@v587d/capital-generation 2.7.11 → 2.8.0

package/selected-skills/investment-skills/skills/buffett-investment-framework/references/06-capital-allocation-C05-C09.md

@@ -0,0 +1,119 @@
+# Capital Allocation · Part 2 of 2 (C05-C09)
+
+Cards C05, C06, C07, C08, C09 of this module. Part 1 (`06-capital-allocation-C01-C04.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.
+
+### C05 — Return Surplus Capital When No Better Use Exists
+
+- **Decision question:** After protected reserves and productive uses, is capital
+  genuinely surplus?
+- **Guidance:** Treat payout as the consequence of no better supported deployment, not a
+  fixed preference; distinguish distribution from central redeployment.
+- **Use when:** Mature or capital-light operations generate cash beyond maintenance,
+  growth, obligations, and resilience needs.
+- **Analytical actions:** Reconcile distributable cash after C02; compare C03
+  alternatives; show tax, control, and owner-treatment effects of payout channels.
+- **Output:** A surplus-capital ledger with amounts blocked, deployable, distributable,
+  or unresolved.
+- **Limits:** Legal, tax, contractual, and balance-sheet limits may block payout; an
+  incomplete reserve or opportunity set means no surplus finding.
+- **Source basis:**
+  - **Berkshire Hathaway 1984 annual letter** — *implements*: Berkshire dividend policy
+    uses value creation threshold.
+  - **Berkshire Hathaway 2007 annual letter** — *qualifies*: redeploy cash from high
+    return low reinvestment businesses.
+- **Corroboration:** EWB §III.C; BH2014; LOW ch.15 (distribution threshold case).
+
+<a id="c06"></a>
+
+### C06 — Repurchase Only Below Value with Surplus Capacity and Material Effect
+
+- **Decision question:** Will repurchase materially improve continuing-owner value
+  without weakening resilience or unfairly transferring value?
+- **Guidance:** Require conservative undervaluation, protected liquidity, fair
+  disclosure, superior alternatives, and meaningful per-share effect.
+- **Use when:** An issuer proposes, conducts, or defends a material repurchase.
+- **Analytical actions:** Compare price with value; recheck capacity and alternatives;
+  quantify shares retired, financing, per-share effect, and transfers.
+- **Output:** A repurchase worksheet with value, capacity, materiality, fairness,
+  alternatives, and unresolved assumptions.
+- **Limits:** Value is uncertain and above-value purchases can transfer wealth; the
+  worksheet authorizes no repurchase or trade.
+- **Source basis:**
+  - **Berkshire Hathaway 1980 annual letter** — *implements*: repurchase below intrinsic
+    value.
+  - **Berkshire Hathaway 1999 annual letter** — *qualifies*: above value repurchases
+    transfer wealth from continuing owners.
+- **Corroboration:** EWB §IV.B; BH2014; BH2022; LOW ch.10 (Washington Post repurchases).
+
+<a id="c07"></a>
+
+### C07 — Issue Shares Only Value for Value
+
+- **Decision question:** Does issuing equity give owners at least as much durable value
+  and resilience as the interest surrendered?
+- **Guidance:** Analyze issuance as a partial sale of owner assets and compare value
+  surrendered with assets, claims extinguished, or resilience received.
+- **Use when:** Stock-financed acquisitions, compensation issuance, conversion,
+  recapitalization, or balance-sheet repair.
+- **Analytical actions:** Estimate value and ownership surrendered; value consideration
+  and resilience received; reconcile to continuing-owner value rather than optics.
+- **Output:** An issuance exchange bridge with ownership transfer, proceeds, financing
+  effects, and per-share result.
+- **Limits:** Issuance can rationally improve resilience and both sides are uncertain;
+  missing estimates leave the exchange unresolved.
+- **Source basis:**
+  - **Berkshire Hathaway 1982 annual letter** — *implements*: share issuance value for
+    value rule.
+  - **Berkshire Hathaway 1992 annual letter** — *illustrates*: stock financed bank deal
+    destroyed value.
+- **Corroboration:** EWB §IV.A; OM1996; LOW ch.12 (stock-deal dilution cases).
+
+<a id="c08"></a>
+
+### C08 — Evaluate Acquisitions by Quality, Price, Financing, Alternatives, and Postmortems
+
+- **Decision question:** Does the complete exchange improve continuing-owner value under
+  defensible stand-alone and downside cases?
+- **Guidance:** Evaluate target economics, management, price, financing, dilution,
+  alternatives, and realized outcomes together, not EPS or size.
+- **Use when:** A proposed or completed acquisition, merger, or major asset purchase.
+- **Analytical actions:** Underwrite stand-alone quality and owner cash; build a value
+  exchange and financing bridge; preserve assumptions for post-closing comparison.
+- **Output:** An acquisition sheet with stand-alone value, consideration, financing,
+  alternatives, downside, per-share effect, and postmortem fields.
+- **Limits:** Good businesses can be overpaid for and synergies may matter; unbounded
+  economics or consideration leaves the assessment unresolved.
+- **Source basis:**
+  - **Berkshire Hathaway 1985 annual letter** — *implements*: Berkshire whole business
+    acquisition criteria.
+  - **Berkshire Hathaway 2017 annual letter** — *implements*: evaluate acquisitions on
+    all equity basis.
+- **Corroboration:** EWB §IV.D; OM1996; BH2014.
+
+<a id="c09"></a>
+
+### C09 — Counter Acquisition-Process Bias
+
+- **Decision question:** Has commitment manufactured confidence through selective
+  information, incentives, or optimistic assumptions?
+- **Guidance:** Require an informed opposing case challenging seller information,
+  forecasts, turnarounds, synergies, adviser incentives, and deal hunger.
+- **Use when:** A material transaction with committed leadership, seller-controlled
+  information, or synergy and turnaround dependence.
+- **Analytical actions:** Build the stand-alone downside before synergies; map
+  incentives and information; run a premortem and preserve assumptions.
+- **Output:** An independent deal-challenge memo listing contested assumptions,
+  adverse-selection risks, opposing evidence, and unresolved conditions.
+- **Limits:** Seller advantage does not imply fraud, deals do not universally fail, and
+  broad acquisition priors cannot determine a specific case.
+- **Source basis:**
+  - **Berkshire Hathaway 1995 annual letter** — *supports*: most acquisitions damage
+    buyers and seller projections mislead.
+  - **Berkshire Hathaway 2017 annual letter** — *supports*: deal hunger recruits biased
+    forecasts and synergies.
+- **Corroboration:** EWB §IV.A; EWB §IV.D; BH2014; LOW ch.12 (acquisition ego cases).
+
+<!-- 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/{07-risk-monitoring.md → 07-risk-monitoring-R01-R03.md}

@@ -93,97 +93,3 @@ Abbreviated corroboration citations resolve in the [source key](00-source-key.md
 - **Corroboration:** EWB §II.G; BH2002.
 
 <a id="r04"></a>
-
-### R04 — Test Inflation Exposure Through Pricing Power and Capital Needs
-
-- **Decision question:** Does nominal growth become real owner value after pricing lags,
-  replacement capital, working capital, tax, and financing?
-- **Guidance:** Trace inflation through revenue, costs, price, volume, required capital,
-  financing, and owner cash rather than labeling a hedge.
-- **Use when:** Long-duration forecasts, inflation-sensitive inputs, fixed-price claims,
-  capital intensity, or an asserted inflation hedge.
-- **Analytical actions:** Map price-cost-volume timing; estimate replacement and working
-  capital; compare nominal with real owner cash.
-- **Output:** An inflation-transmission map and real-owner-cash sensitivity with
-  unresolved variables.
-- **Limits:** Pricing can reduce volume and productive assets can require heavy capital;
-  asset labels do not resolve the result.
-- **Source basis:**
-  - **Berkshire Hathaway 2011 annual letter** — *defines*: investment risk as purchasing
-    power loss probability.
-  - **Berkshire Hathaway 2011 annual letter** — *qualifies*: buy currency securities
-    only for unusual mispricing or rate opportunities.
-- **Corroboration:** EWB §V.C; BH1981.
-
-<a id="r05"></a>
-
-### R05 — Preserve Compounding by Minimizing Avoidable Friction
-
-- **Decision question:** How much underlying return is lost to fees, taxes, turnover,
-  advice, and unnecessary activity?
-- **Guidance:** Measure avoidable friction before crediting active intervention while
-  keeping survival and reinvestment quality as prior conditions.
-- **Use when:** Strategy comparison, manager evaluation, turnover, taxes, or claims that
-  gross performance equals owner return.
-- **Analytical actions:** Reconcile gross to net; compare with a lower-friction
-  alternative; compound measured drag over the horizon.
-- **Output:** A friction bridge showing costs and cumulative owner impact.
-- **Limits:** Low cost does not make a weak strategy sound and access, mandate, tax, and
-  benchmarks differ.
-- **Source basis:**
-  - **Berkshire Hathaway 1983 annual letter** — *supports*: market turnover imposes
-    owner friction costs.
-  - **Berkshire Hathaway 2013 annual letter** — *supports*: frequent trading and advice
-    costs reduce aggregate investor returns.
-- **Corroboration:** EWB §III.A; EWB §III.D; BH2014.
-
-<a id="r06"></a>
-
-### R06 — Test Whether an Exit Condition Has Been Met
-
-- **Decision question:** Have economics, thesis evidence, integrity, or opportunity cost
-  changed enough to satisfy a predeclared exit condition?
-- **Guidance:** Compare current evidence with the original thesis and conditions;
-  distinguish deterioration and superior alternatives from price reaction.
-- **Use when:** Hold, sell, or thesis-update review after material evidence or a
-  proposed exit.
-- **Analytical actions:** Compare original and current assumptions; test economics,
-  integrity, value, tax, and alternatives; classify each condition.
-- **Output:** An exit-condition assessment with evidence and unresolved questions, but
-  no trade instruction.
-- **Limits:** Long holding and sale for higher-priority uses are in tension; no
-  condition automatically authorizes a trade.
-- **Source basis:**
-  - **Warren Buffett’s 2015 50th-anniversary essay** — *qualifies*: consider inaction
-    before selling a prosperous business.
-  - **Berkshire Hathaway 2009 annual letter** — *illustrates*: security sales funded
-    higher priority cash deployment.
-- **Corroboration:** EWB §IV.E; BPL1967; BH2014 (Tesco exit-delay case).
-
-<a id="r07"></a>
-
-### R07 — Monitor Assumptions, Change Indicators, and Invalidation Conditions
-
-- **Decision question:** Which observations would strengthen, weaken, revise, or retire
-  each material assumption?
-- **Guidance:** Maintain a compact assumption register with evidence-linked indicators
-  and invalidation conditions; update from decision-relevant evidence rather than
-  undirected news or quotes.
-- **Use when:** Ongoing monitoring, periodic thesis review, or material new operating,
-  governance, financing, or industry evidence.
-- **Analytical actions:** Register assumptions, indicators, and cadence; classify new
-  evidence; mark assumptions strengthened, weakened, revised, retired, or unresolved.
-- **Output:** A thesis-monitoring register with dated evidence, status changes, and
-  blocked conclusions.
-- **Limits:** Indicators can be noisy or lagging and no update automatically produces a
-  buy, sell, or hold action.
-- **Source basis:**
-  - **Berkshire Hathaway 2013 annual letter** — *implements*: ignore daily prices and
-    monitor productive output.
-  - **Berkshire Hathaway 1996 annual letter** — *qualifies*: do not sell fine businesses
-    on scary news alone.
-- **Corroboration:** EWB §II.E; BPL1967; BH2014.
-
-<!-- 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/07-risk-monitoring-R04-R07.md

@@ -0,0 +1,98 @@
+# Risk, Resilience, and Monitoring · Part 2 of 2 (R04-R07)
+
+Cards R04, R05, R06, R07 of this module. Part 1 (`07-risk-monitoring-R01-R03.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.
+
+### R04 — Test Inflation Exposure Through Pricing Power and Capital Needs
+
+- **Decision question:** Does nominal growth become real owner value after pricing lags,
+  replacement capital, working capital, tax, and financing?
+- **Guidance:** Trace inflation through revenue, costs, price, volume, required capital,
+  financing, and owner cash rather than labeling a hedge.
+- **Use when:** Long-duration forecasts, inflation-sensitive inputs, fixed-price claims,
+  capital intensity, or an asserted inflation hedge.
+- **Analytical actions:** Map price-cost-volume timing; estimate replacement and working
+  capital; compare nominal with real owner cash.
+- **Output:** An inflation-transmission map and real-owner-cash sensitivity with
+  unresolved variables.
+- **Limits:** Pricing can reduce volume and productive assets can require heavy capital;
+  asset labels do not resolve the result.
+- **Source basis:**
+  - **Berkshire Hathaway 2011 annual letter** — *defines*: investment risk as purchasing
+    power loss probability.
+  - **Berkshire Hathaway 2011 annual letter** — *qualifies*: buy currency securities
+    only for unusual mispricing or rate opportunities.
+- **Corroboration:** EWB §V.C; BH1981.
+
+<a id="r05"></a>
+
+### R05 — Preserve Compounding by Minimizing Avoidable Friction
+
+- **Decision question:** How much underlying return is lost to fees, taxes, turnover,
+  advice, and unnecessary activity?
+- **Guidance:** Measure avoidable friction before crediting active intervention while
+  keeping survival and reinvestment quality as prior conditions.
+- **Use when:** Strategy comparison, manager evaluation, turnover, taxes, or claims that
+  gross performance equals owner return.
+- **Analytical actions:** Reconcile gross to net; compare with a lower-friction
+  alternative; compound measured drag over the horizon.
+- **Output:** A friction bridge showing costs and cumulative owner impact.
+- **Limits:** Low cost does not make a weak strategy sound and access, mandate, tax, and
+  benchmarks differ.
+- **Source basis:**
+  - **Berkshire Hathaway 1983 annual letter** — *supports*: market turnover imposes
+    owner friction costs.
+  - **Berkshire Hathaway 2013 annual letter** — *supports*: frequent trading and advice
+    costs reduce aggregate investor returns.
+- **Corroboration:** EWB §III.A; EWB §III.D; BH2014.
+
+<a id="r06"></a>
+
+### R06 — Test Whether an Exit Condition Has Been Met
+
+- **Decision question:** Have economics, thesis evidence, integrity, or opportunity cost
+  changed enough to satisfy a predeclared exit condition?
+- **Guidance:** Compare current evidence with the original thesis and conditions;
+  distinguish deterioration and superior alternatives from price reaction.
+- **Use when:** Hold, sell, or thesis-update review after material evidence or a
+  proposed exit.
+- **Analytical actions:** Compare original and current assumptions; test economics,
+  integrity, value, tax, and alternatives; classify each condition.
+- **Output:** An exit-condition assessment with evidence and unresolved questions, but
+  no trade instruction.
+- **Limits:** Long holding and sale for higher-priority uses are in tension; no
+  condition automatically authorizes a trade.
+- **Source basis:**
+  - **Warren Buffett’s 2015 50th-anniversary essay** — *qualifies*: consider inaction
+    before selling a prosperous business.
+  - **Berkshire Hathaway 2009 annual letter** — *illustrates*: security sales funded
+    higher priority cash deployment.
+- **Corroboration:** EWB §IV.E; BPL1967; BH2014 (Tesco exit-delay case).
+
+<a id="r07"></a>
+
+### R07 — Monitor Assumptions, Change Indicators, and Invalidation Conditions
+
+- **Decision question:** Which observations would strengthen, weaken, revise, or retire
+  each material assumption?
+- **Guidance:** Maintain a compact assumption register with evidence-linked indicators
+  and invalidation conditions; update from decision-relevant evidence rather than
+  undirected news or quotes.
+- **Use when:** Ongoing monitoring, periodic thesis review, or material new operating,
+  governance, financing, or industry evidence.
+- **Analytical actions:** Register assumptions, indicators, and cadence; classify new
+  evidence; mark assumptions strengthened, weakened, revised, retired, or unresolved.
+- **Output:** A thesis-monitoring register with dated evidence, status changes, and
+  blocked conclusions.
+- **Limits:** Indicators can be noisy or lagging and no update automatically produces a
+  buy, sell, or hold action.
+- **Source basis:**
+  - **Berkshire Hathaway 2013 annual letter** — *implements*: ignore daily prices and
+    monitor productive output.
+  - **Berkshire Hathaway 1996 annual letter** — *qualifies*: do not sell fine businesses
+    on scary news alone.
+- **Corroboration:** EWB §II.E; BPL1967; BH2014.
+
+<!-- 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/08-specialized-overlays-S01-S03.md

@@ -0,0 +1,99 @@
+# Specialized Industry and Instrument Overlays
+
+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 adding a triggered insurance, banking, consumer, infrastructure,
+technology, commodity, or instrument check.
+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 |
+| --- | --- |
+| [S01](#s01) | Does float create durable financing value or conceal expensive, unstable underwriting? |
+| [S02](#s02) | Are risks identifiable and priced for full expected cost, and will management shrink when terms are inadequate? |
+| [S03](#s03) | How much reported underwriting profit survives accident-year, reserve-development, incentive, and cycle scrutiny? |
+| [S04](#s04) | Can one event or common cause impair solvency, liquidity, claims payment, or post-shock capacity? |
+| [S05](#s05) | Can claims, collateral, refinancing, or counterparties force cash shortfalls when the same shock weakens the chain? |
+| [S06](#s06) | What prevents this apparently commodity-like insurer from earning commodity returns? |
+| [S07](#s07) | Can modest asset or underwriting errors overwhelm thin equity or trigger confidence-sensitive funding loss? |
+| [S08](#s08) | Do loyalty, pricing, distribution, inventory, and format cause durable returns, or does the brand depend on a weakening channel? |
+| [S09](#s09) | Do essential demand and network position earn adequate owner returns after obligations, regulation, maintenance, and financing stress? |
+| [S10](#s10) | Can important economics be forecast despite obsolescence, distribution change, network effects, and shifting attention? |
+| [S11](#s11) | Do normalized owner returns arise from durable advantage or favorable price, cycle, or underinvestment? |
+| [S12](#s12) | Are event, duration, cash-flow, downside, and optionality mechanics understandable and adequately evidenced? |
+
+## Complete Cards
+
+<a id="s01"></a>
+
+### S01 — Insurance: Value Float by Amount, Cost, Duration, and Outlook
+
+- **Decision question:** Does float create durable financing value or conceal expensive,
+  unstable underwriting?
+- **Guidance:** Analyze amount, normalized underwriting cost, claim-payment duration,
+  runoff, and outlook; compare full cost with realistic funding.
+- **Use when:** Material property-casualty operations or investable funds received
+  before uncertain claims are paid.
+- **Analytical actions:** Reconcile float; estimate cycle-normalized cost and duration;
+  stress runoff, reserve deterioration, yield, and cash use.
+- **Output:** A float ledger and scenario table with funding comparison, required
+  capital, and unresolved reserve effects.
+- **Limits:** Float remains a liability and long duration adds reserve uncertainty; an
+  equity analogy requires supported low cost and durability.
+- **Source basis:**
+  - **Berkshire Hathaway 1986 annual letter** — *defines*: float.
+  - **Berkshire Hathaway 2001 annual letter** — *qualifies*: float value depends on
+    relative funding cost.
+- **Corroboration:** OM1996; BH2002; BH2014; LOW ch.7 (early float recognition).
+
+<a id="s02"></a>
+
+### S02 — Insurance: Underwrite Exposure and Price Rather than Volume
+
+- **Decision question:** Are risks identifiable and priced for full expected cost, and
+  will management shrink when terms are inadequate?
+- **Guidance:** Evaluate exposure, conservative severity, full-cost pricing, and
+  demonstrated willingness to reject uneconomic volume.
+- **Use when:** Insurance underwriting where premium growth may obscure risk selection
+  and expected loss.
+- **Analytical actions:** Define exposure, limits, and aggregation; compare price with
+  loss, expense, capital, and uncertainty; review cohort and volume decisions.
+- **Output:** An underwriting-discipline scorecard with exposure, price adequacy,
+  expected economics, volume decisions, and unresolved models.
+- **Limits:** Shrinking is not always correct and no model removes uncertainty; missing
+  exposure or loss assumptions block a conclusion.
+- **Source basis:**
+  - **Berkshire Hathaway 1977 annual letter** — *implements*: accept lower volume when
+    insurance rates are inadequate.
+  - **Berkshire Hathaway 2010 annual letter** — *implements*: apply four disciplines to
+    insurance underwriting.
+- **Corroboration:** BH2014; BH2023; BH2025; LOW ch.7 (pricing-over-volume origin).
+
+<a id="s03"></a>
+
+### S03 — Insurance: Reconstruct Reserves and Earnings Through the Cycle
+
+- **Decision question:** How much reported underwriting profit survives accident-year,
+  reserve-development, incentive, and cycle scrutiny?
+- **Guidance:** Treat earnings as provisional until accident-year development,
+  prior-year revisions, settlement maturity, cycles, and quiet years are reconciled.
+- **Use when:** Material loss reserves, long-tail claims, catastrophe exposure, changing
+  assumptions, or unusually smooth results.
+- **Analytical actions:** Build accident- and calendar-year bridges; separate current
+  underwriting from reserve changes; normalize cycles.
+- **Output:** A reserve-development and normalization table with uncertainty ranges,
+  revisions, and unresolved accident years.
+- **Limits:** Reserve error may be innocent and even multiyear windows miss rare losses;
+  absent triangles leave earnings unresolved.
+- **Source basis:**
+  - **Berkshire Hathaway 1984 annual letter** — *supports*: property casualty statements
+    are provisional.
+  - **Berkshire Hathaway 1993 annual letter** — *qualifies*: loss free years do not
+    establish catastrophe profitability.
+- **Corroboration:** BH2002; BH2023; LOW ch.10 (GEICO reserving crisis).
+
+<a id="s04"></a>

package/selected-skills/investment-skills/skills/buffett-investment-framework/references/08-specialized-overlays-S04-S06.md

@@ -0,0 +1,72 @@
+# Specialized Industry and Instrument Overlays · Part 2 of 4 (S04-S06)
+
+Cards S04, S05, S06 of this module. Part 1 (`08-specialized-overlays-S01-S03.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.
+
+### S04 — Insurance: Test Aggregate Tail Loss Against Distress Capacity
+
+- **Decision question:** Can one event or common cause impair solvency, liquidity,
+  claims payment, or post-shock capacity?
+- **Guidance:** Aggregate policies, businesses, investments, counterparties, collateral,
+  and funding; work backward from intolerable outcomes.
+- **Use when:** Catastrophe, systemic, liability, cyber, terrorism, or other nonlinear,
+  correlated exposure.
+- **Analytical actions:** Enumerate common causes; estimate ranges under model breaks;
+  compare loss with regulatory, covenant, claims, and post-shock needs.
+- **Output:** An aggregate-tail ledger with loss ranges, liquidity timing, binding
+  capacity, and unresolved correlations.
+- **Limits:** Scenarios are never exhaustive and no universal buffer applies; preserve
+  false precision as unresolved.
+- **Source basis:**
+  - **Berkshire Hathaway 1996 annual letter** — *implements*: reverse engineer
+    aggregated tail risk from intolerable outcomes.
+  - **Berkshire Hathaway 2012 annual letter** — *qualifies*: insurance capacity must
+    remain proportionate to enterprise resources.
+- **Corroboration:** BH2002; BH2014; LOW ch.23 (super-cat exposure growth).
+
+<a id="s05"></a>
+
+### S05 — Insurance: Test Crisis Liquidity and the Risk-Transfer Chain
+
+- **Decision question:** Can claims, collateral, refinancing, or counterparties force
+  cash shortfalls when the same shock weakens the chain?
+- **Guidance:** Analyze claims liquidity and the complete transfer chain together,
+  including ability, duration, collateral, jurisdiction, and weakest link.
+- **Use when:** Losses are ceded, collateralized, long-tailed, externally financed, or
+  dependent on multiple transfer parties.
+- **Analytical actions:** Map gross loss, ceded layers, collateral, timing, and parties;
+  stress simultaneous claims and failures; identify unrefinanced liquidity.
+- **Output:** A risk-transfer and liquidity map showing gross and net timing,
+  dependencies, collateral, and unresolved recoverability.
+- **Limits:** Retention is not automatically safer and legal rights do not ensure prompt
+  collection; unverified recoveries stay unavailable.
+- **Source basis:**
+  - **Berkshire Hathaway 2001 annual letter** — *implements*: stress test entire
+    reinsurance counterparty chain.
+  - **Berkshire Hathaway 2004 annual letter** — *supports*: reinsurer solvency is
+    material counterparty risk.
+- **Corroboration:** BH2002; BH2014.
+
+<a id="s06"></a>
+
+### S06 — Insurance: Require Discipline and Structure for a Moat
+
+- **Decision question:** What prevents this apparently commodity-like insurer from
+  earning commodity returns?
+- **Guidance:** Look for low cost or niche, distribution, underwriting skill, capital,
+  and a culture willing to sacrifice volume; do not infer a moat from growth.
+- **Use when:** An insurer is claimed to have durable competitive advantage.
+- **Analytical actions:** Name and compare the mechanism; test price, retention,
+  acquisition cost, losses, distribution, and capital through a cycle; seek persistence.
+- **Output:** An insurance-moat map with competitor evidence, cycle indicators, erosion
+  signals, and unresolved causal links.
+- **Limits:** Berkshire and GEICO are favorable cases, not base rates; unobserved causal
+  outcomes leave the moat unresolved.
+- **Source basis:**
+  - **Berkshire Hathaway 1987 annual letter** — *supports*: commodity insurance rewards
+    low cost or niche.
+  - **Berkshire Hathaway 1999 annual letter** — *qualifies*: reinsurance advantage
+    combines distribution skill culture and capital.
+- **Corroboration:** BH2014; BH2023; LOW ch.10 (GEICO expense-ratio edge).
+
+<a id="s07"></a>

package/selected-skills/investment-skills/skills/buffett-investment-framework/references/08-specialized-overlays-S07-S09.md

@@ -0,0 +1,74 @@
+# Specialized Industry and Instrument Overlays · Part 3 of 4 (S07-S09)
+
+Cards S07, S08, S09 of this module. Part 1 (`08-specialized-overlays-S04-S06.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.
+
+### S07 — Banking: Assess Funding, Credit, Leverage, and Culture
+
+- **Decision question:** Can modest asset or underwriting errors overwhelm thin equity
+  or trigger confidence-sensitive funding loss?
+- **Guidance:** Analyze asset quality, vintages, funding, liquidity, leverage,
+  incentives, and bad-news flow as one bank-specific fragility system.
+- **Use when:** Banks, deposit-taking lenders, or businesses dependent on
+  confidence-sensitive funding.
+- **Analytical actions:** Segment credit and concentration; stress funding loss, credit,
+  and liquidity together; compare incentives and reporting with outcomes.
+- **Output:** A banking resilience matrix covering loss, runoff, liquidity, capital,
+  culture indicators, and unresolved disclosures.
+- **Limits:** Regimes and protections differ materially; missing asset or funding detail
+  blocks the branch.
+- **Source basis:**
+  - **Berkshire Hathaway 2006 annual letter** — *illustrates*: teaser mortgages defer
+    and amplify payment stress.
+  - **Berkshire Hathaway 2010 annual letter** — *supports*: leverage can destroy
+    survival when refinancing disappears.
+- **Corroboration:** EWB §II.G; OM1996; BH2002; LOW ch.19 (deposit-insurance moral
+  hazard).
+
+<a id="s08"></a>
+
+### S08 — Consumer and Retail: Separate Brand Economics from Fragile Distribution
+
+- **Decision question:** Do loyalty, pricing, distribution, inventory, and format cause
+  durable returns, or does the brand depend on a weakening channel?
+- **Guidance:** Test customer behavior and price separately from distribution access,
+  delivered value, inventory risk, and format durability.
+- **Use when:** Consumer products, retail, restaurants, or similar brand and channel
+  dependence.
+- **Analytical actions:** Measure price, volume, retention, mix, and channel economics;
+  trace inventory and format risks; identify channel shifts and alternatives.
+- **Output:** A franchise and distribution scorecard with behavior, unit economics,
+  dependencies, and erosion indicators.
+- **Limits:** Exceptional management can overcome some weak economics; missing cohort,
+  channel, or inventory evidence leaves durability unresolved.
+- **Source basis:**
+  - **Berkshire Hathaway 1983 annual letter** — *supports*: consumer franchise and low
+    cost position create goodwill.
+  - **Berkshire Hathaway 1988 annual letter** — *qualifies*: exceptional management can
+    overcome mediocre industry economics.
+- **Corroboration:** EWB §II.E; EWB §V.C; LOW ch.18 (Coca-Cola franchise case).
+
+<a id="s09"></a>
+
+### S09 — Infrastructure: Evaluate Regulation, Irreplaceability, and Maintenance Capital
+
+- **Decision question:** Do essential demand and network position earn adequate owner
+  returns after obligations, regulation, maintenance, and financing stress?
+- **Guidance:** Evaluate regulated return, irreplaceability, service duties, required
+  capital, political legitimacy, and stressed financing together.
+- **Use when:** Utilities, railways, pipelines, networks, and regulated or essential
+  capital-intensive infrastructure.
+- **Analytical actions:** Reconcile allowed and realized returns; separate maintenance,
+  replacement, and expansion; stress lag, affordability, utilization, and debt service.
+- **Output:** An infrastructure bridge covering rate mechanism, capital, returns,
+  financing, constraints, and unresolved regulation.
+- **Limits:** Irreplaceability does not guarantee owner returns; missing rate or
+  maintenance evidence blocks the judgment.
+- **Source basis:**
+  - **Berkshire Hathaway 2015 annual letter** — *implements*: regulated investment
+    requires reasonable returns and constituency approval.
+  - **Berkshire Hathaway 2003 annual letter** — *qualifies*: stable ring fenced utility
+    cash flows can support subsidiary debt.
+- **Corroboration:** OM1996; BH2014.
+
+<a id="s10"></a>

package/selected-skills/investment-skills/skills/buffett-investment-framework/references/08-specialized-overlays-S10-S12.md

@@ -0,0 +1,76 @@
+# Specialized Industry and Instrument Overlays · Part 4 of 4 (S10-S12)
+
+Cards S10, S11, S12 of this module. Part 1 (`08-specialized-overlays-S04-S06.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.
+
+### S10 — Technology and Media: Test Whether Disruption Strengthens or Destroys the Moat
+
+- **Decision question:** Can important economics be forecast despite obsolescence,
+  distribution change, network effects, and shifting attention?
+- **Guidance:** Identify the protection mechanism, then test technical substitution,
+  platform control, distribution, behavior, and reinvestment; stop if forecastability
+  cannot be bounded.
+- **Use when:** Technology, software, platforms, media, advertising, or rapid technical
+  and distribution change.
+- **Analytical actions:** Map mechanism and dependencies; track retention, switching,
+  network density, distribution, attention, and innovation spend; define exit
+  indicators.
+- **Output:** A disruption and forecastability map with dependencies, erosion
+  indicators, and an estimable or outside-boundary result.
+- **Limits:** Leadership, reputation, or network size alone is insufficient; unbounded
+  critical economics stop the branch.
+- **Source basis:**
+  - **Berkshire Hathaway 1993 annual letter** — *qualifies*: stay with easy to
+    understand businesses.
+  - **Berkshire Hathaway 2005 annual letter** — *defines*: widening the moat.
+- **Corroboration:** EWB §II.E; BH2014; LOW ch.18 (competence-bounded selection).
+
+<a id="s11"></a>
+
+### S11 — Energy and Commodities: Normalize Cycles, Inflation, and Capital Intensity
+
+- **Decision question:** Do normalized owner returns arise from durable advantage or
+  favorable price, cycle, or underinvestment?
+- **Guidance:** Separate price exposure from controllable advantage and normalize
+  volume, price, utilization, depletion, capital, regulation, and financing.
+- **Use when:** Producers, processors, commodity-linked assets, or energy businesses.
+- **Analytical actions:** Build price-volume-cost and cycle bridges; estimate
+  maintenance, depletion, and working capital; test cost claims under adverse prices and
+  capacity.
+- **Output:** A normalized commodity table with cycle range, capital burden, cost
+  position, inflation exposure, and unresolved assumptions.
+- **Limits:** Low-cost producers may be exceptions and price forecasts remain uncertain;
+  missing reserves or replacement data blocks owner cash.
+- **Source basis:**
+  - **Berkshire Hathaway 1978 annual letter** — *supports*: commodity capital intensity
+    depresses returns.
+  - **Berkshire Hathaway 1985 annual letter** — *qualifies*: commodity cost saving capex
+    becomes industry price reduction.
+- **Corroboration:** EWB §I.C; EWB §V.C; OM1996; BH2014.
+
+<a id="s12"></a>
+
+### S12 — Special Instruments: Analyze Event Probability, Duration, Downside, and Optionality
+
+- **Decision question:** Are event, duration, cash-flow, downside, and optionality
+  mechanics understandable and adequately evidenced?
+- **Guidance:** Route each instrument to atomic contractual cash-flow,
+  event-probability, duration, upside, failure-downside, and enforceability analysis;
+  frozen evidence supports only announced-event arbitrage.
+- **Use when:** Announced-event arbitrage, workout, preferred, convertible, or unusual
+  contractual claim rather than ordinary equity.
+- **Analytical actions:** Identify contract, event, states, and legal dependencies;
+  estimate probability, duration, terms, and failure loss; stop unsupported branches.
+- **Output:** A state-contingent worksheet with event states, probability inputs,
+  duration, payoff and loss ranges, legal dependencies, and unsupported branches.
+- **Limits:** No universal return, probability, diversification, or legal checklist
+  applies; unsupported instruments remain unresolved.
+- **Source basis:**
+  - **Berkshire Hathaway 1988 annual letter** — *defines*: risk arbitrage.
+  - **Berkshire Hathaway 1988 annual letter** — *implements*: four question arbitrage
+    analysis.
+- **Corroboration:** EWB §II.B; BPL1964.
+
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