Even though he hasn’t been very successful in his own investments, Billy Joel explains the feelings of those who do participate in the common stock market. Investment returns are really earned when the markets are going against you, not when they are going your way. Many managers who run a high-conviction and low-turnover stock picking discipline will run into situations “Where the only thing you feel are loaded guns in your face.” One of the all-time great investors, Howard Marks, put it this way:
“I’d say the necessary condition for the existence of bargains is that perception has to be considerably worse than reality. That means the best opportunities are usually found among the things most others won’t do. After all, if everyone feels good about something and is glad to join in, it won’t be bargain-priced.”
When investors are making money in sectors and industries you are not participating in, you feel incredible pressure to conform to the crowd. Jeremy Grantham describes successful investing as opening yourself up to career risk. Grantham argues that you must be willing to stand against the crowd in a way that makes investors feel incredibly uncomfortable and run the risk of losing some of your investors along the way.
“Vienna” 1977
Billy Joel reminds investors to have patience:
“Slow down you’re doing fine
You can’t be everything you want to be before your time
Although it’s so romantic on the borderline tonight (tonight)”
He argues for reduced portfolio management activity:
“Slow down you crazy child
Take the phone off the hook and disappear for a while
It’s alright, you can afford to lose a day or two (oooh)
When will you realize…Vienna waits for you?”
He reminds investors that long-duration investing is a marathon:
“But you know that when the truth is told
That you can get what you want
Or you can just get old
You’re gonna kick off before you even get halfway through (Oooh)
When will you realize…Vienna waits for you?”