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Berkshire Hathaway’s stock price is too high for Nasdaq computers
- neonate 5y agohttps://archive.is/UVJfs https://archive.is/UVJfs
- ketamine__ 5y agoSomeone should surely lose their job for letting it come this close. Edit: You guys have no chill.
- notyourwork 5y agoNot everything is predictable/foreseeable prior to it happening even if in hindsight it looks dumb.
- ketamine__ 5y agoSo someone thought it could get to 200k but not 460k? It was foreseeable. It's not a pandemic.
- jiggawatts 5y agoThe current pandemic was predicted by many experts. Obama even set up a task force to prepare. That didn't stop idiots ignoring expert predictions. One orange idiot in particular disbanded the task force to save millions of dollars, and cost the US economy billions because of the slow response to a highly predictable disaster.
- ketamine__ 5y agoYou can't predict when it will happen or how it will happen. Not quite the same as this problem Nasdaq is facing.
- Tenoke 5y agoIt's actually fairly comparable. In both cases, it's likely to happen at some point, you don't know when but by the time it gets close to being a problem you dont have that much time to make the necessary changes.
- fighterpilot 5y agoThe stock price of BRK has been grinding higher gradually for a year and was within reach months ago. That this could happen should've been on the radar for a long time and it's definitely a failure if this was a "surprise"
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- derekp7 5y agoRemember that a lot of action on the stock market is built on speed. If they change the storage format to be 64-bit instead of a 32-bit number that would be a non-backwards compatible data format change. So the data format specification would need a new version, all the software that interacts with it would also need to be updated, and a lot of algorithms will get a bit slower since they now have to deal with a 64-bit number or some other representation. There are probably some elegant ways to handle this, but again it would require that timing-sensitive software will need to do extra work to see if the value is in the extended format; or they would have to process twice as many bits if all data values are updated to the new format. Also in in the past most stocks will split for many other reasons when the per share price gets above an easily to handle number. What wasn't predicted is that a company wants to avoid a stock split for whatever reasons they have.
- happytoexplain 5y agoIt's not that simple. Word size is a non-trivial factor.
- ketamine__ 5y agoYeah, real difficult. Like AGI.
- philip1209 5y agoAnd then what? That person just gets another job? Or, they should never be hired by anybody ever again?
- ketamine__ 5y agoMunger told a story about a secretary they deeply loved and then she died. They thought she couldn't be replaced. Then they realized the new hire was better!
- NullPrefix 5y agoMake him work on legacy code.
- iudqnolq 5y agoThat's their current job, no?
- barbazoo 5y agoSeems unnecessarily retaliatory, what would that improve?
- ketamine__ 5y agoMore qualified people join the organization.
- Rebelgecko 5y agoExcept the new hires wouldn't have that first hand experience to help them understand the importance of sizing your integers appropriately. Institutional knowledge is a valuable thing.
- lokedhs 5y agoSpot on. Firing someone for a mistake is incredibly short-sighted. After the mistake has been rectified, you can be sure there is going to be one employee in the organisation who will never ever let that problem happen again. Why do you want to get rid of that person? Of course, if the person is making the same mistake again, then that may be reason for concern, but that's a completely different discussion
- ketamine__ 5y agoRight, no senior programmers understand how to size integers. We need institutional knowledge for that.
- jasonhansel 5y ago> You guys have no chill. Welcome to HN.
- derekp7 5y agoSummary: Nasdaq computers store stock prices as a 32-bit number representing the number of 1/100'ths of a penny, which means the highest dollar amount it can store is $429,496.7296 (2 ^ 32 / 10000).
- repiret 5y agoThe highest they can store is (2^32-1)/10000.
- zeusk 5y ago((2^32)-1)/10000 assuming they don't care about negative equity price.
- repiret 5y agoIf they were storing it in a signed 32-but integer, it would have already overflowed.
- sgtnoodle 5y agoThey could also be applying an arbitrary offset to support some range of negative value. This whole tangent seems a bit pedantic though. :-) They probably should have used uint64!
- eru 5y agoOr perhaps just move to arbitrary-length integers. (Eg what Python gives you by default.) Or even rational numbers. Both are a bit slower than using ints built into the machine, but exchanges don't have to be particularly fast. (In contrast to HFT participants. But they just need to be faster than their competitors.)
- sgtnoodle 5y agoMy suspicion is that the field is a fixed size for serialization inside a database table or something. Truly variable length fields are trickier to store and then subsequently iterate over non-sequentially. When you say rational numbers, do you literally mean a fraction, or are you talking about a floating point representation? I'm not sure what a fraction would do over fixed point in this usage, and floating point is best avoided for anything finance related due to the fact that they're approximate. They probably regret not just using 64-bit from the start, but on the other hand somebody likely saved a measurable amount of money on storage over the years. Potentially not worth the cost to figure out a workaround now, though. Perhaps they could implement a rule where if the field equals MAX_UINT32, then the value must be looked up in an auxiliary database table. Depending on how much crufty code there is assuming 32-bit though, it may be their equivalent of y2k.
- icedchai 5y agoMaybe they should just work around the problem and do a stock split. They probably should anyway.
- Rebelgecko 5y agoBuffett sees the stock price as a feature, not a bug (IIRC he's also said that you should only buy BRK.A if it's at a significant discount compared to BRK.B)
- pmyteh 5y agoThe other way around: he said you should only buy BRK.B if it's trading at a discount. The A shares are convertible to B (though not vice-versa), so if A is trading at a discount it will be quickly arbed away.
- zaptheimpaler 5y agolmao buffet/munger are like pro gamers who are so good they overflowed the score field
- Andaith 5y agoWhy doesn't Berkshire do stock splits to make the stock easier for retail investors to buy?
- ska 5y agoCounterpoint - why would they? I mean this seriously, is there a benefit to the company to do this? It requires at least a little work on their part to do, why fix what isn't broke?
- Someone1234 5y agoBRK is an unusual case where they offer both A and B, wherein B is retail-accessible. BRK.A mostly exists for bragging rights at the shareholder meetings / getting closer to a celebrity a lot of people deify. For other businesses, stock splits can increase investment/price since it makes that stock more accessible to retail investors and more importantly their huge pile of retirement savings. For example automatic investment plans that can buy whole shares of a company each month (via salary redirected savings) are much more popular than sitting on cash for up to months to buy a single share (and that is harder to automate/brokers don't support it). Fractional Shares should solve this issue, but many 401Ks simply don't support them, different brokers have a patchwork of what can/cannot be done with fractional shares (e.g. market orders only), and there's also questions about voting power/stock splits/broker transfers/legal rights/etc. If fractional shares were offered not at the broker level but at the exchange level with identical [proportional] power/legal rights/access/etc to regular shares none of this would matter, but they don't at all. So we've got a system where share price is both meaningless mathematically but also somehow an impediment to an entire investment class.
- philsnow 5y ago> When pressed on the issue, [Warren Buffet] has told shareholders that a lower price would bring unsophisticated short-term investors into the stock. there's BRK.B for that. BRK.A is what, a vanity stock? I've long had the idea that the reason to buy any BRK.A is because ownership of a single share allows you to go to the shareholders meeting in Omaha. https://www.investopedia.com/ask/answers/021615/what-difference-between-berkshire-hathaways-class-and-class-b-shares.asp https://www.investopedia.com/ask/answers/021615/what-differe... doesn't mention the shareholders meeting, so maybe that's outdated or apocryphal.
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- tych0 5y agoI think you get tickets with BRK.B too. A friend of mine sells the tickets he gets on ebay and says that's a bigger dividend than the stock will ever pay :)
- hnburnsy 5y agoOwning BRK and no dividend is the best thing since sliced bread in my taxable investment account; the 8% discount on Geico insurance is nice too.
- hellbannedguy 5y agoWe need to start listing what we all pay here for auto insurance. I have a feeling it's a rigged industry, and has very powerful lobbyiests. (That part after the comma is true in California.) I'll start: 1. age 50 2. no moving violations. 3. bare bones legal minimum in CA. (15-30-5) 4. $550 year, with a Covid credit of $6.30 5. I'm with Mercury. (I looked into pay per mile, but I don't have a computer in my vechicle.)
- edgyquant 5y ago28 1 speeding ticket Full coverage 1080 a year Toyota
- gumby 5y agoA yes, the famous S500K problem. Like the even more famous Y2K problem people (a small number in this case) will rush to fix it in time, and then the consensus will be that the whole thing was overblown. Making limiting simplifications is one of the important legs of engineering (the other two being making tradeoffs and focusing on accomplishing the goal).
- samplatt 5y agoWhat is the famous S500K problem? Your comment here is the first result on google for "S500K". Completely agree wrt the other points though...
- gumby 5y agoSorry, it was a bit of a joke: Y2K was Year 2000 and my made up name S500K was Stockprice over around $500K. I suppose I should have written "famous". Those of us over a certain age remember how much work went into patching the Y2K issue, and how it changed the software industry, and yet was pooh-poohed by the general press in the final year of the last millennium (2000) when nothing material went wrong. My point was the article was a little bit alarmist, which it almost had to be to spin out a brief article about what is otherwise an amusing piece of trivia that would fit in a sentence: "Berkshire Hathaway's price has almost reached the point where it can't be represented in NASDAQ's computer, but they are patching their code and expect everything to work fine by the time the stock reaches that point, if ever." I'd be glad to chuckle in passing upon encountering that sentence, but was annoyed at the padding used by the poor reporter to make an article of it. Given the state of the world it's hard to blame anyone (reporter, editor, Bloomberg management...) for this phenomenon.
- LorenPechtel 5y agoNothing material went spectacularly wrong. There were things like the supermarket whose inventory computer was tossing a bunch of perfectly good product until someone noticed that the "expired" goods they were disposing of weren't expired at all.
- nknealk 5y agoThere's a great Acquired podcast episode about Warren Buffet and his obsession with compounding returns. After listening to that episode, it totally makes sense why he'd be opposed to a stock split. I highly recommend it for those curious about Buffet
- tantalor 5y agoSum it up for us.
- paulyacoubian 5y agoThe high stock price directly signals the power of compounding. If you split it down to $10 per share the lesson of buying and holding is lost.
- smabie 5y agoNot really? Everyone would look at the split adjusted price for the past?
- throwaway69123 5y agoI know plenty of people who dont understand that 100 $1 stocks is the same as 1 $100 stock
- runawaybottle 5y agoIt’s not the same. Depends on total shares. No one likes messing with stuff that’s never gonna move, doesn’t matter if it’s $1 of $100, it might as well not even be an investment opportunity. The returns on these high priced and low volume stocks will always be shit.
- edoceo 5y agonope, the lower number tricks your mind.
- 5y ago
- exporectomy 5y agoSurprising that they are they rushing to fix it at the last minute when Berkshire Hathaway's stock price has been steadily climbing towards that limit for decades. For about half the time that Nasdaq even existed, it's been more than 20% of the way there ($70,000 in 1998). Surely they've touched their software sometime between then and now and had the opportunity to notice the problem.
- bawolff 5y agoY2K was a thing too, but its not like we didn't see the clocks rolling over coming. People tend to procrastinate on this sort of thing.
- gre 5y agoWant to feel old? We're closer to 2038 than Y2K now.
- exporectomy 5y agoOh no! I just remembered I have a time-limited trial feature in my own software that won't work past 2022 because when I implemented it, I assumed I'd either rewrite it or be out of business by then. Now I have some more empathy.
- NullPrefix 5y agoIs it December yet?
- 5y ago
- drchiu 5y agoThe higher share price serves as a mechanism to stabilize the share prices as well. I have a few friends who disdain at the idea of selling even a single share because they don't want to bother converting it to B shares and/or don't want to trigger a tax on the capital gain.
- carabiner 5y agoDaily reminder that his name is spelled Buffett. Two t's.
- exporectomy 5y agoOr we could follow Shakespeare's lead and not worry about spelling too much. Plenty of named also get anglicized into slightly different or multiple spellings. Are those Chinese people called Wang or Wong?
- koolba 5y agoEither way, sometimes it’s going to be Wong.
- Invictus0 5y agoWhen the word is someone's name the spelling should be respected.
- red369 5y agoI agree, but I think the point regarding Shakespeare's spelling was probably referring to the way he may have spelled his own name differently at different times: https://en.wikipedia.org/wiki/Spelling_of_Shakespeare%27s_name https://en.wikipedia.org/wiki/Spelling_of_Shakespeare%27s_na...
- exporectomy 5y agoNot just his own name, nobody at that time could spell English consistently. Which might have had something to do with not even being able to read or write. People's names are fundamentally oral and spelling is just an encoding to communicate them in writing. Being worried about spelling correctness it like being worried about the choice of binary encoding of the spelling. My name is only correctly encoded in binary as ASCII, not some bastardized similar-looking unicode codepoints, and certainly not that archaic IBM encoding! Future generations had better respect my preference! /s
- 5y ago
- mensetmanusman 5y agoBerk2K On this crazy timeline (considering the last 10 years), I wouldn’t be surprised if B2K sparks a world wide fiscal meltdown.
- dzdt 5y agoBerk2^32/K.
- Johnny555 5y agoAhh, another 32 bit overflow problem. I still think I'll be making big bucks after my retirement working on the Y2038 epoch overflow problem [1], just as COBOL programmers were reportedly in high demand for Y2K. [1] https://en.wikipedia.org/wiki/Year_2038_problem https://en.wikipedia.org/wiki/Year_2038_problem
- LorenPechtel 5y agoI confess to having committed this sin. The order tracking at my employer suddenly started crashing during load and this happened when I was on the other side of the world with only e-mail access. The culprit turned out to be a Y2K38 bug on my part triggered by a salesman fat-fingering an order into the 2060s. The only Y2K bug I had wasn't worth fixing--one list of reports was "date"-sorted (dates in the filenames) and making the display wider was more of a downside than dealing with the mis-sort at rollover.
- floatingatoll 5y agoThe headline misleads; it’s multiple exchanges, as IEX also says midway down that they won’t be able to handle it.
- tzs 5y agoThis is what I'd consider if something like this came up at work, and there was too much crufty old code in the 32-bit systems to get management to accept updating the whole thing to 64-bit. Change it so that what is listed on Nasdaq as BRK.A is not actually BRK.A but rather 1/2 BRK.A. So when Nasdaq says BRK.A is $X it is really $2X, and when they say N shares traded that day it was really N/2 shares. Only allow transactions that involve an even number of the 1/2 BRK.A shares. Hopefully the code to handle all that would just need to be in the interfaces between the 32-bit systems and the rest of the world, and should be a lot less work than changing the whole thing to 64-bit.
- diveanon 5y agoKind of concerning that the systems running a major financial exchange are struggling with problems solved by game devs already. What's newsworthy here isn't the technical problem, but the institutional problem that allowed 32bit overflow to even approach affecting a production system like this.
- blibble 5y agoin a game engine you have several ms to process events from the user/network if you're handling depth from US exchanges you're lucky if you have a microsecond for maximum decoding speed: most major exchanges represent data using fixed point with fixed message offsets (CME being the main exception, but then they have fractional prices) the 4dp was likely picked due to some past requirement (e.g. fractional prices) doing a major upgrade of a protocol like this is not easy when you have to co-ordinate the upgrade with all of your members (all of which have their own software/appliances, and some likely pass that 4dp through their systems too)
- diveanon 5y agoThanks for knowledgeable response. It does shed some light on the issue. It's interesting that decoding speed is the major bottleneck here. However it is still surprising that this issue wasn't foreseen and that the burden of responsibility seems to fall on the berkshire and not the system architects.
- blibble 5y agoI have no doubt that there's something in the rulebook they can use to get BRK.A to split (or face delisting)!
- joezydeco 5y agoBack in the mid 2000s I was working on a stock ticker display for an embedded device. I got into regular arguments with people that couldn't be convinced that a stock price would ever exceed 3 digits. BRK.A was written in black Sharpie on a post-it above my desk, I would just point to it. I think it was $90,000 back then.
- paulpauper 5y agoamazing how much it has gone up since then. in large part due to the stuff that is not public like the insurance businesses
- lotsofpulp 5y agoFrom what I can tell, BRK has not been remarkable for at least 10 years now. Or at least since the Goldman deal where Buffett famously got a discount. In fact, I’m pretty sure Buffett lost out on a ton of growth because he was anti tech for a while, since he liked to claim he did not invest in businesses he did not understand. I doubt the insurance companies are driving BRK’s price growth anyway. The biggest contributor is probably his stake in Apple. Any broad market index fund ETF probably did just as well, if not better. https://www.google.com/finance/quote/BRK.A:NYSE?comparison=NYSEARCA%3AVTI&window=5Y https://www.google.com/finance/quote/BRK.A:NYSE?comparison=N...
- Scoundreller 5y agoAAPL is 43% of BRK.A. 5 stocks get you to 75%.
- radicality 5y agoMaybe I should go place a limit order at $1/share in case by chance the price wraps around to $0 and the order gets filled :)
- lwansbrough 5y agoI’ll be sure to place my bid at $2…
- sumedh 5y agoDoesn't the exchange reject such orders which are too far away from the current market price?
- herpderperator 5y agoIf you choose to _sell_ at $1 you will likely get a warning because it will fill instantly at the current market rate despite being a limit order. However you can choose to buy at $1 and there's no reason for it not to be accepted into the order book. In fact you often see this via Nasdaq TotalView during low liquitiy events such as right as the premarket opens where someone is bidding $1 or $0.01 for shares of a blue chip company. The same applies in reverse.
- cout 5y agoMarket makers, which are required to maintain a quote, have been known to put in a bid at $1, knowing it will never actually execute. Until the price drops below a dollar, which it turns out does occasionally happen. Oops.
- flukus 5y agoI don't know about refuse, but if it did go through it would definitely raise a bunch of red flags from the anti-money laundering checks, IME these are taken very seriously. Accounts involved would probably get locked pretty quickly.
- fighterpilot 5y agoI think that's the broker that does that
- arthurcolle 5y agoIt would be cool if you could store floating point (or double precision floating point) values in some sort of pseudo-type where you want to ensure that you have at least this much precision, and any time you insert a new row into the db table, if any of the individual values exceed the configured db max precision, as specified in the initial migration, or explicit table creation, it just automatically creates a migrated to bump the precision, (in Django you have 2 required fields for a decimal, it's like "max digits" and "precision" iirc) EDIT: like an expandable floating point type, where as you increasing the needed max_digits, you just have this implicit migration that occurs. Idk this is super half/quarter-baked but just going off script a bit
- spacedome 5y agoWhy not just use fixed point? That's specifying how much precision you need in a fixed way and has the benefit of being quite simple
- arthurcolle 5y agoAssuming you mean like fixed-point arithmetic? Well, if you know you want to support all of 1 BTC's satoshis but also want to support Danish krone's, you could be wasting a lot of space by just delegating to the currently largest precision-requiring currency (or whatever, depending on your use case) Unless I'm not understanding what you mean by fixed point?
- tdeck 5y agoCreating a migration to bump the precision would rebuild the entire table in most SQL databases. That's not something you want happening at random intervals.
- arthurcolle 5y agoGood catch, yeah that is pretty terrible. It just seems silly that I'm building some PoC, and 3 years later all the assumptions I applied initially become something I need to actively design around, or just refactor my data schema. How many layers of abstraction would I need to add to create a kind of more flexible types that just know to expand if I add more significant figures, or contract (on a row basis) depending on the entry. Like I was building a django app 2 weeks ago, and pulled in django-money to deal with currencies without reinventing the wheel, and then with another field on a model (meant to simulate a crypto asset), I had to arbitrarily decide what level of precision and what the "max digits" were for a class of potential instances of this model. I get that this might be overoptimization, but really - this is silly. By specifically asserting a max length for some field, aren't you wasting space? If not, then my entire point is moot. Not super quantitative, but just thinking out loud a bit.
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- paulpauper 5y agoscientific notation
- supernova87a 5y agoWho else here is old enough to remember when stocks were priced with fractions as the cent value? 1/8s anyone? or 1/16s? I cringe at how they had to parse that string input on an online stock trade form... "128 3/8" imagine the typos...
- s314159265358 5y agoHumans: create a system that profits off suffering and pain Humans: surprised pikachu face
- aswegs8 5y agoCan you explain what you mean by that in the context of the article?
- DocTomoe 5y agoI never quite got why Berkshire doesn't do splits - the only explanation I can come up with is flexing and keeping investors to be a small, exclusive, contained club. In fact, splitting has become surprisingly rare in recent years
- tim333 5y agoI like the pricing system. The shares were $16 when Buffett started buying, $420k now, haven't paid significant dividends, done splits or anything so the return to investors has been 420k/16 = 26250x. With most stocks it's really hard to do a similar calculation - you'd have to look at 60 years of history to figure the payments, splits and so on. That's basically why Buffett does it - he likes clarity and openness. As an aside a lot of my bank / brokerages basically give a number out of range error if you try going back more than five years or so. Which is a pain for this sort of stuff - Buffett started buying into Berkshire in 1962. Also the whole digits thing gets much worse in crypto where you have have 10^24 shares of some coin worth $10^-23 per coin or similar. I was trying to write some software the other day and the only thing I found was to store the numbers as strings in the database and convert them to something like Python long integers which can have unlimited digits.
- pliny 5y agoMost market data vendors (including yahoo finance, google finance etc) account for splits (by dividing the historical price) and dividends (by simulating reinvestment). You don't have to think about those events unless you're doing something special in response to them.
- dcl 5y agoOutside of forcing a stocksplit, what do people anticipate an architectural solution would be? Is it simply having to rewrite a bunch of code to deal with 64bit numbers?
- throwaway4good 5y agoDon't tell wallstreetbets.
- raggi 5y agoIt's called a Buffet Overrun
- avipars 5y agoBuffett overflow
- dwhitney 5y agoas someone who has designed an application for financial services, I can confirm that Berkshire is a PITA :)
- CharlieMunger 5y agoIf you want to understand Berkshire Hathaway, visit the world's most active Berkshire Hathaway community: https://old.reddit.com/r/brkb/ https://old.reddit.com/r/brkb/ Thousands of active members, dozens of value investor moderators, join us!
- sillypuddy 5y agoThe flip side of this problem is keeping track of exchange rates when currencies go through hyper-inflation. For example the exchange rate between Venezuelan Bolivar to USD right now is 0.000000. https://x-rates.com/table/?from=USD&amount=1 https://x-rates.com/table/?from=USD&amount=1
- zakirenish 5y agoStock overflow happened, check out brk.a in google finance.
- Markoff 5y agoI wonder how do they trade stock in Indonesia, Vietnam or in old times before euro in Italy? Maybe ask them about solution?