@v587d/capital-generation 2.7.11 → 2.7.12

package/selected-skills/investment-skills/skills/buffett-investment-framework/references/01-decision-posture-D05-D09.md

@@ -0,0 +1,123 @@
+# Decision Posture and Opportunity Cost · Part 2 of 2 (D05-D09)
+
+Cards D05, D06, D07, D08, D09 of this module. Part 1 (`01-decision-posture-D01-D04.md`) holds the module title and card index.
+Each part is sized to arrive complete in one `read`; open the part you need before concluding a card is absent.
+
+### D05 — Use Opportunity Cost Across Action and Inaction
+
+- **Decision question:** Which feasible alternative—the current asset, cash, another
+  asset, or waiting—has the best supported owner outcome after tax, risk, and friction?
+- **Guidance:** Compare action and inaction on a common owner-level basis and treat
+  waiting as an alternative with optionality and opportunity cost.
+- **Use when:** Allocation comparisons or a proposal that omits the best feasible
+  alternative.
+- **Analytical actions:** Define alternatives and horizon; compare owner cash, risk,
+  tax, friction, liquidity, and scale; state assumptions driving the ranking.
+- **Output:** An opportunity-cost table with supported, challenged, or unresolved
+  comparisons.
+- **Limits:** Alternatives may be incommensurable or poorly evidenced; the comparison
+  does not authorize reallocation.
+- **Source basis:**
+  - **Berkshire Hathaway 1987 annual letter** — *implements*: select by after tax
+    mathematical expectation.
+  - **Warren Buffett’s 2015 50th-anniversary essay** — *qualifies*: consider inaction
+    before selling a prosperous business.
+- **Corroboration:** BPL1963; CM50-2015; BH2014.
+
+<a id="d06"></a>
+
+### D06 — Pair Patient Standards with Decisive Action
+
+- **Decision question:** Are standards being lowered to create activity, or is a
+  supported opportunity being missed because of pressure or hesitation?
+- **Guidance:** Precommit analytical and resilience requirements, wait without relaxing
+  them, and classify a case as analytically ready only when evidence, price, and
+  downside align.
+- **Use when:** Activity pressure, fear or enthusiasm, prolonged inactivity, or a
+  material price dislocation.
+- **Analytical actions:** Record precommitted conditions; test the case against them;
+  explain a ready, not-ready, or unresolved result.
+- **Output:** An analytical-readiness checklist and reasoned no-action, unresolved, or
+  criteria-satisfied finding.
+- **Limits:** Patience is not proof of discipline and contrarian action is not
+  automatically correct; the card does not execute an action.
+- **Source basis:**
+  - **Berkshire Hathaway 2024 annual letter** — *supports*: wait liquidly and act on
+    compelling opportunities.
+  - **Berkshire Hathaway 2010 annual letter** — *qualifies*: persistent uncertainty
+    should not paralyze long term investment.
+- **Corroboration:** CM50-2015; BH2014; BH2022.
+
+<a id="d07"></a>
+
+### D07 — Assess Whether Concentration Fits Capability and Portfolio Survival
+
+- **Decision question:** Is concentration supported by understanding, distinct
+  exposures, downside tolerance, liquidity, and survival of a major error?
+- **Guidance:** Evaluate concentration only where conviction is evidence-based and
+  survival does not depend on the thesis being right.
+- **Use when:** A concentrated exposure, correlated portfolio, or claim that conviction
+  alone justifies concentration.
+- **Analytical actions:** Map competence and downside; aggregate common exposures and
+  forced-action paths; identify a major-error survival case.
+- **Output:** A concentration-fit assessment with capability, correlation, liquidity,
+  and survival findings, but no position size.
+- **Limits:** Self-assessed competence may be false; no numeric sizing rule is supplied.
+- **Source basis:**
+  - **Berkshire Hathaway 1984 annual letter** — *qualifies*: concentration requires
+    exceptional financial strength.
+  - **Berkshire Hathaway 1993 annual letter** — *implements*: match diversification to
+    investor knowledge.
+- **Corroboration:** BPL1963; OM1996; LOW ch.5 (American Express concentration case).
+
+<a id="d08"></a>
+
+### D08 — Judge Active Skill After Friction, Capacity, and Precommitment
+
+- **Decision question:** Was apparent skill identifiable prospectively, repeatable after
+  costs, and usable at the capital scale under review?
+- **Guidance:** Compare with a suitable low-friction alternative and reject
+  hindsight-selected success unless process, persistence, downside behavior, incentives,
+  and capacity support a prospective claim.
+- **Use when:** Manager selection, strategy evaluation, performance attribution, or
+  extrapolation from a small capital base.
+- **Analytical actions:** Reconstruct after-cost results; examine prospective selection
+  evidence and downside periods; test capacity and incentive effects.
+- **Output:** A skill dossier separating gross result, friction, exposure, capacity, and
+  prospective identifiability.
+- **Limits:** Benchmark, factor, regime, survivorship, and access choices can leave the
+  conclusion unresolved.
+- **Source basis:**
+  - **Berkshire Hathaway 2016 annual letter** — *qualifies*: skilled managers exist but
+    are rarely identifiable.
+  - **Berkshire Hathaway 2016 annual letter** — *supports*: asset growth turns
+    investment success into underperformance.
+- **Corroboration:** EWB §III.A; BPL1969; BH2022.
+
+<a id="d09"></a>
+
+### D09 — Detect Reflexive Speculation and Promotional Supply
+
+- **Decision question:** Is expected value grounded in productive cash generation or in
+  leverage, promotion, serial supply, and resale to later buyers?
+- **Guidance:** Treat fee-driven distribution, serial issuance, effortless-gain
+  narratives, and exit-before-others logic as warning mechanisms that require
+  independently supported business value.
+- **Use when:** New-issue booms, promotional markets, nonproductive assets, rapid
+  issuance, or a thesis dominated by resale.
+- **Analytical actions:** Trace cash generation and who funds whom; map issuance,
+  leverage, incentives, and supply; separate productive return from resale.
+- **Output:** A speculation-mechanism map identifying productive support, reflexive
+  dependencies, beneficiaries, and unresolved economics.
+- **Limits:** The warning neither times reversal nor implies that every high valuation,
+  intermediary, or issuance is fraudulent.
+- **Source basis:**
+  - **Berkshire Hathaway 1990 annual letter** — *supports*: distribution revenue can
+    overpower security merit.
+  - **Berkshire Hathaway 2000 annual letter** — *supports*: bubble markets enable
+    investor extraction business models.
+- **Corroboration:** EWB §II.G; BPL1965; BH2023.
+
+<!-- This document follows common-doc-guidelines.md.
+See github.com/jlevy/practical-prose and review guidelines before editing.
+-->

package/selected-skills/investment-skills/skills/buffett-investment-framework/references/02-business-economics-B01-B03.md

@@ -0,0 +1,94 @@
+# Business Economics and Competitive Position
+
+Use these cards as evidence-bounded analytical prompts derived from Buffett and
+Berkshire writings. Apply them to supplied evidence, preserve each card’s limits, and
+return unresolved findings when prerequisites are missing.
+
+Read this file when mapping the business, testing moat mechanisms, reinvestment, or
+structural change. Load only the cards selected by the router; do not load the whole
+module by default. Abbreviated corroboration citations resolve in the
+[source key](00-source-key.md).
+
+## Card Index
+
+| Card | Decision question |
+| --- | --- |
+| [B01](#b01) | How does a customer dollar become revenue, operating cash, required reinvestment, and distributable owner cash? |
+| [B02](#b02) | What mechanism protects excess returns, and is it widening or eroding? |
+| [B03](#b03) | Do customer behavior, channel position, and realized pricing support durable economics? |
+| [B04](#b04) | Does a non-brand mechanism durably alter delivered cost, customer switching, competitor entry, or network utility? |
+| [B05](#b05) | Will price-taking, excess capacity, and required reinvestment consume apparent earnings or growth? |
+| [B06](#b06) | Can the business deploy material additional capital at attractive normalized returns for long enough to affect owner value? |
+| [B07](#b07) | Is weakness temporary and bounded, or caused by persistent economics that additional effort and capital are unlikely to repair? |
+
+## Complete Cards
+
+<a id="b01"></a>
+
+### B01 — Map How the Business Earns and Converts a Dollar
+
+- **Decision question:** How does a customer dollar become revenue, operating cash,
+  required reinvestment, and distributable owner cash?
+- **Guidance:** Build a causal model from transaction and unit economics through working
+  capital, maintenance, growth funding, and owner cash, then reconcile it to reported
+  totals.
+- **Use when:** Initial analysis, a changed business model, unexplained cash conversion,
+  or a forecast with unclear operating mechanics.
+- **Analytical actions:** Map revenue drivers, unit economics, and costs; trace required
+  and optional reinvestment; reconcile to reported cash and segments.
+- **Output:** A one-page business-model map and dollar-conversion bridge with explicit
+  gaps.
+- **Limits:** A coherent map does not prove durability or value; unresolved segment,
+  unit, or reinvestment data leave the map unresolved.
+- **Source basis:**
+  - **Berkshire Hathaway 2000 annual letter** — *supports*: growth affects value only
+    through cash flow economics.
+  - **Berkshire Hathaway 1977 annual letter** — *illustrates*: See’s capital light
+    earnings growth.
+- **Corroboration:** EWB §V.C; EWB §V.D; OM1996.
+
+<a id="b02"></a>
+
+### B02 — Identify a Causal Moat and Track Its Direction
+
+- **Decision question:** What mechanism protects excess returns, and is it widening or
+  eroding?
+- **Guidance:** Name the mechanism, behavior it changes, and economics it protects;
+  track direction with business-specific evidence rather than labels.
+- **Use when:** A thesis claims durable quality, excess returns, franchise value, or
+  competitive advantage.
+- **Analytical actions:** State the mechanism and protected benefit; describe the
+  strongest plausible attack; track strengthening and erosion indicators.
+- **Output:** A causal moat map with mechanism, protected economics, attack path,
+  indicators, and unresolved links.
+- **Limits:** Reputation, market share, and historical returns do not alone prove a
+  moat.
+- **Source basis:**
+  - **Berkshire Hathaway 2005 annual letter** — *defines*: widening the moat.
+  - **Berkshire Hathaway 1995 annual letter** — *illustrates*: GEICO direct distribution
+    created structural cost advantage.
+- **Corroboration:** BH1981; BH2007; BH2014; LOW ch.3 (GEICO cost-advantage discovery).
+
+<a id="b03"></a>
+
+### B03 — Test Pricing Power, Brand, and Distribution Strength
+
+- **Decision question:** Do customer behavior, channel position, and realized pricing
+  support durable economics?
+- **Guidance:** Treat brand and distribution as mechanisms only when price realization,
+  retention, volume, utility, and channel evidence show a durable behavioral effect.
+- **Use when:** Brand, loyalty, distribution, or pricing power is central to the thesis.
+- **Analytical actions:** Decompose price, volume, mix, retention, and elasticity;
+  examine channels and utility; test inflation, scarcity, and promotion as alternatives.
+- **Output:** A pricing-and-distribution scorecard with mechanism evidence,
+  alternatives, and direction.
+- **Limits:** Price increases can reflect inflation or scarcity; awareness and past
+  margins are insufficient.
+- **Source basis:**
+  - **Berkshire Hathaway 1983 annual letter** — *supports*: consumer franchise and low
+    cost position create goodwill.
+  - **Berkshire Hathaway 1993 annual letter** — *supports*: brands products and
+    distribution create protective moats.
+- **Corroboration:** EWB §V.C; BH2014; BH2023; LOW ch.9 (See’s brand pricing case).
+
+<a id="b04"></a>

package/selected-skills/investment-skills/skills/buffett-investment-framework/references/{02-business-economics.md → 02-business-economics-B04-B07.md}

@@ -1,97 +1,7 @@
-# Business Economics and Competitive Position
+# Business Economics and Competitive Position · Part 2 of 2 (B04-B07)
 
-Use these cards as evidence-bounded analytical prompts derived from Buffett and
-Berkshire writings. Apply them to supplied evidence, preserve each card’s limits, and
-return unresolved findings when prerequisites are missing.
-
-Read this file when mapping the business, testing moat mechanisms, reinvestment, or
-structural change. Load only the cards selected by the router; do not load the whole
-module by default. Abbreviated corroboration citations resolve in the
-[source key](00-source-key.md).
-
-## Card Index
-
-| Card | Decision question |
-| --- | --- |
-| [B01](#b01) | How does a customer dollar become revenue, operating cash, required reinvestment, and distributable owner cash? |
-| [B02](#b02) | What mechanism protects excess returns, and is it widening or eroding? |
-| [B03](#b03) | Do customer behavior, channel position, and realized pricing support durable economics? |
-| [B04](#b04) | Does a non-brand mechanism durably alter delivered cost, customer switching, competitor entry, or network utility? |
-| [B05](#b05) | Will price-taking, excess capacity, and required reinvestment consume apparent earnings or growth? |
-| [B06](#b06) | Can the business deploy material additional capital at attractive normalized returns for long enough to affect owner value? |
-| [B07](#b07) | Is weakness temporary and bounded, or caused by persistent economics that additional effort and capital are unlikely to repair? |
-
-## Complete Cards
-
-<a id="b01"></a>
-
-### B01 — Map How the Business Earns and Converts a Dollar
-
-- **Decision question:** How does a customer dollar become revenue, operating cash,
-  required reinvestment, and distributable owner cash?
-- **Guidance:** Build a causal model from transaction and unit economics through working
-  capital, maintenance, growth funding, and owner cash, then reconcile it to reported
-  totals.
-- **Use when:** Initial analysis, a changed business model, unexplained cash conversion,
-  or a forecast with unclear operating mechanics.
-- **Analytical actions:** Map revenue drivers, unit economics, and costs; trace required
-  and optional reinvestment; reconcile to reported cash and segments.
-- **Output:** A one-page business-model map and dollar-conversion bridge with explicit
-  gaps.
-- **Limits:** A coherent map does not prove durability or value; unresolved segment,
-  unit, or reinvestment data leave the map unresolved.
-- **Source basis:**
-  - **Berkshire Hathaway 2000 annual letter** — *supports*: growth affects value only
-    through cash flow economics.
-  - **Berkshire Hathaway 1977 annual letter** — *illustrates*: See’s capital light
-    earnings growth.
-- **Corroboration:** EWB §V.C; EWB §V.D; OM1996.
-
-<a id="b02"></a>
-
-### B02 — Identify a Causal Moat and Track Its Direction
-
-- **Decision question:** What mechanism protects excess returns, and is it widening or
-  eroding?
-- **Guidance:** Name the mechanism, behavior it changes, and economics it protects;
-  track direction with business-specific evidence rather than labels.
-- **Use when:** A thesis claims durable quality, excess returns, franchise value, or
-  competitive advantage.
-- **Analytical actions:** State the mechanism and protected benefit; describe the
-  strongest plausible attack; track strengthening and erosion indicators.
-- **Output:** A causal moat map with mechanism, protected economics, attack path,
-  indicators, and unresolved links.
-- **Limits:** Reputation, market share, and historical returns do not alone prove a
-  moat.
-- **Source basis:**
-  - **Berkshire Hathaway 2005 annual letter** — *defines*: widening the moat.
-  - **Berkshire Hathaway 1995 annual letter** — *illustrates*: GEICO direct distribution
-    created structural cost advantage.
-- **Corroboration:** BH1981; BH2007; BH2014; LOW ch.3 (GEICO cost-advantage discovery).
-
-<a id="b03"></a>
-
-### B03 — Test Pricing Power, Brand, and Distribution Strength
-
-- **Decision question:** Do customer behavior, channel position, and realized pricing
-  support durable economics?
-- **Guidance:** Treat brand and distribution as mechanisms only when price realization,
-  retention, volume, utility, and channel evidence show a durable behavioral effect.
-- **Use when:** Brand, loyalty, distribution, or pricing power is central to the thesis.
-- **Analytical actions:** Decompose price, volume, mix, retention, and elasticity;
-  examine channels and utility; test inflation, scarcity, and promotion as alternatives.
-- **Output:** A pricing-and-distribution scorecard with mechanism evidence,
-  alternatives, and direction.
-- **Limits:** Price increases can reflect inflation or scarcity; awareness and past
-  margins are insufficient.
-- **Source basis:**
-  - **Berkshire Hathaway 1983 annual letter** — *supports*: consumer franchise and low
-    cost position create goodwill.
-  - **Berkshire Hathaway 1993 annual letter** — *supports*: brands products and
-    distribution create protective moats.
-- **Corroboration:** EWB §V.C; BH2014; BH2023; LOW ch.9 (See’s brand pricing case).
-
-<a id="b04"></a>
+Cards B04, B05, B06, B07 of this module. Part 1 (`02-business-economics-B01-B03.md`) holds the module title and card index.
+Each part is sized to arrive complete in one `read`; open the part you need before concluding a card is absent.
 
 ### B04 — Test Cost, Scale, Switching, Network, and Efficient-Scale Advantages
 

package/selected-skills/investment-skills/skills/buffett-investment-framework/references/{03-management-governance.md → 03-management-governance-M01-M04.md}

@@ -118,96 +118,3 @@ Abbreviated corroboration citations resolve in the [source key](00-source-key.md
 - **Corroboration:** EWB §I.E; OM1996; FL2025.
 
 <a id="m05"></a>
-
-### M05 — Test Culture and the Institutional Imperative Through Behavior
-
-- **Decision question:** Which behaviors does the organization repeatedly attract,
-  reward, normalize, and reproduce?
-- **Guidance:** Treat culture as a system expressed through hiring, incentives,
-  forecasts, costs, imitation, and reactions to mistakes—not declared values.
-- **Use when:** A thesis depends on durable organizational behavior, acquisition
-  appetite, cost discipline, forecasting, or decentralization.
-- **Analytical actions:** Identify repeated behaviors; trace reinforcing mechanisms;
-  search for actions contradicting the declared culture.
-- **Output:** A culture-mechanism map with reinforcing behaviors, contradictions, and
-  change indicators.
-- **Limits:** Culture is neither automatic nor irreversible; leave durability unresolved
-  when evidence is anecdotal or leader dependent.
-- **Source basis:**
-  - **Berkshire Hathaway 1989 annual letter** — *defines*: institutional imperative.
-  - **Berkshire Hathaway 2000 annual letter** — *supports*: long term growth forecasts
-    can corrupt managerial behavior.
-- **Corroboration:** EWB §II.F; BH2002; BH2014.
-
-<a id="m06"></a>
-
-### M06 — Assess Decentralization, Controls, and Bad-News Flow
-
-- **Decision question:** Does authority sit with capable operators while audit,
-  compliance, escalation, and capital control remain effective?
-- **Guidance:** Evaluate autonomy and control together; decentralization requires
-  capable managers, protected escalation, and explicit retained controls.
-- **Use when:** Decentralized groups, holding companies, autonomous subsidiaries, or
-  multilayer information flow.
-- **Analytical actions:** Map delegated and retained authorities; test audit,
-  compliance, whistleblower, and bad-news channels; review detection and correction of
-  errors.
-- **Output:** An authority-and-control matrix with escalation paths, failure examples,
-  and unresolved dependencies.
-- **Limits:** Centralization can also fail and visible mistakes may be an accepted cost;
-  absent incident evidence leaves control quality unresolved.
-- **Source basis:**
-  - **Berkshire Hathaway 1991 annual letter** — *implements*: decentralize operations
-    centralize capital allocation.
-  - **Berkshire Hathaway 2004 annual letter** — *qualifies*: decentralized companies
-    need protected whistleblower channel.
-- **Corroboration:** CM50-2015; OM1996; LOW ch.15 (two-level control structure).
-
-<a id="m07"></a>
-
-### M07 — Test Substantive Board Independence and Power
-
-- **Decision question:** Can the board understand, challenge, and act against management
-  when owner interests require it?
-- **Guidance:** Judge independence by competence, economic independence, information,
-  deliberation, and willingness to oppose or replace management—not formal labels.
-- **Use when:** Board oversight, CEO power, deals, compensation, conflicts, or
-  controlling ownership affects the thesis.
-- **Analytical actions:** Map skills, ties, information, and voting power; inspect
-  dissent mechanisms; review behavior during conflicts or underperformance.
-- **Output:** A board-power assessment separating formal status from demonstrated
-  capability and action.
-- **Limits:** Ownership and private sessions do not create judgment; unobservable
-  conflict behavior leaves independence unresolved.
-- **Source basis:**
-  - **Berkshire Hathaway 2003 annual letter** — *supports*: business savvy is
-    indispensable for corporate directors.
-  - **Berkshire Hathaway 2019 annual letter** — *implements*: boards should hear
-    informed opposition to acquisitions.
-- **Corroboration:** EWB §I.B; BH2014; FL2025.
-
-<a id="m08"></a>
-
-### M08 — Assess Role-Specific Succession and Control Continuity
-
-- **Decision question:** Can leadership, operating, investment, and control roles
-  transfer without losing capability or fair treatment?
-- **Guidance:** Assess succession by role, horizon, emergency readiness, delegated
-  experience, and control-transfer mechanics; a name is not proof.
-- **Use when:** Key-person dependence, controlling ownership, aging leadership, estate
-  plans, voting arrangements, or role concentration.
-- **Analytical actions:** Separate role successions; inspect emergency and long-term
-  plans and staged responsibility; map voting, estate, and sale mechanics.
-- **Output:** A role-specific continuity map with successor evidence, control
-  transitions, triggers, and unresolved dependencies.
-- **Limits:** Private plans may remain undisclosed and legal or tax mechanics can
-  change; names or assurances alone leave readiness unresolved.
-- **Source basis:**
-  - **Berkshire Hathaway 2005 annual letter** — *defines*: succession role separation.
-  - **Berkshire Hathaway 2010 annual letter** — *implements*: document emergency
-    successors with strengths and weaknesses.
-- **Corroboration:** CM50-2015; BH2014; FL2025.
-
-<!-- This document follows common-doc-guidelines.md.
-See github.com/jlevy/practical-prose and review guidelines before editing.
--->

package/selected-skills/investment-skills/skills/buffett-investment-framework/references/03-management-governance-M05-M08.md

@@ -0,0 +1,97 @@
+# Management, Governance, and Culture · Part 2 of 2 (M05-M08)
+
+Cards M05, M06, M07, M08 of this module. Part 1 (`03-management-governance-M01-M04.md`) holds the module title and card index.
+Each part is sized to arrive complete in one `read`; open the part you need before concluding a card is absent.
+
+### M05 — Test Culture and the Institutional Imperative Through Behavior
+
+- **Decision question:** Which behaviors does the organization repeatedly attract,
+  reward, normalize, and reproduce?
+- **Guidance:** Treat culture as a system expressed through hiring, incentives,
+  forecasts, costs, imitation, and reactions to mistakes—not declared values.
+- **Use when:** A thesis depends on durable organizational behavior, acquisition
+  appetite, cost discipline, forecasting, or decentralization.
+- **Analytical actions:** Identify repeated behaviors; trace reinforcing mechanisms;
+  search for actions contradicting the declared culture.
+- **Output:** A culture-mechanism map with reinforcing behaviors, contradictions, and
+  change indicators.
+- **Limits:** Culture is neither automatic nor irreversible; leave durability unresolved
+  when evidence is anecdotal or leader dependent.
+- **Source basis:**
+  - **Berkshire Hathaway 1989 annual letter** — *defines*: institutional imperative.
+  - **Berkshire Hathaway 2000 annual letter** — *supports*: long term growth forecasts
+    can corrupt managerial behavior.
+- **Corroboration:** EWB §II.F; BH2002; BH2014.
+
+<a id="m06"></a>
+
+### M06 — Assess Decentralization, Controls, and Bad-News Flow
+
+- **Decision question:** Does authority sit with capable operators while audit,
+  compliance, escalation, and capital control remain effective?
+- **Guidance:** Evaluate autonomy and control together; decentralization requires
+  capable managers, protected escalation, and explicit retained controls.
+- **Use when:** Decentralized groups, holding companies, autonomous subsidiaries, or
+  multilayer information flow.
+- **Analytical actions:** Map delegated and retained authorities; test audit,
+  compliance, whistleblower, and bad-news channels; review detection and correction of
+  errors.
+- **Output:** An authority-and-control matrix with escalation paths, failure examples,
+  and unresolved dependencies.
+- **Limits:** Centralization can also fail and visible mistakes may be an accepted cost;
+  absent incident evidence leaves control quality unresolved.
+- **Source basis:**
+  - **Berkshire Hathaway 1991 annual letter** — *implements*: decentralize operations
+    centralize capital allocation.
+  - **Berkshire Hathaway 2004 annual letter** — *qualifies*: decentralized companies
+    need protected whistleblower channel.
+- **Corroboration:** CM50-2015; OM1996; LOW ch.15 (two-level control structure).
+
+<a id="m07"></a>
+
+### M07 — Test Substantive Board Independence and Power
+
+- **Decision question:** Can the board understand, challenge, and act against management
+  when owner interests require it?
+- **Guidance:** Judge independence by competence, economic independence, information,
+  deliberation, and willingness to oppose or replace management—not formal labels.
+- **Use when:** Board oversight, CEO power, deals, compensation, conflicts, or
+  controlling ownership affects the thesis.
+- **Analytical actions:** Map skills, ties, information, and voting power; inspect
+  dissent mechanisms; review behavior during conflicts or underperformance.
+- **Output:** A board-power assessment separating formal status from demonstrated
+  capability and action.
+- **Limits:** Ownership and private sessions do not create judgment; unobservable
+  conflict behavior leaves independence unresolved.
+- **Source basis:**
+  - **Berkshire Hathaway 2003 annual letter** — *supports*: business savvy is
+    indispensable for corporate directors.
+  - **Berkshire Hathaway 2019 annual letter** — *implements*: boards should hear
+    informed opposition to acquisitions.
+- **Corroboration:** EWB §I.B; BH2014; FL2025.
+
+<a id="m08"></a>
+
+### M08 — Assess Role-Specific Succession and Control Continuity
+
+- **Decision question:** Can leadership, operating, investment, and control roles
+  transfer without losing capability or fair treatment?
+- **Guidance:** Assess succession by role, horizon, emergency readiness, delegated
+  experience, and control-transfer mechanics; a name is not proof.
+- **Use when:** Key-person dependence, controlling ownership, aging leadership, estate
+  plans, voting arrangements, or role concentration.
+- **Analytical actions:** Separate role successions; inspect emergency and long-term
+  plans and staged responsibility; map voting, estate, and sale mechanics.
+- **Output:** A role-specific continuity map with successor evidence, control
+  transitions, triggers, and unresolved dependencies.
+- **Limits:** Private plans may remain undisclosed and legal or tax mechanics can
+  change; names or assurances alone leave readiness unresolved.
+- **Source basis:**
+  - **Berkshire Hathaway 2005 annual letter** — *defines*: succession role separation.
+  - **Berkshire Hathaway 2010 annual letter** — *implements*: document emergency
+    successors with strengths and weaknesses.
+- **Corroboration:** CM50-2015; BH2014; FL2025.
+
+<!-- This document follows common-doc-guidelines.md.
+See github.com/jlevy/practical-prose and review guidelines before editing.
+-->

package/selected-skills/investment-skills/skills/buffett-investment-framework/references/04-financial-reality-F01-F03.md

@@ -0,0 +1,95 @@
+# Financial Reality and Owner Economics
+
+Use these cards as evidence-bounded analytical prompts derived from Buffett and
+Berkshire writings. Apply them to supplied evidence, preserve each card’s limits, and
+return unresolved findings when prerequisites are missing.
+
+Read this file when reconciling filings, owner earnings, segments, capital returns, or
+obligations. Load only the cards selected by the router; do not load the whole module by
+default. Abbreviated corroboration citations resolve in the
+[source key](00-source-key.md).
+
+## Card Index
+
+| Card | Decision question |
+| --- | --- |
+| [F01](#f01) | What ownership, cash-flow, and obligation economics lie behind the reported result? |
+| [F02](#f02) | How much cash can owners remove without weakening competitive position or unit volume? |
+| [F03](#f03) | Which capital preserves economics, funds growth, remains trapped, or is actually distributable? |
+| [F04](#f04) | What economics accrue through minority interests, segments, and holding structures despite reported presentation? |
+| [F05](#f05) | What recurring earning power belongs to each distinct business across a representative period? |
+| [F06](#f06) | What normalized unleveraged returns does the business earn on required tangible capital, and what has additional capital produced? |
+| [F07](#f07) | What disclosed or implied claims could absorb cash materially beyond reported earnings or liabilities? |
+
+## Complete Cards
+
+<a id="f01"></a>
+
+### F01 — Reconstruct Economic Substance from Accounting
+
+- **Decision question:** What ownership, cash-flow, and obligation economics lie behind
+  the reported result?
+- **Guidance:** Begin with audited figures and reconcile every adjustment back to them;
+  accounting rules are inputs, not permission to discard costs.
+- **Use when:** Accounting form, rule changes, acquisition accounting, noncash charges,
+  consolidation, or management metrics may obscure economics.
+- **Analytical actions:** Inventory policies and changes; reconcile totals to the
+  analytical view; explain the economic reason for every adjustment.
+- **Output:** A reported-to-economic bridge with source, amount, rationale, and
+  unresolved items for each adjustment.
+- **Limits:** Adjustments can introduce bias and false precision; unsupported
+  substitutions or an unreconciled bridge remain unresolved.
+- **Source basis:**
+  - **Berkshire Hathaway 1982 annual letter** — *supports*: accounting numbers begin not
+    end valuation.
+  - **Berkshire Hathaway 2001 annual letter** — *illustrates*: goodwill rule change
+    raises reported not economic earnings.
+- **Corroboration:** EWB §V.B; EWB §V.D; OM1996; BH2014.
+
+<a id="f02"></a>
+
+### F02 — Estimate Owner Earnings After All Real Costs
+
+- **Decision question:** How much cash can owners remove without weakening competitive
+  position or unit volume?
+- **Guidance:** Restore noncash charges only when they are not economic depletion and
+  subtract maintenance capital, required working capital, compensation, and recurring
+  costs; use supported ranges.
+- **Use when:** Cash removability or distributable earning power matters to valuation,
+  reinvestment, or payout analysis.
+- **Analytical actions:** Show every adjustment; estimate maintenance capital and
+  working capital across a representative period; sensitize judgmental components.
+- **Output:** A reconciled owner-earnings range with assumptions, sensitivities, and
+  blocked components.
+- **Limits:** Maintenance and growth overlap and depreciation or amortization may
+  misstate depletion; unbounded material needs leave the result unresolved.
+- **Source basis:**
+  - **Berkshire Hathaway 1986 annual letter** — *defines*: owner earnings.
+  - **Berkshire Hathaway 2000 annual letter** — *supports*: depreciation represents real
+    maintenance capital cost.
+- **Corroboration:** EWB §V.D; BH2002; BH2014; BH2023.
+
+<a id="f03"></a>
+
+### F03 — Separate Maintenance, Growth, Restricted, and Distributable Capital
+
+- **Decision question:** Which capital preserves economics, funds growth, remains
+  trapped, or is actually distributable?
+- **Guidance:** Classify capital by economic function before treating cash flow as owner
+  value; required, catch-up, restricted, or low-return reinvestment is not freely
+  distributable.
+- **Use when:** Capital-intensive, regulated, cyclical, rapidly growing, or structurally
+  restricted businesses.
+- **Analytical actions:** Classify spending and working capital; reconcile restrictions
+  and reserves; test whether claimed growth spending only preserves economics.
+- **Output:** A schedule of maintenance, growth, catch-up, restricted, and distributable
+  amounts or ranges.
+- **Limits:** Categories overlap and management labels may be unreliable; unbounded
+  maintenance or restrictions leave distributability unresolved.
+- **Source basis:**
+  - **Berkshire Hathaway 1986 annual letter** — *defines*: owner earnings.
+  - **Berkshire Hathaway 2007 annual letter** — *qualifies*: rapid growth low return
+    capital hunger is worst business model.
+- **Corroboration:** EWB §V.C; OM1996; BH2023.
+
+<a id="f04"></a>