Cigarbutt

Thank you for the article. -First reflex: This must be fake news. It's not: surprise medical bills (out-of-network MDs working in the network and out-of-network hospitals) are frequent and often (because of size and unexpected nature of the bill) a tipping point to financial hardship. -Second reflex: Let's put surprise bill laws into effect. This seems to be in the air but IMO unlikely to prevent self-sustaining unintended consequences coming from the foundations. -Many problems described here but I submit that the basic essential problem is the following: In a study published in 2014 by Wilson and Cutler (referenced below), it was found that hospitals had profit margins of 39.6% for privately insured patients treated in emergency departments, whereas the profit margin for patients covered by Medicare and Medicaid, and those uninsured were: -15.6%, -35.9% and -54.4% respectively. https://www.ncbi.nlm.nih.gov/pmc/articles/PMC4285369/ If you're an MD, what is your incentive to sign a contract with the network if you can avoid it and charge 150 to 300% of Medicare rates in order to provide the exact same services? If you're a for-profit hospital, what is your incentive to become part of a network if you can avoid it and charge sky is the limit rates? This thing will be a huge challenge and I would say that this file is either one for bipartisan wise men or for the deranged with a "your margin is my opportunity" attitude.

flesh, I'd like to have your opinion on the following. Relevant to investing because I suspect, for instance, that I may unconsciously lower my appraisal for companies led by a woman CEO which IMO is wrong: should base my evaluation on credentials, decisions, results etc (can add dimensions of race, attractiveness etc) My understanding of your post is that 1-the tests are poor and that 2-the biases are learned, justified, beneficial and even may be genetically programmed. While some "differences" may be justified in some areas (ability, taste etc), unconscious and conscious biases can be detrimental and conscious work is required to re-balance the assumptions. This is obviously controversial and hard to study and prove but I submit the following study: https://cos.gatech.edu/facultyres/Diversity_Studies/Goldin_Orchestrating%20Impartiality.pdf IMO, despite some limitations, the study shows that major orchestras discriminated against women performers and the "screen" has helped with a more balanced "hiring" process. Anecdotally, for the symphony orchestra in my area, in the 90's, a woman performer doing an audition (principle oboe) without a screen was dismissed on the spot by the medical director but was then hired when a second method with a "screen" was used. Interesting to note that this conductor eventually had to deal with various legal issues that suggested that the bias may not have been unconscious. Or do you think that male musical performers are better?

-Intrinsic reasons: size, style drift -Extrinsic reasons: in the "environment" of the last 8 years, features such as concentration, contrarian value, avoidance of technology stocks have performed relatively poorly If the style drift itself is poor and if the "environment" works against you, it's a double whammy. If you're consistently the opposite, you're Warren Buffett. I guess we all try to find our space in between but this topic is just another example showing how hard it may be to outperform over the long term because it seemed, at some point, that Mr. Berkowitz could do no wrong. Interesting that the contributors of the first page of this thread (at least in retrospect) described the seeds of disappointment.

Thank you for the reminder. So what's the message? Probably best to invest in the Market like a private business owner would. Interesting because I'm re-reading Money of the Mind by James Grant, written in 1994, at a time when he described the long term trends that gave rise to the democratization of credit in conjunction with the socialization of risk... Mr. Grant has a tendency to stick his neck out. He can be dead wrong, can be right too early or when it does not matter but I find that what he writes is always interesting and thought-provoking. A quote that resonates (given my training background) is: " In science, progress is cumulative, and in finance, progress is cyclical." Indeed, Mr. Buffett stands out. He has always been able to combine exposure and protection from tail risks, and to ride the cycles as the Market has a life of its own.

I did the same one as you. The test is so flawed. Half the time I forgot which hand was for which category. So what they're assigning a bias towards ("Office" = "Paul"), was nothing more than forgetting which hand was for which category. Maybe the test is flawed but perhaps worthwhile taking this further. What the site uses is the implicit association test which carries some weight in terms of method and results. Also, maybe there is nothing wrong with "association" as there may be underlying biological justifications that tilt the numbers. The research on unconscious bias is often based on tests that require multi-tasking, involve distraction or include a time component for the explicit reason that "conscious" pathways need to be bypassed. For those interested in the topic, Google has produced a program for employees which is relevant. https://rework.withgoogle.com/guides/unbiasing-raise-awareness/steps/introduction/ The video: Watch Unconscious Bias @ Work is long but IMO worth it. @augustabound I respect the fact that you may think that this is hogwash (maybe it is...) but, based on former postings, I suggest the following scenario: In 3 years, you receive 2 resumes from computer science graduates and you have to decide whom to hire. The only material differences are that 1- my daughter's first language is French (although perfectly fluent in English) and 2- she was born and raised in Québec (vs Ontario, for instance). Do you think these differentiating factors constitute potential unconscious (or conscious?) effects? After watching the Google video, it seems that unconcious bias is permeating the process in many cases. The easy way is to forget about it.

This idea was triggered by: -recent direct and indirect anecdotal experience suggesting a significant growth opportunity going forward with a not so discretionary component -reviewing prospects of different books of underwriting businesses at Fairfax and relevant competitors The following remarks apply to the US market but I think similar conclusions can be reached for Canada, Europe etc. Pet ownership is on the rise and correlates with rising pet expenditures, well above inflation. A large part of expenditures is related to veterinary care and services. I understand that pet insurance market history and penetration are variable. For instance, I understand that, in Sweden, policies were written way back and some report that 50% (!) of pets are insured. In the US, the "story" is more recent with, apparently, the first policy written in 1982 to cover the dog (dogs?) playing Lassie on television. In the US, market penetration has slowly risen from 1% to now about 3 to 5%. IMO, Fairfax is very well positioned with their Crum & Forster Pet Insurance Group (including Hartville) and their PetHealth Inc. subsidiary. I assume that there is resistance or at least passive assistance from veterinarians related to inertia to change and I wonder if growth now is mostly impeded due to a lack of awareness or lack of available options. Given the strong bond that pet owners develop, I wonder how much a pet owner would be ready to pay to obtain satisfactory coverage. I suspect a lot. Anyboby holding a pet insurance policy? It seems many people who hold such policies are not satisfied with coverage issues that are "discovered" along the way. Entitlements bring mixed feelings but sometimes, it just may be better to not fight the trend. https://www.city-journal.org/html/pet-insurance-16130.html

Just finished a test. Haven't done the required work on this but the methodology "looks" weak, especially since it concludes that I suffer from a bias I don't have. :) Reminds me of the 90% of people who consider themselves better than the average driver. The scary part is that the remaining 10% may be part of the prudent category. Reminds me also of the bias blind spot (recognizing the impact of biases on the judgment of others, while failing to see the impact of biases on one's own judgment) which is the norm rather than the exception as a very large majority of people think they are less biased than others with almost nobody thinking that they are more biased than others. Sadly, higher level thinking does not seem to improve the self-deception as it only brings "stronger" attempts at rationalization. Perhaps realization that this may be a potential problem (going through online tests, for instance) could represent a step in the right direction. An exercise that can be done privately if public recognition brings unbearable dissonance.

For the groupies, https://www.mercurynews.com/2018/08/24/billionaire-warren-buffett-chops-price-on-his-laguna-beach-home-to-7-9-million/ The house now includes (image 13 of 15) a television with CNBC on at all times, a copy of the Wall Street Journal and an open bottle of Coke. :) The Laguna Beach and Dana Point beachside areas are really nice. Even where Richard Nixon was "retired" nearby is quite nice. Looking at the pictures, it looks like the new owner will need to upgrade the flooring, cupboards and cabinets and the property is not directly "sitting" on the beach.

I'm not sure I understand what you need but, along similar lines, I have found Financial Shenanigans by Howard Schilit to be useful. http://bus.emory.edu/scrosso/Fall%202014/Weekend%20case%20complete/Prework%202.shenanigans_schilit.pdf If you're looking for more details found in the edition that came after the first one, feel free to send a PM.

So a potential question: Should a group rely on expert opinions (diagnosis at a distance) and what are the circumstances that could allow a group to make a good collective decision? If you read Gustave Le Bon's The Crowd, the crowd will tend to act on instinct (gut feelings), to skip rationality, to be influenced by superficiality and perhaps to become less civilized versus the members of the group taken individually. So, the crowd could be mesmerized. At the other extreme, if you read James Surowiecki's The Wisdom of Crowds, given a certain level of efficient aggregation of diverse, independent and individual private opinions, intelligent collective decision making is the likely outcome. The "truth" is probably somewhere along the spectrum and I would say that collective intelligence may be somewhat cyclical. Individually, we have ingredients for destruction and for enlightenment and I think this applies to groups as well. Perhaps optimist but I would submit that the crowd along human history, even if not experts in psychiatric diagnoses, has been able, mostly, to figure out where to place its confidence. Mistakes have been made though and History is not fully "efficient". What to do? I would say that the group does not need conditions to reach unanimity, it needs an environment that allows a critical mass to meet the conditions defined by Surowiecki. I would add that basic civic education, credible media (traditional and social, with civility) and balanced powers within a sound institutional framework are likely essential aggregating elements. If life puts someone with a manipulative NPD on your path, you can try to adapt or put a distance. Do not expect to change the person.

https://publish.manheim.com/en/services/consulting/used-vehicle-value-index.html "The strange summer price appreciation in used cars is partly a function of a strong economy at its peak, with mounting affordability challenges for the consumer that favor growth in used vehicle sales at the expense of new. These conditions have supported strong used vehicle prices for over a year. The catalyst for even stronger price movement this summer is the fear of import tariffs’ leading to higher prices in the future. Higher prices and the related declining level of supply create a psychological feedback loop for consumers, encouraging buying now with the expectation that prices may be higher later." The numbers suggest the possibility that we are quite late in this cycle but who knows? CACC is up 36,3% since this "short" thread was initiated 5 short months ago...

Another interesting aspect is that people afflicted with such disorders can end up in powerful positions. One way to describe this is the "dark triad" that is often associated with "dark" leadership. I would say many CEOs have such profile, at least partially. There are "tricks" at the individual level but would like to read your thoughts on how to address this collectively. http://observer.com/2016/01/how-to-deal-with-a-narcissist-5-secrets-backed-by-research/ Don’t fight narcissism, starve it?

Why do you think it is a horrible car? https://www.telegraph.co.uk/cars/renault/renault-zoe-review/ Want to hear about your perspective but please remember that a segment of the population (growing?) may see a car as a commodity to go from point A to point B.

Don't want to clogg the thread but since you're asking about "local" initiatives that may be relevant for perspective. In the Montreal area, Uber has met resistance mostly due to regulations. There is a private start-up (indirectly supported by government) called Téo Taxi which is an interesting intermediate disrupter: focus on technology (client interface, taxi fleet management), electric vehicles and salaried drivers and which is led by a dynamic character. The firm is expanding and appears to gain market share (within taxi industry and car "sharing" in a durable way). Interesting that it may benefit from the car disaffection that seems to characterize the younger generations. https://electrek.co/2017/09/29/montreal-fleet-of-electric-taxis-and-trucks-teo/ http://www.ccmm.ca/en/news/blog_three_things_to_take_from_alexandre_taillefer_visit/ http://chairelogistique.hec.ca/wp-content/uploads/2017/11/infor_article.pdf At some point, these new trends are bound to impact, somehow, traditional auto makers.

Complementary information and potential impact on pent-up demand. The impact of vehicle inspections on safety is relatively controversial. Two reports with different conclusions: https://scholarsarchive.byu.edu/cgi/viewcontent.cgi?article=1319&context=fhssconference_studentpub https://www.globalfueleconomy.org/media/44073/wp4-car-fleet-renewal-schemes.pdf Opinion: fatalities and injuries are bad news but the effect of inspections now and going forward is quite likely to be marginal, given the improvements already achieved and the "quality" of the existing fleet. I would tend to say though that the "spirit" of regulations in Europe is more stringent and the policy goals may not be so much about safety as about pollution control and fuel efficiency. This factor IMO explains a lot of the differential. In the US, the inspection regulations are much less severe and the trend is going in the opposite direction as several states are discontinuing their programs. Also, it seems to me that buyers are taking advantage of fuel efficiency by buying larger vehicles... So, pent-up demand could increase if (big if) the "spirit" of regulations change because bringing vehicle fleet age from 12 to 8 would mean a lot of new cars on the road.

That is an area I'm following and try to incorporate it in the pent-up demand concept that is being described by some. Last time I checked, in the US, the average age of cars and light trucks is 11,6 years and about 40% of vehicles are 12 years or older. In Europe, for some reason, the average age of the fleet is much lower. https://www.energy.gov/eere/vehicles/articles/fact-997-october-2-2017-average-age-cars-and-light-trucks-was-almost-12-years https://www.eea.europa.eu/data-and-maps/indicators/average-age-of-the-vehicle-fleet/average-age-of-the-vehicle-8

Some more food for thought (and actions): https://www.wired.com/story/oscar-health-ceo-mario-schlosser-interview/ "There are all kinds of middlemen in that process. And what the middlemen do for the most part is remove the competition in the health care value chain that would go towards building something that’s a compelling, seamless user experience. They remove the cost containment pressures as well. That’s one big reason why health costs in the US have risen so much. In the end, you as an individual can’t really vote with your own feet, and oftentimes don’t even realize how much health care costs behind the scenes." When the incentives are so far away from the "customer", starting from scratch may be a viable option.

Thank you also. The report illustrates very well the valuation challenge (based on closely following the company for over twenty years) associated with a tendency for uncorrelated and lumpy results. Often the earning power appears to be underestimated by the market and looking for reversion to the mean (like now) but somehow, to jump in, one has to agree with or have full confidence in their "seer" capability, a topic that has been discussed in another FFH thread (Ericopoly and others) before.

Anecdotal evidence is tricky. https://rationalwiki.org/wiki/Anecdotal_evidence "Anecdotal evidence is not accepted as proper proof or scientific evidence for good reason, yet they still dominate people's thinking. This is because while facts and figures may be true, they are difficult for people to relate to. Anecdotes have convincing and strong narratives that resonate with people on a key individual level — someone telling an anecdote will lead the listener to think that it just could happen to them too. There are further biases at work. Anecdotes, even implausible ones, can contain a high level of detail. It is this detail that causes people to become involved in the story and to imagine it more clearly..." Humans are social animals. When analyzing a company, I try first to look at numbers and objective facts and then try to incorporate the "story" part into the thesis. It is a form of reasonable confirmation when the story supports the data as it may help to project what is ahead. I remember scotthall describing this phenomenon rather well elsewhere on this Board although he seemed to put a large emphasis on the story part.

This thread is likely relevant if one is looking at Altius, Brookfield Asset Management etc Hard to say if this is just noise, as most of the times, it is. Looked up an old file on the 1997 Asian crisis and 1998 Russian default that followed. After the fact, many voices heard to explain why it happened but it seems that most, prospectively, felt that a Russian default was not in the cards (nuclear power etc). Around that time, LCTM was thriving. It was composed of very bright people using advanced risk management tools and yet they did not see how noise could become contagion and how a relatively ordinary flight to safety movement could bring its demise. After the fact, they described a "perfect storm"...Also, mostly after the fact, many expressed views that the LCTM flaws were obvious (leverage and investments in relatively esoteric and illiquid securities (like Danish mortgage bonds :)...). The point of this post is that it may be very hard to know when noise becomes contagion and the contagion phase is when you "see" hidden risks that were there all along. LCTM looks now like a blip on the chart but, then, was felt to be significant enough to cause larger systemic issues and to necessitate a Wall Street banks consortium bailout brokered by the maestro. Surprises will come "but timing, degree, & liklihood is anyone's guess." How about China? Not an expert but interesting to note that debt intensity (unit of GDP generated per unit of debt) has been coming down rapidly and has joined the downward trend and level of more "advanced" economies. China has achieved this "milestone" way before its planned transformation from a capital intensive model to a domestic consumer model. Add to that that debt and GDP numbers may not be reliable and GDP there is not really an output measure but ends up where it ought to be. One can question how the "West" deals with failures and transitions but, for China, this is history in the making and I doubt that dealing with inevitable failures to come will be easy.

Very interesting man. “Our greatest enemy by far is ignorance.” Consider myself an ignorant but working hard to improve that. Randi’s work and thoughts have many ramifications. From Carl Sagan, describing Mr. Randi, the “angry man”: “Randi is rambling, anecdotal, crotchety, and ecumenically offensive. He raises questions that many of us would prefer not to consider. But I think it is important that we pay attention. It is not only a matter of rooting out bunko and cruelty directed to those least able to defend themselves and most in need of our compassion, people with little other hope. It is also a timely reminder that mass rallies and television and mail-order technology permit other kinds of lies to be injected into the body politic, to take advantage of the frustrated, the unwary, and the defenseless in a society with political illnesses that are being treated ineffectively if at all. We may disagree with Randi on specific points, but we ignore him at our peril.”

I don't know where interest rates are going but it may make sense to get "protection" for certain outcomes or to position a fixed-income portfolio to take advantage of (future) opportunities. Historically, FFH has been very good at that. When you look at insurance companies, most follow a similar investment strategy and is is quite possible that FFH eventually ends up with a significantly different result. If inflationary forces do, in fact, manifest, as WR Berkley recently explained (excellent long term underwriter), it is reasonable to expect a delayed response on the underwriting side too with mid to long term implications for the longer tail book of business as the new generation learned inflation from the history section of their training. Even if agnostic however, I wonder if the death of long term bonds has not been declared too rapidly as FFH used to quote Hoisington not so long ago.

Very interesting Boilermaker. - for medical research I am looking for the obvious. If 5+ studies come to the same conclusion and none or 1 against, then seems like a high probability that the 5+ studies are the one to bet on. I am no experts in statistics, so lack there, but some data I can evaluate. It really depends. I am trusting the scientists - which does leave open the wrong conclusion. I look for conclusions that are generally clear in one direction though. For investing: This is a really involved question on the research. I usually try to disprove my thesis for the big drivers of value. Interesting perspective. If I understand correctly, there is an element of « gut feeling » which apparently can be improved with deliberate practice. Would add that one should be aware of what is described as the Bing Crosby methodology which has many meanings in research (and can be applied to investing decisions) but can be used to explain that the results that one “sees” may not reflect a sound process (from publication {selection bias} to the reader {confirmation bias}) and may simply reflect a form of cherry-picking. But I see your point for health issues where the price of being wrong can be high and would tend to assess the price to abate the information asymmetry that exists and determine if the effort is worth it. What is great about investing is that one can simply walk away if the target does not go through the basic filters. Next. Trust is often a key variable in those cost/benefit decisions when we meet the lawyer, doctor, car mechanic or whatever on a daily basis. So, what makes an expert? However benign or life-changing, we (consciously or not) should? go through the following steps: 1-level of relevant knowledge acquired from training and practice 2a-offered conclusions are based on a disclosed set of facts 2b-offered conclusions are based on sound and well delineated reasoning 3-opinion not offered as authority but as a basis to understand and solve a specific problem or question The underlying problem often resides in the bridge that needs to be crossed from research (often uncertain and controversial) to policy that works well if simple and clear (without nuance), the same way that an investment recommendation may not convey the uncertainty of the outcomes for a specific security. @LC I liked the video. If I understood correctly, the leader had a hard time convincing his Congress until he started to use their own language. Experts come in different varieties.

Since you seem to have a significant attachment to the halo effect, you may be interested in: https://deepblue.lib.umich.edu/bitstream/handle/2027.42/92158/TheHaloEffect.pdf?sequence=1&isAllowed=y "When considering the establishment of rules concerning blind review, conflict of interest, nepotism, and the like, it would therefore seem advisable to consider more than the possibility that some individuals in the system may be venal and corrupt. The protestations of even the most virtuous and disinterested participants that they are capable of independent judgments should be considered suspect." Beware of the venal and the virtuous?

My questions have to do with the research part. In investing, isn't it the goal to become an "expert" about a company/industry and profit from the discrepancies, if any? How do you go about the selection and triage of data? If you don't evaluate the merits of the data, how do you appraise the conclusions?