with constantly moving goalposts, where the goal always seems possible, but probably isn’t. (Pac-Man level 256 might fall in this category.)

You could go one step further and combine this with a sandbox game, where the game somehow detects what goal(s) you are trying to reach, and subtly moves that goal just out of your reach.

But these are examples of games with goals, just seemingly reachable but actually not reachable ones.

You could also go a completely different direction and make something like ‘Desert Bus‘, which has a goal, but reaching that goal is so boring that very few people will ever achieve it.

This brings us to the concept of the ‘Grey Game’. Not a reference to ‘Grey Aliens‘, or to ‘Grey Goo‘, but a game which is similar in concept to an isolation tank:

”
The player is suspended in a featureless grey landscape. They can move in every direction, but nothing changes. Nothing ever changes. You might think that parts of the background are different from other parts, but unlike COBE, all you are seeing is pixelation, and the universe is grey and featureless. Forever.
”

[1]As a thought exercise, it’s often useful to explore the limits of many or all of the assumptions you can perceive, to see what happens when you negate or change each of them (or multiple ones in tandem). We may discover a new goal-less game or goal-less genre of games, or we may discover this is actually impossible[2], and find some interesting ideas which are partway towards the negated or changed assumptions. I think I want to write about this some more. Watch this space!

[2]Some might say that the very definition of ‘game’ assumes the existence of a ‘goal’. I say ‘to-mah-to‘.

Which ‘Magic Numbers’ do You Use?

Engineering, Nostalgia, Science!, Thoughts on Thoughts, Words!

I was talking with S earlier this week, and the idea came up for a post about the numbers that I remember and use for estimation. I enjoy the sobriquet ‘Magic Numbers’.

‘Magic Numbers’. They’re considered bad practice[1] in programming, but are such a useful and helpful part of human ‘back of the envelope‘ problem solving[2].

Water:

The ‘Magic Number’ which precipitated this post was the fact that one tonne[3] of water is one cubic meter in volume. Interestingly, this is actually a number of interlocking ‘Magic Numbers’, including: One tonne is one thousand kilograms, water has a density of 1 gram per cubic centimetre (‘density of 1’), one thousand is 10x10x10, one tonne is one thousand liters of water, one liter is one kilogram, etc, etc…

I mostly enjoy using this to respond to ‘I could eat a tonne of this’, or to estimate whether you could fit a tankerfull of oil in an office.

It is commonly known that ice will float on water, because the hydrogen bonds give the water molecules a structure which is more spaced out and less dense than close packed[4]. Also, water has its greatest density of about one at about 4 degrees C.

Density:

Incidentally, hydrocarbons have a density of about 0.7, so the tankerful of oil mentioned above would rather difficult to swim in. This 0.7 is close enough to 1.0 so as to make no difference for most back of the envelope questions. Strong acids are known to have densities greater than one[5], but that’s not really that useful most of the time.

The Earth has a density of on the order of five. Interestingly, while reading this, I learned that granite and quartz have a density of about three, much less than I had been assuming. No wonder pumice can float.

Gold has a density of about 20 (19 and change, when that matters). Osmium and Iridium are the densest, at around 22 and change.

On the list of interesting curiosities, Saturn is the only planet in the solar system known to have a density less than one, about 0.7! This was only useful in winning a scientific trivia contest with TJFN when I was young.

Scientific Constants:

Avogadro’s number is 6e23, Coulomb’s constant is 9e9, the ideal gas constant is 8.314 (I remember that one because it includes pi), G is 6.67e-11, the Planck constant is 6.63e-34. Most of these are useless without things like the mass or charge of an electron or proton. The only one I use is Avogadro’s number, and that’s largely to calculate how much of your body is made up of atoms which were once part of a particular famous person[7].

For atoms, what I’ve found useful is the fact that a proton is about 2000 times heavier than an electron, and that chemical bond distances are measured in Angstroms (1e-10m).

c is 3e8m/s, which is useful for Star Trek and Star Wars-type arguments. One atmosphere is 101.325kPa, or about 30 feet of water (which is important for divers).

Math constants:

Pi is 3.14159, or 22/7[6] to its friends. Pi comes up a lot.

e is about 2.718. e doesn’t come up very often.

log10(1) = 0
log10(2) ~= 0.301
log10(3) ~= 0.477
log10(7) ~= 0.845
log10(10) = 1

With these three, you can calculate all of the logarithms from one to ten, and much of everything else. In high school, we memorized all of the perfect squares up to 100^2, but most of those have fled from memory.

The (x+y)(x-y) = x^2 – y^2 trick still comes in handy, though.

Large Things:

The CN Tower is 553m tall, really only useful in Toronto.

The Earth has a radius of about 6380m, has an orbit of 93e6 miles (150e6km), useful for things like Dyson Sphere and Red Giant arguments.

The Earth is about 6e24kg, has a diameter of about 40,000km (at the equator), axial tilt of about 23.5 degrees (Uranus is the only planet with an axial tilt significantly greater, almost sideways!).

The sun is about 400x larger than the moon, and is about 400x further away, and this is why solar eclipses work.

Conversions:

1.609 km/mi (0.621 mi/km), 2.54 cm/in (by law!), 9/5+32 degrees C-> degrees F.

SGD, AUD, CAD, USD, EUR, GBP are pretty close in value, and are in that approximate order with only a factor of about 2 separating them. HKD has maybe 6-8 times per unit, CNY is in that general ballpark, and JPY has about 100 times per unit.

Miscellany:

My handspan is about 10″, which is very useful for measuring things.

Stories are about 2m tall.

3600s/hour, 86400 seconds per day, the Unix epoch started 1970-01-01, useful if you spend any time coding, or want to know how long something will take at ‘x per second’. (100k seconds per day is a useful gross approximation for many applications.)

And I would be remiss if I left out my favourite physics approximation (from the same class where I learned about Stirling’s approximation):

sqrt(10) ~= pi.

Thank you and good night.

[1]Although, compare some cases where they are considered not quite so bad practice.

[2]They are also almost essential for proper answering of ‘Fermi Questions‘.

[3]’Tonne’ means metric tonne, or 1000 kg. You can tell because it’s spelled in the French way, and SI (Systeme Internationale) was brought in while France was a preeminent country.

[4]I didn’t know what the actual structure of ice was before looking it up. Apparently, it’s tessellating hexagonal rings.

[5]’Add acid to water, like you oughta’, else you may melt the top of your beaker off.

[6]Really, it isn’t, but it’s a useful approximation sometimes.

[7]With some reasonable approximations, I remember it being billions of atoms with each breath.

Bringing You Little Conversational Nuggets

Idle Speculation, Thoughts on Thoughts

Yesterday, I was out at lunch, and a good friend of mine was telling a story about ‘fishing for piranhas’. As he mentioned, “it’s about as easy as you’d expect. You put some meat on a stick and dip it into the water. They’re really bony when you try to eat them, though.”

There’s such a delicious joy in bringing little conversational nuggets to people. Sometimes, it almost feels like this is what humans are made for, sharing bits of information back and forth.

S talks about how we go out into the world, and then bring each other back little stories to share, kind of like bringing twigs back to build our nest together.

Memes are real. Tell your friends. [1]

It may help bring you closer together.

[1]Think about it.

Brain Structure vs. Brain Thoughts vs. Hash Functions

Idle Speculation, Nostalgia, Puns, Thoughts on Thoughts, Visualizations, Words!

So, I was doing a knowledge transfer session[1] last week, and I was struck by the way that my brain seemed to be answering the questions. It felt almost like there was a structure inside that was taking the input from the questions, and outputting the answers in a different part of the brain.

It felt different from the hash functions that I mentioned before. Those felt like they were hash functions[2] implemented in software, the structure above felt more like inflexible hardware, like you put a problem in, it or something upstream abstracts the problem to a useable form, it spits the answer out automatically and gives you that answer before you know it.

Hardware can be fun sometimes.

But this was the first time that I really felt that thoughts and reactions I was having were completely the result of brain hardware rather than software. It was a most interesting feeling.

It felt more like channels or a Pachinko/Peggle game.

It’s interesting the contrast here. When you’re trying to get something creative out of your brain, it’s like fish jumping out of water, and you’re trying to relax to allow yourself to see them and express them. When you’re answering a question, you’re taking the words in, and passing them through a filter and hash function. When you’re solving a problem, sometimes it’s all processed through some kind of a hardware structure.

Some might use the analogy of sound waves traveling through a Crystalline Entity, but I like the analogy of a collagen structure with the cells removed that concepts can travel through to and from specific places, so you could have a graph in many directions or dimensions, perhaps simultaneously[3]

Your brain structure can be dictating your answers to questions, perhaps not always your thoughts. Fascinating.

[1]PM me if you want to know more!

[2]They felt like hash functions both because they were in software, but more importantly because they each worked in one direction only, or with a specific ‘twig’ not the same as others'[4].

[3]Do these thoughts ever collide?

[4](Other people or other twigs)

How do you Make Computer Games Challenging?

Analysis, Games!

So, you’re designing a computer game. You want some sort of challenge for your player(s) to face. How do you design that challenge? We’ll assume some sort of single player game for now, but most of the things we’ll talk about should easily translate to multiplayer.

Almost[1] all games have a goal[2]. Most of the time, this goal is imposed by the game creators, some of the time this goal is invented or imposed by the player themselves.

For example, in Candy Crush, the goal is to match enough candies in a specified time period to gain points to pass a threshold (‘obtaining one star’). In Skyrim, the quest (at least at the start of the game) is to escape an area and survive.

As you attempt to reach these objectives, the game designers have provided you with various positive and negative obstacles.

Terrain:

Terrain is an excellent example of an obstacle that can be positive or negative. In Skyrim, you can hide around corners, or you can fall down a mountain. In Candy Crush, the shape of the board can make certain portions easier or much more difficult to match.

Offensive Items:

Special Candies can be classified as offensive items, compare them to a sword which allows you to do more damage with a single blow.

Defensive Items:

In Candy Crush, the candies can be encased in ‘jelly’, which acts as a shield that must be overcome. In Skyrim, you have various types of armour which you and your adversaries can wear. (Sometimes, only they can wear it.) There are also magical defenses.

Miscellaneous Items and Magic:

In Candy Crush, you can obtain a ‘Lollipop Hammer‘, which helps you by removing or triggering single candies.

In Skyrim, there is a wide variety of special purpose items and magic. The line between these is often blurry.

AI Adversaries:

I don’t think there are many AI adversaries in Candy Crush, unless they decide to tinker with the random candy generation algorithm, or if you count level design. Skyrim is populated with hundreds, if not thousands of NPCs who will interact with you in various ways.

Repetition:

An uninteresting way to make a game more challenging is to make it more repetitive[2.5]. You could make your player battle the same enemy 35 times, or solve minor variations on the same puzzle 50 times, or make them walk through an endless samey forest.

Ideally, you want to give a feeling of exploration and small but noticeable differences along the way.

Next time, we’ll compare two more games which are even more distinct. Suggestions in the comments below!

[1]I say almost, even though I can’t think of any games which don’t have a goal, and/or can’t have one created by the player. Inventing one sounds like a fun challenge. I don’t mean a game with an impossible challenge which always seems almost possible, I’m talking about a game which aggressively has no goal, and cannot, to the greatest extent possible.

[2]Or goals plural. Multiple interlocking[3] or interrelated goals are out of scope.

[2.5]Than usual…Most of these games are quite repetitive.

[3]Sometimes I think I write just because I enjoy using words such as ‘interlocking[4]’.

[4]Not to be confused with Interlochen[5].

[5]S: “Or Interleukins.”

Visually ‘Misheard’ Words

Idle Speculation, Puns, Thoughts on Thoughts, Words!

‘Foot Locker.’ ‘Foot Looker.’

‘Keming.'[1]

This was originally going to be a post about visually ‘misheard’ words, where I talk about how visually ‘mishearing’ words may be similar to how I ‘mishear’ words and conversations like a record player slightly too far from the record.

But then I realized that’s just ‘keming‘[2].

So I’m just going to take this time and glory in the beauty of keming.[3]

Have a good night. 😀

[1]Maybe NSFW.

[2]Still maybe NSFW.

[3]Yep.

What are your Non-Negotiables?

Agile, Idle Speculation, Organizing Systems, Programming, Thoughts on Thoughts

What are your Non-Negotiables? Most recently, I was talking to someone[1] about my New Year’s resolutions, and we were discussing why I had done one of them, but not the other two. It eventually came out that the resolution that worked (writing every day this year[2]), worked because I had made it a Non-Negotiable[3]. I had resolved that no matter what, every day this year, I would write something. Somehow, every day, I would carve out an hour or two, pushing other things aside so that I could focus and write.

(Incidentally, this practice focusing has done wonders for me, helping me find ‘the zone’, or ‘flow’ much more consciously and easily.)

Sometimes I would push aside a computer game, or facebook, sometimes sleep, but those things didn’t matter compared to the commitment I had made (mostly to myself) to write every day.

Interestingly, the other Non-Negotiable that came to mind today was the 5-minute standup. I was talking to someone about it today, and they started to say ‘5-10 minutes’, and I had to interject, with talk of Non-Negotiables, how if you let something like that slip, pretty soon you’re having daily half-hour sit down ‘stand-up’ meetings.

Interestingly, biking to work every day is not quite a Non-Negotiable. I take probably a couple of weeks off each year, some for snow, some for rain, some for events. It’s pretty close, though, and I’m not so worried, because I’ve been doing it for long enough (14 years, I think), that it’s a pretty deep-seated habit.

So, what are your Non-Negotiables? What is the one thing you want to change this year?

[1]Pretty sure it was G at a life coaching session, but my brain has this annoying tendency to abstract things away, but that’s another post. I also remember it from a speech by the head counselor at music camp many years ago, but that’s another story…

[2]At least so far…

[3]This is a good precis from a life coach on Non-Negotiables.

Liveblogging the Berkshire Hathaway Annual Meeting: II

Economics, Idle Speculation, Internet Culture, Politics

Yesterday, we watched the first half of the Q&A at the annual Berkshire Hathaway meeting. We ‘live’ blogged the first quarter of yesterday. Today, here’s the second quarter:

Q10: Negative rates, and how they affect Berkshire:
Charlie:
1/4 to -1/4 is not very different. Both are ‘painful’ interest rates for investing $60 billion

Charlie Munger looks like a sea turtle.

Charlie seems to drink a lot of Coke, don’t know if Warren does, but that could just because Warren is the one talking most of the time.

Q11: BNSF Decline in commodity prices, and how that might change how much freight is shipped
“We don’t mark up and down our wholly-owned businesses based on motions in the stock market.”

Q12:Harry Potter(?!?) question? (The question asker compared the situation to Hogwarts, etc…)
How should children look at stocks when time horizons for ‘investing’ so short, and IPOs are making so much money?

(On IPOs)
‘If they want to do mathematically unsound things and one of them gets lucky and they put the one that’s lucky on television…’
Think of stocks as a business you own…
Charlie:
‘American business will do fine’
‘But not the average client of a stockbroker.’
‘The stockbroker will do fine’

Q13: NV lobbying against solar (rooftops) where the utility was forced to pay the increased rate to the homeowner instead of the government?
‘Who pays the subsidy’ is the issue… (‘A political question’)
‘If society is the one benefiting, then society should pick up the tab.’

Q14: Low oil prices influence BRK more now (because of various effects on various subsidiaries)?
Warren:
‘We don’t think we can predict the price of commodities.’
Charlie:
‘I’m even more ignorant than you are.’

Q15: Would philanthropic establishment of new universities help with the cost of tuition, possibly by supply/demand?
Charlie:
‘If you expect financial efficiency in american higher education, you’re howling at the wind’
‘Glory of civilization’ (universities)
‘Monopoly and bureaucracy’ (description of universities)

We (USA) spend a lot of money on higher education. Being cheap is not our issue.
Charlie:
‘I’ve made all the enemies I can afford.’

Q16: On effects of Donald Trump on Berkshire
‘That won’t be the main problem’
Charlie:
‘I’m afraid to get into this area.’
Warren:
‘Business in this country has done extremely well for 200 years.’
Returns on tangible equity have not suffered while those on fixed income have suffered.
GDP/capita has gone up in real terms
‘System works very well in terms of output per capita, as far as distribution (inequality), there are often more issues.’
‘Charlie, give something pessimistic to balance me out.’
Charlie:
‘I don’t think the future is necessarily going to be as good as the past, but it doesn’t need to be.’
‘You’re making free choices that you couldn’t 20 years ago.’

Q17: Norfolk Southern/CP failed merger fallout?
BNSF: Certain tests needed to be passed before a large railroad merger would happen (good for public interest, good for shareholders, etc…). That merger may have been good for the shareholders, but did not meet the overall criteria. Next round of mergers will occur when population makes transportation more scarce.

Q18: How do you feel about investment banks not being able to make as much money?
After 2008-9, regulations to increase capital requirements, particularly on larger banks….
‘You can change the math of banking and profitability of banking by changing capital requirements.’
100% capital requirement means not very profitable, 1% capital requirements causes huge problems
Investment banking not a thing we invest in.
Charlie:
‘Generally, we fear the genre more than we love it.’

Q19: Activist investor targeting if BRK trades at a discount to intrinsic value?
Defend by size, and by having money to buy shares at less than intrinsic value.
‘The numbers involved would be staggering.’
Mid-America does better by not being split up.
1973-1974 very good companies selling at a steep discount to what they’re worth… (When stocks at a discount, money is hard to come by)
Charlie:
We don’t worry about this and others do, they can get attacked by hostile takeovers/etc, and we can’t
‘…and you want a strong ally, how many people would you pick in preference to BRK?’

Q20: Leasing?
Train cars… Bank has lower cost of funds than we do
‘A trillion dollars, at 10 basis points’
Aircraft leasing not interesting…
‘We’re well located now, but I don’t think we have new opportunities.’

Q21: Which competitor would you take out and why
Charlie:
‘I don’t think we have to answer this one.’
‘Widening the moat’ is the goal.
‘Not trying to target competitors, just trying to do the best everywhere.’
Warren:
‘Spoken like an anti-trust lawyer’

Q22: Sequoia, and Valeant position
The guy we trusted and recommended passed away in 2005.
The manager involved is no longer in charge.
‘If you have a manager, and doesn’t have integrity, make sure they’re dumb and lazy.’
‘Pattern recognition is very important in evaluation of humans and business.’
‘Frequently come to a bad end, but frequently looks good in the short term.’
Charlie:
‘Valeant of course was a sewer.’ (And they deserved what they got.)

Just before lunch, they put up the interim results of a wager between Buffet and a money management firm.

Hedge Funds vs. S&P 500 Index Fund results
Hedge Funds vs. S&P 500 Index Fund results

Protege Partners Wager Results (longbets.org)
Hedge funds of funds vs. S&P500 index funds
‘That might sound like a terrible result for the hedge funds, but it’s not a terrible result for the hedge fund managers.’
‘180 million dollars a year, merely for breathing.’ (If Berkshire compensated 2&20.)
‘They can’t believe that they can’t hire someone to make them more money than average.’
‘Consultants can’t change too much year to year, because it looks like they don’t know what they’re doing.’
‘Charlie, do you have anything to add to my sermon?’
‘A tiny group of people.’ (Who can manage money consistently better)
‘Far far far more money made on Wall Street by sales abilities than investment abilities.’

Liveblogging the Berkshire Hathaway Annual Meeting

Economics, Internet Culture, Politics

I’ve been following Berkshire Hathaway’s Warren Buffet’s annual ‘Letters to Shareholders‘ for a number of years now. Amongst other things, he avoided the 1999-2001 tech bubble, and predicted the crash of 2007-08. We were lucky enough to go see him in ‘person’ at the Berkshire Hathaway annual meeting last year. This year, we decided to watch his Q&A on livestream (through Yahoo! Finance). Below are some of my thoughts as the meeting progressed. The format is various people (analysts, journalists, and audience member, in that order) ask questions in rotation until time runs out. This goes from about 9:30 until 3:30 Central, with Warren Buffet and Charlie Munger (his longtime business partner) holding court.

********************************************************************

So again, we see the two (very) old friends up on the screen.

Warren Buffet and Charlie Munger, Berkshire Hathaway Q&A 2016
Warren Buffet and Charlie Munger, Berkshire Hathaway Q&A 2016

Q1: Going from low capital high earnings businesses to high capital moderate earnings businesses (regulated like rail and utilities).

The question asked why Berkshire moved from purchasing companies with low capital requirements and high income to purchasing companies with high capital requirements and moderate income.

The fundamental answer has to do with the size of opportunities available vs. the size of the conglomerate as a whole. (You can read all about it in the shareholder letters.)

Pithy remarks on the subject:

“Increasing capital acts as an anchor on earnings.”

This one I think was a Charlie-ism:
“When our circumstances changed, we changed our minds.”

Q2: Precision Cast, and the huge multiple premium paid
Under Berkshire, Helped make their main asset (the CEO) & made him more productive to the company.
Running a public company distracting vs. being under Berkshire.

“Buy a business that an idiot could manage, because eventually an idiot will have to.”

Q3: What would you do differently?
Warren said he’s ‘doing exactly what [they] like to do with the people [they] love’.

“It’s more fun to do things as a partnership.”

And a Charlie-ism:
“[Learning slowly] is a blessing too. At 92, I still have a lot of ignorance to work on.”

Q4: Munich and Swiss Re divestment
Business is less attractive for the next 10 years, because of low interest rates.

“Supply has gone up but demand has not gone up.”
“Reinsurance is easy to establish a disguised operation in a friendly tax jurisdiction. Couple that with low returns on float…”

Q5: Geico getting ‘whooped’ by Progressive Direct. Why?
Buffet: Diversion to number of car deaths/100M. From 1930 15/100M to 1/100M recently. (40,000)
‘Last year, for the first time, there was more driving, and more distracted driving’
‘Made a bet many years ago on the Geico model over the Progressive model.’
Charlie:
‘I don’t think we have to worry about a competitor having a good quarter.’

Q6: Direct sales -> Search, Push to Pull marketing…
Need to always think about the powerful trend (Amazon) when we make decisions.
‘Doesn’t worry us with Precision Cast.’
‘We were slow on the Internet.’ ‘Mobile and whatever.’
Internet still has much to change…
‘Thought of ourselves as having capital to allocate’, so makes it easier to pivot industries.
‘Amazon has a real advantage, 100s of millions of happy customers.’
Charlie
‘We failed so thoroughly at retail when we were young…[laughter]’ (so not likely to try retail again, and has helped guard them against that particular type of hubris)

Q7: Negative health effects of Coke products, why do you keep dodging the question?
[they dodged the question again]
184k deaths per year…’Declined to invest in cigarettes, why should be proud to own Coke?’
‘I’m about 1/4 coca cola. I’m not sure which quarter, I don’t know if we want to pursue that question.’
‘1.9 billion 8 oz servings per day.’ (Since 1886)
Dodged the question. ‘You have the choice of consuming more than you use.’ Talked about how Coca Cola is not the sole problem.

‘[small town with a constant population] Every time a girl had a baby, a guy had to leave town.’
‘If you want to change your longevity, you should have a sex change.’

Charlie:
‘We ought to almost have a law (I’m sounding like Donald Trump), that you have to say the benefits along with the detriments.’

Q8: Coal vs. renewables
Is your goal to get to 100% renewables?
‘We cannot make changes that are not approved by the Public Utility Commissions.’
‘Iowa’s been marvelous at encouraging renewables.’
In Iowa, we can offer lower rates because of it.
(2.3c/kWh federal tax credit)
‘Benefits of reducing carbon emissions are worldwide…’
‘A benefit that accrues to the world.’
Pay a lot of tax, so worth it to make a lot of investments
Iowa has gotten server farms because of cheaper electricity (from wind)
Vs. more expensive public Nebraska power…

Charlie:
‘If the whole rest of the world were behaving as we do, it would be a better world.’
‘I want to conserve the hydrocarbons’, for chemical feedstock…’I’m in their camp, for different reasons.’

Q9: Derivatives:
How do you value the banks you own?
‘If you asked me to describe the derivative position of the BoA…’
‘The great danger in derivatives is discontuinities’
WWI closed the stock market for many months
1987 almost did, but went on the next day
If marked to market and collateralized, most of the problems are okay…
Large quantities and collateral requirements are the most dangerous…
Kuwait went to a six-month stock settlement process, and caused all kinds of problems because of lack of certainty of ownership.
‘If you took the 50 largest banks, we wouldn’t look at [investing in] 45 of them.’
Charlie:
‘We’re in the awkward position of making 20B from those derivatives.’
‘We would have preferred if those derivatives had been illegal to buy. It would have been better for the country.’

One comment Buffet made which received less attention than it should have is about the issue with having an effective oligarchy amongst auditing firms. The specific issue was that the same person from an auditing firm could be rating or valuating the same derivative from both sides of the deal, and they could easily be rating or valuating it differently…

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Those were the first 9 questions (out of a usual 60-ish). Stay tuned for more, comments below!