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Lessons from Nomad Investment Partnership Letters — Part 2
Patience — The Joy of Doing Nothing
French philosopher Blaise Pascal observed that most of humanity’s problems stem from man’s inability to sit quietly in a room alone. Reading Nomad’s letters, you get the sense that Nick and Zak would be perfectly comfortable, alone and quiet, so long as a stack of annual reports accompanied them.
Patience was a defining characteristic of Nomad’s style. Always on the lookout for a less crowded playing field, Nick and Zak were patient because other investors weren’t. According to their 2006 annual letter:
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.
Patience came in two forms: long holding periods and long stretches of inactivity.
Nomad’s desired holding period was five years versus an industry average of less than one year. The duo believed that patience is rewarded and that equity returns increase over time, a concept they called the equity yield curve. Short holding periods meant intense competition at the short end of the curve. Going further out meant a less crowded field. Once again, Nomad sought advantage by doing things that others struggled to do.
