What you'll learn:
ā¤ Who Is Qais Zakaria
It’s not every day you hear about a fund like the Nomad Investment Partnership, charting an unprecedented 13-year streak, and delivering a staggering 921.1% return.
Led by the investment prowess of Nick Sleep and Qais Zakaria, Nomad didn’t just outperform the MSCI World Index; it surpassed it by a staggering 800%+.
Secrets to Success
In an exclusive interview immortalized in William Green’s book, Richer, Wiser, Happier, Sleep and Zakaria unveiled three foundational pillars behind their phenomenal success: Quality, Delayed Gratification, and Scale Economies Shared.
These seemingly simple concepts held profound implications, especially in the competitive landscape of Wall Street.
Leading a Life Embracing Quality
Contrary to the conventional narrative of Wall Street’s fast-paced success, Sleep and Zakaria embarked on their journey with a fundamental principle: an unwavering commitment to high-quality actions and decisions.
This principle wasn’t a sudden epiphany but a notion that took root when Nick Sleep stumbled upon the book Zen and the Art of Motorcycle Maintenance: An Inquiry into Values at the tender age of 20.
Its essence, of rapid and discerning rejection of things, resonated deeply with both Sleep and Zakaria, shaping their investment philosophy.
Their partnership mirrored this core value. Instead of prioritizing profits, they structured Nomad’s investment partnership distinctivelyāsetting an annual management fee just enough to cover expenses and taking a 20% share of profits only if a 6% annual return was achieved.
It was a testament to their focus on doing the right thing, exceptionally well.
Evolving Nomadās Investment Approach
Nick Sleep and Qais Zakaria complemented each other’s strengths. Sleep, a generalist, and Zakaria, a specialist, forged a symbiotic partnership.
Their ownership structure, with Sleep holding 51% and Zakaria 49%, was a strategic move to avoid conflicts and foster a lasting friendship beyond their fund’s tenure.
Nomad’s inception in 2001 witnessed them diving into ‘cigar butt’ stocksācompanies so reviled by the market that they traded at remarkably low prices.
This strategy paid off handsomely, doubling their assets within two years. Yet, an ‘error’ with Stagecoach made them reevaluate their tactics.
The āMistakeā of Stagecoach
In 2002, Nomad invested in Stagecoach, seeing it rise from 14 pence to 60 pence before selling. But Stagecoach’s subsequent surge to Ā£3.68 by 2007 was a profound lesson.
Sleep and Zakaria recognized the potency of long-term investments in companies with visionary management capable of compounding earnings over time.
Mastering Delayed Gratification
They rebelled against Wall Street’s short-term obsession, making contrarian choices like distancing themselves from major investment hubs and discarding conventional sell-side research.
Their office layout, strategically placing the Bloomberg Terminal out of easy reach, reflected their commitment to focusing solely on long-term analysis.
Nomadās Triumphs with Delayed Gratification
Their contrarian nature proved pivotal during the 2008 crisis when they boldly allocated over 20% of their portfolio to Amazon.
It was a daring move that yielded a remarkable 404% return in the following four years.
Long-Term Vision: Costco and Amazon
Nomad’s triumphs were deeply rooted in companies embracing delayed gratification like Costco and Amazon.
These giants disrupted the norm by prioritizing value over immediate profits, leveraging annual subscriptions to build customer loyalty and foster sustained growth.
Costcoās innovative membership model and Amazonās relentless focus on enhancing Prime memberships showcased the power of compounding through delayed gratification, creating loyal customer bases and fostering substantial growth.
Virtuous Cycle of Scale Economies Shared
Their conviction in ‘scale economies shared’ stocks like Costco and Amazon stemmed from understanding the inherent advantage of large-scale operations.
These companies leveraged their size to negotiate better deals and pass on the benefits to their customers, fostering a virtuous cycle of growth and value creation.
Applying Lessons from Nomad Today
Sleep and Zakaria’s journey revolved around a timeless principle: delayed gratification. This principle transcends centuries, mirroring ancient tales like Esau selling his birthright for immediate gains.
Their legacy extends beyond finance, emphasizing the satisfaction derived from delayed gratification itself.
Retiring after 13 years, they redirected their focus to philanthropy, showcasing a profound understanding that the joy of giving surpasses amassing wealth.
Embracing Simple Principles for a Fulfilling Life
In essence, their narrative embodies the pursuit of a fulfilling lifeāfinding gratification in both short and long-term endeavors.
Their legacy teaches investors to apply timeless principles wisely, echoing the parable of the rich man with endless storehouses but an impoverished soul.
Richer, Wiser, Happier by William Green encapsulates their extraordinary journey, serving as a beacon for investors seeking wisdom beyond financial gains.
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š„ Daily Inspiration š„
Too many people spend money they earned..to buy things they don’t want..to impress people that they don’t like.
ā Will Rogers
