Destinations matter, not smooth routes
“Nomad is about destinations, not smooth routes (no kidding!), and we will have bad years again in the future.”
Investing
Nick Sleep and Qais Zakaria's December 2010 letter to Nomad partners, one of the letters in Nomad Investment Partnership Letters, 2001–2014.
Wisdom lies in knowing what to overlook
“To paraphrase the philosopher William James, the art of being wise is the art of knowing what to overlook. In that spirit, we wou ld suggest you overlook Nomad’s short-term results.”
Volatility scrambles even long-term metrics
“The point is that equity markets have been so volatile that even relatively long-term metrics have been all over the shop.”
Scale economics shared misleads a fund
“Whilst we love scale economics shared as a business model, it leads you down the wrong path if you run an investment partnership and are also trying to maxi mize investment returns!”
Price cuts are invisible investment
“[Amazon's] investment-in-price-giveback can dwarf other items of investment spending but, by its nature, it is excluded from conventional accounting formats.”
No right split between growth and maintenance
“We can all have a guess as to the split between growth and maintenance spending and, if pressed, executives at the firms in question will also have to guess at a split too, as there is no right answer.”
Price cuts that build habit last longest
“We would also suggest that investment in price-giveback, so favored by Nomad’s firms, is the most long-lived of the investment spending items if it engenders consumer habit. It may, therefore, be the most valuable to long-term investors.”
Operating costs are internet firms' Achilles heel
“The Achilles heel for internet firms has often come in the form of operating costs, which can be hard to manage, especially at the early, sub-scale stages in a firm’s development.”
Chasing the vision, not the money
“Our firms tend to chase the vision, not the money.”
Insight comes from a business's deep reality
“One of the things we have learnt over the last few years is that our most profitable insights have come from recognizing the deep reality of some businesses, not from being more contrarian than everyone else.”
The human itch to look busy
“[Low portfolio turnover] is hard due to the human itch to be seen to be doing something, perhaps especially when paid a salary to be doing something.”
More reporting can be counterproductive
“We own shares for very long periods and we are conscious that more frequent or detailed reporting may be unnecessary and even counterproductive.”