11: How to save the most time

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Let’s dig in.

What I’m Writing

My Investing Philosophy

My investing philosophy is now public and available on the website. I strongly suggest members take a moment to read (it’s short) so you can know we are on the same page.

Interesting Reads

Full_Collection_Nomad_Letters_.pdf (igyfoundation.org.uk)

Nick Sleep and Qais Zakaria of Nomad Investment Partnership crushed it from 2001 to 2013. They returned 921% after performance fees, or 18.4% per annum.

From their 2013 letter:

Our portfolio inaction continues and we are delighted to report that purchase and sale transactions have all but ground to a halt. Our expectation is that this is a considerable source of value added! At the time of our initial investments in Nomad’s investee businesses, the firms were, on average, around fifteen years old. Take out the two grandparents (Berkshire Hathaway and Costco) and the average falls to twelve years. It is hard to know how this compares to businesses at large (what is the average age of a listed company?), but we do know that the average time S&P500 constituent stocks have been included in that index is twenty-five years. One could guestimate that those firms might have been say, twenty years old on inclusion? At any rate, the statistic helps to illustrate how youthful Nomad’s firms are. The runway ahead for our businesses may be very long indeed. Inaction on our part is counter-cultural and deliberate, and is easier said than done. Really. For those used to a more industry-standard level of trading activity, we hope to update you in real time on our level of inaction through our planned “Nomad Inactivity App.”, available only in the Amazon App. store, of course. As Berkshire Hathaway Vice-Chairman, Charlie Munger, says, you make your real money sitting on your assets!

It’s pretty cool how they gamified inactivity to their benefit.

Here’s their returns vs the MSCI world index:

0_hpdKX4w59cr_S5Y_.png

The coolest part of all of this? their closing paragraph after 219 pages of investment letters:

Many of the successful and wealthy people we know are a little mystified by what the money really means. Investors can think their way to success without seeming to work in the traditional sense and the payoff in capitalism from stock picking can be extraordinary. It is one thing for capital allocators to be rewarded for their efforts but, in our opinion, taking personal identity in everything above X-amount is not a route to building a better world. We suspect that if you made it to the end of our letters, then you are one of the good guys and know that already. If good investing is a minority sport, then good philanthropy is a minority sport for those that do minority sports. Our band could do with moving from the fringes of society to becoming the norm. We hope you will join us on the journey.

Just stellar. Reading about Nick and Qais in the book Richer, Wiser, Happier has been a blessing. I think that book will stand the test of time. I’m reading it right now, and taking my time with it.

Learning

Capital Allocation within businesses from 10-K Diver

10-K Diver is one of the best resources on the planet for quickly learning about finance and investing. Very simple, very effective teacher. If I want to learn something from scratch I check this threads to see if he has an overview before diving in to anything else. His website is here. (you should bookmark it)

The better we understand how capital moves in and out of a business, the better we can predict the business’s future cash flows and its stock’s long-term performance.

Businesses generate *cash* through their operations. For example, Apple generates cash by selling iPhones. Starbucks generates cash by selling coffee. Google generates cash by selling ads.

Capital Allocation is the step that comes *after* generating all this cash. That is, once the cash is available, what does the CEO *do* with it?

Basically, there are only 5 things a CEO can do with surplus cash:
1) Invest for organic growth,
2) Acquire businesses,
3) Let the cash pile up on the balance sheet,
4) Buy back shares, or
5) Return the cash to shareholders as dividends.
So, let’s look at each of these. …

Make sure you check it out. There’s a few cool illustrations in there too.

Resources & Tools

Most of you are clicking a lot on these resources and tools sections, so I’m going to put a little more oomph into them.

Marinara: Pomodoro® Assistant – Chrome Web Store (google.com)

Another tool that I use religiously and helps me do less then obsess is the pomodoro tracker extension. It’s the best one I’ve found, simple enough, with the perfect amount of features. All you have to do is click it and then focus for 25 minutes. After that a 5 minute break.

The best thing is it shows a timer in the extension tray, so you can see how far you have left to go. This might seem like an overly simplistic tool, but the guarding of time is one of the best things we can do. Most people I know tend to “die a death of a thousand cuts” only instead of cuts it’s time and distractions like social media, phone notifications, etc.

The trick is to plan and see if you can do an entire chunk of project that would normally take an hour and do it in 25 minutes. Speed and intensity.

A glimpse:

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Try it out and let me know what you think.

For Fun

beautiful-investment-analysis.pdf (wordpress.com)

Nick Sleep makes a great call on Costco in 2005. If you’re like me, this is FUN. Look at what Nick values here. It’s not pie in the sky thinking, but looking at the values that Costco embraces at the cost of short term earnings for a long term runway. Too cool.

Newsletter Of The Week

40 | The Land of Milk and Money – by Kalani Scarrott – Curated by Kalani (substack.com)

If you like lots of gems then Kalani is your guy. “I curate and compress investment topics with a focus on Asia-Pacific, optimizing my emails for maximum return on your time invested. I find, summarize and simplify important information so you don’t have to.”

Quote Of The Week

Decide the type of person you want to be. Prove it to yourself with small wins. James Clear

Some Thoughts

It’s amazing what can happen when we start reaching out and talking to each other. Over the past couple weeks I’ve talked to about 10 people who have given so much support to what I do that it inspires me to give back. I’m not sure how, yet, but I know that that is something I want to do.

It’s still the early days, but thank you to those of you who like, share, comment, and support me in any way. It means the world to me.

If you are new to the investing world, or if you have any questions please email me or DM me on twitter.

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