#365 Nick Sleep's Letters: The Full Collection of the Nomad Investment Partnership Letters

although we are all interested in margin it must never be done at the expense of our philosophy margin must be obtained by

better buying emphasis on selling the right kinds of goods we want to sell operating efficiencies lower Mark markdowns greater turnover increasing the retail prices and justifying on the basis that we are still competitive could

f you want to be successful and we do then you have to be willing to be misunderstood okay come on this has been a main theme the last month and do things that do not seem sensible to most people for example if you the employees come into the office in the morning thinking how are you going to beat number one number two and number three in the indu

don't spend any time worrying about what other investors do I spent all my time studying great companies and studying great Industries if Nick and Zach were worried about what other investors were doing at this time they wouldn't be doing what they're doing they wouldn't have been buying Amazon they wouldn't have been talking about Costco

Nick is seeing himself in that story right now in 2008 he's like I got I got Berkshire I got Amazon the key is

to not mess that up he the key is to not interrupt this these honest compounding machines which in itself is a decision a daily decision not to do anything and arguably more difficult than to do something because I think we are naturally wi

you need to be heavily concentrated and bet heavily it could be argued that lots of things had to go right for Walmart to grow for 40 years that is certainly true but at its heart a very few simple things really mattered in our opinion the central engine of success at Walmart was a thrift orientation so low costs low waste fueling growth with the s

you cannot just focus on the outputs if you do you're going to sell you have to really understand the central engine of success you have to understand that business deeply

hy is it that no one but the founding Walton family owned

Walmart all the way through Zach and I were told a story which we enjoyed enormously and might help illustrate this point in the early 1970s a large successful fund management company analyzed its portfolio and discovered that their sale of IBM 30 years earlier had been a huge error of omissi

he says in our opinion just a few things in life are noble and it is because just a few things are noble that noad has just a few Investments the Church of diversification is seen as an insurance against any one idea being wrong we would propose that if knowledge is a source of value ad and few things can be known for sure then it Li logically foll

let's invert the way to construct a portfolio the other way to construct a

portfolio that's different from how other people do it is to invert and start at 100% waiting and work down