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Thursday, May 31, 2007

The Empirical Commute

I've told this story to a lot of people and I've written parts of it on Motley Fool and perhaps even on this blog. I forget. But it's probably a good idea to write it down here now. The point is to explain the one thing that most changed how I view the world.

For about 10 years total, I commuted along a 30 mile stretch of highway which was ideal for studying driver behavior. Most of it was 4 lanes. Most of the time, the amount of traffic maximized driver interactions: about 50% of capacity, so there was lots of maneuvering space for people to do whatever things they were going to do. And the traffic was high speed, mostly 70mph (112kmh) and higher.

When I started doing this commute, I also had just bought life insurance, which got me thinking about a simple question, "If I was going to die this year, what's the most likely way that it would happen?" The answer was obvious. These people drove like maniacs. So I decided to focus on trying to avoid a serious accident. My time was valuable and slowing down a great deal day-in-and-day-out wasn't really a possibility and it wasn't clear that it would help. So I started actively studying the behavior of the cars and put a lot of effort into thinking about what they were doing and what they were going to do, but what made the most impact was simply carefully observing it all. Considering that I put in over 12,000 hours, I had lots of time to observe and learn.

What I learned was that drivers have a certain signature exactly like the things described in the book Blink. Some of it has to do with the type of car. Much of it is the trajectory of the car during the span of a few seconds. A lot of it is where the car is relative to other cars and within the lane. With 4 lanes and moderate traffic, there are a lot of degrees of freedom that can characterize the person driving. And the choices people make fall into very clear patterns.

I find that I always read the cars before I'm actually able to verbalize it. None of it is rational thinking, although there was a lot of rational thinking that went into observing the behavior over many years.

It's not that difficult to know what drivers are going to do once they've already started doing it (such as starting to edge over to one side of the lane or look over their shoulder before they change lanes), what I've been able to do is to know it about 5 seconds beforehand. Just last week I was driving someone along that same road and made a total of 4 predictions and they all happened, including one consisting of three steps involving a number of cars interacting.

There's no magic, it's just noticing the patterns that are already there. I've seen other commuters who see it because I see them reacting at the same time I see something.

The important lesson I learned from this is a sense of the complexity of real world systems. I can see that these patterns are weird; they are ruled by a mathematics beyond anything I can imagine. And I can see that any attempt to impose a simple model on it will end up very wrong

I've seen this same sort of thing in other areas, such as playing team based Quake games online (which I haven't done in years). I expect and hope that over time I'll get better at recognizing patterns in the small companies I look at here on this blog.

Reading books like Blink, Deep Simplicity, The Black Swan, the various evolutionary biology books, and others have helped me understand this stuff. Each piece of information adds to the giant jigsaw puzzle. For me, The Black Swan was a very big piece.

On the return trip of the very last day of all my years of commuting on that terrifying road, I thought to myself, "Hey! I made it! No accidents." Then only a minute or two later it happened. The car in front of me slowed down. Not a lot. I slowed down just fine since I had more than enough room in front of me. But a guy named Jeronimo (yes, that's his real name) in a 1989 Honda Civic DX wasn't slowing down enough and I could see it in my rearview mirror. I closed the gap in front of me to give him more room, but it wasn't quite enough. Bump! We stopped, looked. No visible damage. We both drove cheap old cars, so it wasn't a big deal.

I thought to myself that I should thank him for the humorous ending to a long story. I could have stood there pontificating to this Native American and his girlfriend on the median grass about my years of driving and the irony of it all ending this way. Sadly all I did was take down his information, which I still have to this day as a memento, and tell him that I wouldn't do anything unless the car fell apart or something. It never did. It was a Toyota.

I've previously spelled his name Geronimo, but I just dug up the accident information paper and I see that it's spelled Jeronimo.

Thanks for the useful mental-model, Bruce. I was very glad to read this, because I have examined the exact same thing you described in your post. Almost every time I am on a large freeway, I think about its relation to investing and the market. Simple things like how everything and everyone works in harmony, and many things have to go right (although we leave "margins of safety" to protect against minor errors), until one small thing can start a chain-reaction that leads to a massive accident. I have been in some bad accidents myself (never the driver) and observed this first hand.

The specific story you mentioned about predicting driver's actions ahead of time resonated with me. Although at times I may look crazy making these predictions out loud with others in the car. I have never been in an accident while I was the driver, and I tell people who ask that (I believe) it is because of my ability to picture all the cars around me and how they interact.

Upon observing myself drive, I've found I'm fairly unpredictable. But whenever I come across other unpredictable drivers on the freeway, this is when I've ran into problems and almost got in an accident. Anyway, sorry for the rant and thanks for the story, as I know I'm not the only one that thinks about this.
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