We believe Billy Joel’s art offers very good advice for long-duration common stock investors. First, the economy of the U.S. will include its share of creative destruction and carry a short-run human toll as it makes its changes over the years. Second, those who let major political, economic and social upheavals chase them away from owning good quality common stocks have damaged their returns historically.
Finally, we believe successful execution of portfolio management must include significant time stretches where the pressure to conform to the crowd of investors and to their beliefs will produce extreme discomfort to the high-conviction portfolio manager. Lastly, Vienna, in this case, represents the ultimate goals of long-duration common stock investing. It means meaningful long-term outperformance versus both peers and benchmark indexes. We’d like to think ‘Vienna’ is waiting for us.
William Smead is CEO and chief investment officer at Smead Capital Management.