#072 - Five key lessons to be learned from Sleep and Zakaria

Five key lessons to be learned from Sleep and Zakaria

First They provide a compelling example of what it means to pursue quality as a guiding principle in business, investing, and life-a moral and intellectual commitment inspired by Zen and the Art of Motorcycle Maintenance. It’s easy to dismiss quality as a vague and subjective notion, but it ofers a surprisingly useful flter for many decisions. For example, it was obvious to Sleep and Zakaria that a low annual management fee that merely covered Nomad’s operating costs was a higher-quality option than a fatter fee that would enrich them regardless of how they performed.

Second, there is the idea of focusing on whatever has the longest shelf life, while always downplaying the ephemeral. This principle applied not only to the information they weighed most heavily but also to the long-lasting companies they favored.

Third, there is the realization that one particular business model scale economies shared creates a virtuous cycle that can generate sustainable wealth over long periods. Sleep and Zakaria took this one great insight and profited massively from it by focusing on a few high-quality businesses that followed a similar path. Paradoxically, they also argued that it was less risky for them to own a small number of stocks (usually about ten) than to own hundreds—a standard strategy that would inevitably have produced less dazzling returns. “We knew that we didn’t know many things,” says Sleep. “So it made sense to us only to have a few shares because those were the only things we ever understood and ever really knew.”

Fourth, it's not necessary to behave unethically or unscrupulously to achieve spectacular success, even in a voraciously capitalistic business where self-serving behavior is the norm. During the financial crisis, Sleep wrote about the destruction caused by a culture in which “the players just have to win” and “are not too squeamish about the means.” He and Zakaria wanted Nomad to embody a more enlightened form of capitalism.

Fifth, in a world that's increasingly geared toward short-termism and instant gratification, a tremendous advantage can be gained by those who move consistently in the opposite direction. This applies not only to business/Investing but to our relationships, health, each careers, and everything else that matters.

Source: Richer, Wiser, Happier by William Green

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That’s it from my end for this week. Thanks for reading.

See you again next week!

Dhaval.

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