Investing
Nick Sleep and Qais Zakaria's December 2006 letter to Nomad partners, one of the letters in Nomad Investment Partnership Letters, 2001–2014.
“Once the index is seen as risk free the mistakes that follow cascade and include: requirement to have an opinion on everything inside the index regardless of one’s circle of competence, an unwillingness to invest in other better opportunities, and over diversification.”
“We are walking down the road less traveled when we argue that the index is not risk free, it is one, of many, opportunity sets.”
“Zak and I consider non - investment distractions to be the single biggest risk to our operation and we are on to it.”
“Good investing is a minority sport, which means that in order to earn returns better than everyone else we need to be doing things different to the crowd. And one of the things the crowd is not, is patient.”
“(In brief, the equity yield curve is a concept that argues that patience has a value, and that returns increase with time in the equity market as they do on a normal bond market yield curve).”
“There may be a blind spot in academia as the overwhelming methodology for research in Economics has been to take observations over short time periods, as if cause and effect sit on top of each other.”
“Our peers are trading shares at the short end of the equity yield curve where the competition is the greatest, and we are investing at the long end where competition is the least.”
“We can estimate what a price reduction will do this week and this quarter. But we cannot numerically estimate the effect that consistently lowering prices will have on our business over five years or ten years.” — Jeff Bezos
“If the share price is being set by those with an eye on the next data point, then they can’t also be looking out for long-term value.” — Jeff Bezos
“I think Bezos would run a good investment fund: but that is the point, good investing and good business decisions are synonymous.”
“What we are saying is that because so many fund managers are constrained by their mandates excess returns ought to exist for the unconstrained.”
“As the bids often come from the private equity fund operating in joint ven ture with management then, in our opinion, they are best understood as insider trading with the takeover rules being used as a bulk purchasing facility.”
“We shy away from more frequent reporting which risks say-something syndrome and at worst may provide a meaningless comfort blanket.”
“You can sack us, but we won ’t sell you.”
“Up to now Nomad has adopted the industry standard ‘high water mark’, which solely avoids double charging investors for the same performance… this, heads-I-win, tails-I-don’t-lose construct is, to our mind, clearly inequitable.”