In 2014, the Nomad Investment Partnership was it, and their last few years of returns were nothing short of astonishing. A 2012 return of 39.8% trumped the MSCI’s 15.8%, and a year later, Nomad clocked up a staggering 62.2% return, decimating the MSCI’s 26.7%. Indeed, in four of their last five years Nomad delivered returns of 40% or more. Without a doubt the partnership founders, Nick Sleep and Qais Zakaria were at the top of their game. Still young, in their mid-40’s, they possessed a magnet for capital via their track record of 20%+ annualised returns. The opportunity to raise billions of capital was there for the taking. Yet, after two decades of investing and fourteen years running Nomad, Sleep and Zakaria decided it was time to hang up their boots. They’d achieved their ‘X-amount’. For them, it was time to move beyond investing.
From the early days, Sleep and Zakaria had mused over a concept they referred to as the ‘X-amount’. This was an amount of money they deemed necessary to pay the bills and have a nice lifestyle. Beyond which, they felt the surplus funds could be an anchor, stripping meaning from their lives by distorting relationships with friends and family and encouraging an indulgent existence.
Like many of the Investment Masters, Sleep and Zakaria recognised the good fortune afforded to successful investors, and took it upon themselves to direct their excess gains towards charitable causes. Both established foundations which continue to benefit from their investing prowess; almost six years on from closing Nomad to external capital, the fund has achieved an average twenty percent return for twenty years.
There is certainly more to life than investing. Caring for the environment, supporting society and helping others less fortunate helps make the world a better place. The rewards of investing are often non-linear, rarely are they commensurate with the commitment, dedication and work required to achieve them. They are unique to the world of investing and with thoughtful application they can support the foundations of a better world.
“My luck was accentuated by my living in a market system that sometimes produces distorted results, though overall it serves our country well. I’ve worked in an economy that rewards someone who saves the lives of others on a battlefield with a medal, rewards a great teacher with thank-you notes from parents, but rewards those who can detect the mis-pricing of securities with sums reaching into the billions. In short, fate’s distribution of long straws is wildly capricious.” Warren Buffett
“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.” Nick Sleep
One of my favourite sayings is, ‘You can’t take a pin with you.’ Money won’t deliver happiness. Meaning will, however, and many of the world's greatest investors have recognised this. Below are some of the random musings I’ve collected over the years.
Giving Pledge
In 2010, Bill and Melinda Gates and Warren Buffett created the Giving Pledge, a movement of philanthropists who’ve committed to giving the majority of their wealth to philanthropy or charitable causes, either during their lifetimes or in their wills. In addition to Buffett, many of the Investment Masters have also signed the pledge, including Ray Dalio, Paul Singer, Paul Tudor Jones, Chris Hohn, Bill Ackman, Jim Simons, Mario Gabelli, Seth Klarman, Jeremy Grantham, Ken Langone, David Rubenstein, Tom Steyer, T. Boone Pickens and Julian Robertson.
It’s quite possible Warren Buffett will be remembered more by his philanthropic endeavours than his investing acumen.
“Gifting to Bill Gates his wealth to take on, that was the greatest achievement of Warren Buffett. He’s respected as an investor, but he should be more respected as a philanthropist.” Chris Hohn
Life Lessons
Studying the world’s greatest investors offers not just lessons in investment but lessons for living a successful and fulfilling life. While Buffett is beyond rich, he chooses to reside in a house purchased in 1958 for $31,500, whose value today reflects less than 0.001% of his wealth. Buffett’s favourite restaurant is the low-key local Omaha steak diner, Gorat’s, while his favorite meal remains a burger washed down with a can of Coke.
“I think it’s also probably surprising to people that the money doesn’t matter to him. He made the money sort of by accident because he was really good at doing what he loved, and when you do that particular thing really well, you end up with a whole bunch of money. But it’s really true that he does not care about having a bunch of money.” Susie Buffett [Warren’s daughter]
“When I look at a bunch of stock certificates in a safe deposit box that were put there 50 years ago or so, they have absolutely no utility to me; zero. They can’t do anything for me in life. I mean they can’t let me consume 7,000 calories a day instead of 3,000. There’s nothing they can do. I’ve got everything in the world I want, and I’ve had it for decades. If I wanted something additionally, I’d go buy it.” Warren Buffett
“I could have 10 houses, but, you know, I could buy a hotel to live in, you know. But would I be happier? It would be crazy. Charlie and I both like fairly simple lives.” Warren Buffett
Purpose
People need purpose and meaning in life. One of my favourite books, ‘Man’s Search For Meaning’ was written by Viktor Frankl, a survivor of the Nazi concentration camps. His experience at Auschwitz reinforced a key idea: life is not a quest for pleasure, but a quest for meaning. The greatest task for any person is to find meaning in his or her life.
Frankl’s insights are echoed in the empowering stories of James Stockdale and Eddie Jaku. Stockdale was a vice admiral in the US Navy who endured seven and a half years as a Prisoner of War - tortured, isolated in solitary confinement and restrained in leg irons - after being shot down above North Vietnam. Eddie Jaku, also a holocaust survivor, endured seven years of unimaginable horrors across Nazi concentration camps in World War II.
While each of their stories was forged in the extremes of terrible suffering, they highlight a common theme - mankind’s need of purpose.
Inheritance
Without purpose, one’s life lacks meaning. Most people cherish the idea of inheriting a fortune, yet there can be a ‘dark side of wealth’. Another favourite book is ‘Fortune’s Children - the Fall of the House of Vanderbilt.’ In 1877, Cornelius Vanderbilt was the richest man in the world. Fifty years after his death, one of his direct descendants died penniless, and no Vanderbilt was counted among the world’s richest people. The story recounts an extravagant lifestyle of spending by his heirs but also the misery, burden and loneliness that inherited wealth can inflict. By his early sixties, Vanderbilt’s son confessed to his family..
“The care of $200,000,000 is too great a load for my brain or back to bear. It is enough to kill a man. I have no son whom I am willing to afflict with the terrible burden. There is no pleasure to be got out of it as an offset - no good of any kind. I have no real gratification or enjoyments of any sort more than my neighbour on the next block who is worth only half a million. So when I lay down this heavy responsibility, I want my sons to divide it, and share the worry which it will cost to keep it.”
This hasn’t gone unrecognised by many of the world’s most successful investors and business owners.
“I think Kay Graham was quoting her father at the time but — some years back as saying, ‘If you’re quite rich, probably the idea of leaving your children enough so they can do anything, but not enough so they can do nothing, is not a bad formula.’” Warren Buffett
“If you have a lot of money, giving all your money to your kids is a mistake which will deprive them of self-achievement. I’ve given my kids a reasonable sum of money. One made it all on his own, one needed it because he’s a scientist, didn’t make a lot of money, but I wouldn’t give all my money to my kids, it’s just so damaging.” Leon Cooperman
“You can always give all your money to your children, but usually people who inherit great sums may not be as productive citizens as people who don’t inherit as much.” David Rubenstein
“I’m not a big fan of inherited wealth. It generally does more harm than good.” T. Boone Pickens
"My children are in a privileged position. I am willing to give them enough help to do something, but I am not willing to give them enough help to do nothing. Because it would destroy them." Terry Smith
“Do you really want your children to be like those who thought themselves your betters while you struggled? Letting them have too much money is really a lot worse than letting them have too little. I've watched family after family destroyed by excessive distributions to descendants, and by family patriarchs' and matriarchs' attempts to be able to control others' behavior from the grave. With wealth comes power. With power comes the ability to damage. Gifts and inheritances influence those you love most. Inheriting too much money at one time destroys initiative, distorts reality, and breeds arrogance. When the money runs out - as it always does - those left bereft of cash can't cope.” Michael Bloomberg
“We will make sure we’ve given most of our money away by the time we die, with the exception of what we leave to our kids. We want to pass along enough for them to live reasonably well, but not so much that they can do anything foolish with it. We want them to have a roof over their heads, but we also want them to have the meaning in their lives that comes from having to make their own way.” Ken Langone
“Why should men leave great fortunes to their children? If this is done from affection, is it not misguided affection? Observation teaches that, generally speaking, it is not well for the children that they should be so burdened.” Andrew Carnegie
“Inherited wealth is as certain a death to ambition as cocaine is to morality.” William Vanderbilt
Possessions
We live in a society that encourages consumption and materialism. Keeping up with the Jones’ has been a long held ambition of many. The sad truth of this matter is that it’s impossible to keep up; when everyone is striving for more, there is no finish line and the race is eternal. Personal possessions will only keep accumulating over time.
“Possession’s don’t bring anybody happiness and most people don’t believe it until you experience it. Your possessions in many ways can become burdens.” James Dinan
“Money is a wonderful commodity to have, but the more one possesses, the more involved and complicated become his dealings and relationships with people.” John P Getty
“We should have guys like Sir John Templeton, Warren Buffett, Charlie Munger as examples to all of us. The legacy of these men should be the focal point of our lives because it doesn’t take long to realize that money buys nothing of value. Everything that is truly worthy is free. That lesson comes hard to some people, but the sooner it comes, the better.” Frank Martin
“Some material things make my life more enjoyable; many, however, would not… Too often, a vast collection of possessions ends up possessing its owner.” Warren Buffett
“The first thing you could do [with money] is you could pleasure yourself. You could buy a plane, you could buy cars, you could buy homes, you could buy art. If you’re an art collector you never have enough money because you can spend $100 million on one canvas. I don’t collect art and I happen to have a view that material possessions brings with it aggravation. I’m a less is more kind of guy.” Leon Cooperman
Health
This one speaks for itself. There’s no such thing as the richest man in a graveyard, so you better ensure you look after yourself while you’re alive.
“A healthy man wants a thousand things, a sick man only wants one.” Confucius
“Stay fit. You don’t want to get old and feel bad. You’ll also get a lot more accomplished and feel better about yourself if you stay fit. I didn’t make it to 91 by neglecting my health.” T Boone Pickens
"You get exactly one mind & body in this world & you can't start taking care of it when you're 50. By that time you'll have rusted out if you haven't done anything. You should really remember you've got just one mind & body to get through life with & do the most with it." Warren Buffett
Time is Money
Time is one of those rare finite resources. We only get so much of it, and regardless of how much money we have, we can’t buy more. So it becomes infinitely more valuable than any possession or trinket.
“If you asked me to trade away a very significant percentage of my net worth, either for some extra years in life, or being able to do, during those years, what I want to do, you know, I’d do it in a second.” Warren Buffett
“Many times over the years, I was fortunate enough to speak at student commencement ceremonies, and that gave me the chance to look out into a sea of the future and share some of these thoughts with young minds. My favourite of these speeches included my grandchildren in the audience. What I would tell them was this Depression-era baby from tiny Holdenville, Oklahoma — that wide expanse where the pavement ends, the West begins, and the Rock Island crosses the Frisco — lived a pretty good life. In those speeches, I’d always offer these future leaders a deal: I would trade them my wealth and success, my 68,000-acre ranch and private jet, in exchange for their seat in the audience. That way, I told them, I’d get the opportunity to start over, experience every opportunity America has to offer.” T. Boone Pickens
Last year, I was saddened by the loss of Jon Boorman, who died of cancer. I didn’t know Jon but I enjoyed his financial posts on twitter. He seemed to have his priorities right. He wrote this before he was diagnosed with cancer. He was a real stoic.
“When you’re young, you have so much time but never enough money. When you’re old you have money but never enough time. How you perceive and value time and money will change many times throughout your life, but at the end there’s only one you’ll want more of, would give anything for, but it won’t be available at any price. Cherish it while you can.” Jon Boorman
Pleasure
Many of the Investment Masters have chosen to give away their money while they are alive. Helping others gives pleasure and investors can direct the funds where they feel they’re most needed.
I enjoyed a recent Forbes article, ‘The Billionaire Who Wanted To Die Broke . . . Is Now Officially Broke’ which recounts the story of Chuck Feeney, the former billionaire co-founder of retail giant Duty Free Shoppers, who pioneered the ‘Giving While Living’ approach while donating over $8 billion to worthwhile causes.
“I see little reason to delay giving when so much good can be achieved through supporting worthwhile causes. Besides, it’s a lot more fun to give while you live than give while you're dead.” Chuck Feeney
Many of the Investment Masters have chosen a route similar to Chuck Feeney.
“You know, I get a lot of pleasure out of doing these things and if I didn’t do them and I died with more money, would I be a happier person? I don’t think so.” David Rubenstein
“Hopefully, we would live long enough to also see the consequences of our [charitable] actions; we would have to eat our own cooking, as it were. Previous generations that retired in old age and died soon after, have not always had that opportunity.” Nick Sleep
“Over the years, the emotional and psychological returns I have earned from charitable giving have been enormous. The more I do for others, the happier I am. The happiness and optimism I have obtained from helping others are a big part of what keeps me sane.. I get tremendous pleasure from helping others. It's what makes my life worth living.” Bill Ackman
“Philanthropy has had a huge role in my life. It’s brought me great joy. I give money away because I love the joy of watching lives change and being able to shape things. I don’t feel guilty about the money I made but I do think it’s strange that I’ve gotten the financial remuneration I have versus a doctor. If I can take that money and raise the the prospects for the American Dream in underserved neighbourhoods, provide scholarships or work on the environment it just brings great joy.” Stanley Druckenmiller
“When we make charitable gifts, we almost always feel richer, not poorer, for having been given the opportunity to help.” Seth Klarman
“We find the execution of our philanthropic work to be both challenging and deeply satisfying.” Jim Simons
“We think it is true that, once past X-amount, real meaning comes with reinvesting in society through charitable giving, which can also be a thoughtful, challenging, wonderful adventure, but with the added bonus that it feels like the world working properly.” Nick Sleep
A desire to donate through their lifetimes is the recognition that problems can sometimes compound faster than capital.
“Our current expectation is that within the constraints of the vagaries of fate, we will spend down most of our philanthropic assets in our lifetimes. One key observation is that society’s problems seem to be compounding as fast as or faster than wealth can compound, suggesting a greater urgency to current funding.” Seth Klarman
After Life
“I realised how rich I had become and I asked myself, ‘Do I really want to be the richest person in the cemetery?’” David Rubenstein
“There’s no Forbes 400, you know, in the graveyard.” Warren Buffett
Summary
The exponential pay-off unique to the investment industry can afford it’s most successful practitioners the capability to make a difference in the world. While every successful investor takes their own approach, there are lessons that can be drawn that relate to not just investing, but leading a more fulfilling life.
Investing is only a small piece of the pie.
Charlie Munger, with his 97 years of accumulated wisdom, teaches us in his characteristically shrewd way that a successful life requires stretching beyond investing.
“If all you succeed in doing in your life is to get early rich from passive holding of little bits of paper, and you get better and better at only that for all your life, it’s a failed life. Life is more than being shrewd at passive wealth accumulation.” Charlie Munger
“If you’re good at just investing your own money, I hope you’ll morph into doing something more.” Charlie Munger
Leon Cooperman encapsulated this nicely in his letter to the Giving pledge:
“I feel it is our moral imperative to give others the opportunity to pursue the American Dream by sharing our financial success. The case for philanthropy has been stated by others in a most articulate way and in words that have impressed me: In the early 1900's Andrew Carnegie said "He who dies rich, dies disgraced." In the 1930's, Sir Winston Churchill observed that "We make a living by what we get, but we make a life by what we give." In 1961, President John F. Kennedy in his inaugural address stated "Ask not what your country can do for you, ask what you can do for your country." Well before all these gentlemen expressed their thoughts, it was written in the Talmud that "A man's net worth is measured not by what he earns but rather what he gives away." Leon Cooperman
The idea of being able to answer the question of, ‘What’s enough?’ remains anathema to many. But not to these few altruistic investors who like Sleep and Zakaria, have determined their X-amount and chosen to pursue more meaningful lives beyond investing.
Sources/Further Reading:
‘X-Amount’ - The I.G.Y Foundation. Nick Sleep & Qais Zakaria. 2021.
‘The Giving Pledge - A Commitment to Philanthropy.’
‘The Billionaire Who Wanted To Die Broke . . . Is Now Officially Broke.’ Steven Bertoni, Forbes. 2020.
‘The Billionaire Who Wasn’t - How Chuck Feeney Made and Gave Away a Fortune Without Anyone Knowing,’ Conor O’Clery, 2007.
Follow us on Twitter : @mastersinvest
TERMS OF USE: DISCLAIMER