来源：微信公众号【Dan Ventures】
引用：Podcast 【In Good Company】｜ 挪威主权财富基金
重点概要
当前经济和仓位
做宏观时，会自下而上，听公司的情况，目前认为： 未来3～6个月，美国经济不会有什么衰退问题 通胀可能会再起来 金融条件宽松 川普当选 经济恢复比预期好 美联储为什么这么早开始降息？“前瞻指引”的问题？美国赤字问题？ 美联储过度执着于“软著陆”。 “前瞻指引”束缚了美联储的灵活性（如果轻易改变立场，美联储会担心失去市场公信力，所以美联储倾向于不认错） 国家债务攀升，赤字上升不可能永续；如果出问题，大概率至少要等到25年底或26年初。 认为如果通胀再次上行，经济没什么问题正常增长，美债10年期收益率可能会到6%～7%（接近名义增长率，即4.5%左右的通胀预期 + 2.5%～3%左右的实际增长率）。 目前空美债的仓位不大不小；等待进一步迹象，确认后再考虑增加仓位。 认为股市目前处于黄灯区，还没到红灯区。 金融条件宽松，上涨股票虽然不多，但是比今年4月份要好很多。 科技股方面，AI很热，很多企业都在布局投资这个方向，但估值贵。自己目前没什么参与。 看好AI，但是目前不知道怎么合理参与，类似2001的情形，应用层面不知道最终谁会跑出来，参与方式倾向于随着时间慢慢增加敞口，类似2001年以后参与投资互联网公司那样。
投资方法论
不会像巴菲特那样买公司，能拿20年，通常看2～4年的趋势；目前在寻找和关注AI应用层的机会。 关于“先买再分析”的方法【即，索罗斯的“先投资再调察”】的方法： 先参与，然后再深入搜集信息和研究分析（强化了研究的立场）；等研究透了再进去，可能就已经错过机会了。 发现错了，清掉仓位就好了；发现没错，再根据情况加仓。 非常依赖图表（技术分析）和直觉。 一再强调投资要考虑18～24个月后，一定要想象18～24个月后的情形是什么样子，会不会不一样，证券价格到时候会怎么反应，千万不能只看当前，投资人特别容易犯这个错误。这一方面再怎么强调重要性都不为过。 关于卖飞Nvdia： 其实并不倾向于卖飞标的，Nvdia是个例外，是犯的错误。 通常会看技术图形，看到顶已经形成了才会卖，Nvdia没有出现技术上的顶就卖了。 不介意卖不卖飞，以更高的价格重新买回上车，对自己来说也很正常。 会围绕核心主题，灵活交易，主题兑现则尽量“一鱼多吃”，“狙击英镑”的案例就是很好的说明： 英国经济下滑，德国经济上行，所以狙击“英镑”，通过押注交易“英镑-马克”脱钩表达 英镑脱钩（已完成核心交易），当时英国国债顺势下跌，股市大幅下跌；他则开始建仓多头英国国债和英国股市（原因：市场认为外汇崩了，需要提高利率；实际上，英国经济的复苏更需要低利率，所以应该买入英国国债，而低利率和英镑贬值其实是有利于英国股市的，所以应该买入英国股市） 认为在投资市场，机器AI不会取代人，伟大的投资人会在【人+机器】协同模式下诞生。 自认为取得投资交易成功的几个方面： 不受情绪影响 买入的股票如果不成立，不在乎买入价格是多少，无论如何都会卖掉；如果成立，也不在意以更高的价格再买回卖出的股票。 有足够的自信，清仓后调整回清醒状态再来，且经常如此；出局就是出局了，不会焦虑。 自己少有的没做到不受情绪影响的案例，形成了之后的反思： 持续学习，扩大知识储备；保持交易竞争力，每年将自己的业绩与市场的机会集比较。 开放心，灵活，谦卑；尊重、顺应和驾驭人性。 不执着于仓位 不惧怕集中重仓 置信度高的仓位，一定要重仓到极致 倾向于参与趋势相对更确定的中间环节，有非常大的勇气在这个阶段重仓加杠杆 多资产类别规划交易（市场不缺重仓机会，比如：权益市场不行，通常固收和外汇市场行，还有大宗商品） 围绕核心主题，灵活交易，主题一旦兑现，则尽量“一鱼多吃”。 对错不重要，重要的是：对的时候赚多少，错的时候亏多少。
采访稿
以下采访稿由Merlin AI生成。
Nicolai Tangan: Hi, everybody I'm Nicolai Tangan the CEO of the Norwegian Sovereign wealth fund and today I'm here with Stanley Druckenmiller, a proper legend in the investment world. Stan, what a pleasure to be here.
Druckenmiller: Happy to see you Nicolai.
Nicolai Tangan: Now, what are the most important data you're looking at these days?
Druckenmiller: Interestingly enough, I'm known as a macro investor, but I do macro from the bottom up, so we're listening primarily to companies and we're not seeing any material signs of weakness other than maybe in the housing market, but that's from a very elevated price level. So we're not seeing bottom up in information, indicating to us that there's an economic problem anytime in the next 3 to 6 months. I would also say, I'm revealing now that I'm more of a market animal than an economist that we look at Financial conditions, they've been very very loose. I mean they're looser and looser than they were. The FED actually started tightening, they've tightened considerably in the last four or five weeks ever since, the ironically, the FED cut, because the dollar has rallied and obviously interest rates have gone up, but they're still quite above normal, so that's pretty much the data we're looking at. I'd say the other thing I'm focused on. I've been obsessed with whether we were in the 70s, really since 2021, when this whole inflationary episode started and I'd say two years ago or a year and a half ago, I was very confident that inflation was going to come down, which I was right on, but I was worried about the economy, which I was completely wrong on. More recently, and you can take this...since I had one right and one wrong there. I've switched to being more worried about inflation going forward than the economy itself. Why do I say that? If we go back to the 70s, there was an episode with OPEC that set off an inflation, you had a recession and inflation came down I think from about 8 to 3 and then went back up again. What's bothered me and what I have wanted to say it went back up again and then a number of months would correlate to the bottom being right about now. So my confidence a year, a year and a half ago was we're going to have that period where we came down again and then we'd see and I'm a little worried that the FED has declared Victory too early. I don't have conviction like I had in 21 that inflation was going to go up that's when the money supply was growing 40% and all sorts of things were happening, but I also don't have conviction that they've snuffed this thing out and won the battle and to cut 50 basis points with credit spreads tight, gold at new highs, equity's roaring, no sign of weakness, material weakness in the economy. Of course, there are some spots, um, that just makes me nervous that this thing could turn up again.
Nicolai Tangan: What would make turn up again, what would be the factors.
Druckenmiller: I think, what I just said, uh, easing into Financial conditions, let's say, um, Trump wins. If Trump wins, you could have animal spirits from the business Community who are dying for deregulation, you could have tariffs which are on the margin inflationary. Immigration has been a great Boom to this country, maybe not the way it was done, but it certainly enabled us to have growth without inflation and labor materially, the last two or three years. So the combination of animal spirits, recovery doing better than it is. I'm just open-minded to it.
Nicolai Tangan: Why is it so urgent for the central bank to cut given this?
Druckenmiller: Honestly, um, I don't take the nefarious view that Powell is doing it for political reasons. I do think he's obsessed with the soft landing and I think he's obsessed with his legacy and having made the mistake made in 21 and he's being egged on by other economists in the press. To me, the fed's job is to avoid the big big mistakes, like the 70s, like the great financial crisis, like the big inflation we just had, but all this fine tuning and worrying about a soft landing that is not the job of the FED. In my opinion, it's to maximize employment for the long term, not for the next three months or the next four months, but I think the fed's obsession with nailing this so-called soft landing, I would remind everybody that the reason we're having a landing is because they let inflation go from 2%. There was no need for a landing for 20 years, but um, I think that's what they're obsessed with. I don't really know.
Nicolai Tangan: How much of a problem is, the forward guidance?
Druckenmiller: It's a huge problem, um, my friend says they're forward guidance dependent, not data dependent.Um, it's a problem because once you do forward guidance, you eliminate your optionality. Yeah, and I think, Nikolai, you and I, being in this business, we know we have to change our mind when we're wrong.This fed has shown over and over again that, they think, if they change their mind they're losing credibility. So it makes them have their hands tied behind their back.I'm wrong all the time. I think my record is mainly because when I'm wrong I changed my mind, not that I'm always right. I'm certainly not. Forward guidance seems to tie them into positions where and eliminate flexibility they need.
Nicolai Tangan: How big a problem is, the budget deficit?
Druckenmiller: As a practitioner, it's something I can't be obsessed with on a 3 to 6 months basis. As an American, it's something I'm really obsessed with, because debt to GDP can't go up forever. And to me, we have a reckoning, but I don't know how, the time when that's going to take place. I will say that because the reserve currency we've been, permitted to engage in behavior that, say, the Brits, couldn't have behaved. We haven't been losing trust, because we are the reserve currency, even though if you look at everything we're doing, it's much more radical than the Brits were doing. Yeah, um, what's that old saying, how do you go bankrupt slowly, and then suddenly running deficits with full employment at basically, at 7% of GDP, is a recipe, that can't last forever. One of the reasons we haven't paid for it is, in Covid, the entire private sector, 80% of individuals refinance their mortgages, so the average mortgage rate is still under 4%, even though at the margin, it got to 8%. Corporations termed out their debt, that stuff rolls over in 25 and 26, if we're going to have a problem, it's probably more like late 25 early 26, but you just don't know.
Nicolai Tangan: So and what is it that can create this kind of trust moment, where people suddenly change their mind in terms of the price they want to have to lend money.
Druckenmiller: It could be a failed auction, it could be, if the Fed is wrong about inflation and it turns back up again, because they're easing financial conditions into a melt up. Um, if they were to have to start increasing interest rates again, which is why I think they should be so cautious about their optionality. Um, now that they've forward guided to a series of cuts that could cause it, um, my best guess would be a failed auction. But, honestly, it could be 6 months, it could be 6 years, I just don't know.
Nicolai Tangan: So, if the rates start to go up, how high can they go?
Druckenmiller: Well, that's a great question, because right now the 10 year I guess it's around 4 and a half, it can go to nominal GDP, so let's say inflation went to four 4 and a half, and real growth was 2 and a half or 3, 10 years go to 6 or 7. I'm not predicting that, but that would be consistent, if things, if inflation, did turn back up again and the economy wasn't weakening. I think you could get there. It's interesting that's what happened in the 70s, the bond market didn't really respond until we went back up from like 3 to 12 and then it responded. I'm not predicting this, but as a practitioner, I'm very open-minded to it, and it's like on my radar well.
Nicolai Tangan: You say you make the most money from, uh, from fed mistakes, so is this the way you are positioned now?
Druckenmiller: I'm short bonds. I'm not like mega short. I actually had good timing for once. I shorted them literally the day the FED cut, um, it's been kind of an easy ride since then. I should have been much bigger, now that they move so much, I'm a little worried about, um, if any thing being too big, but yeah no, that's the way I'm positioned. If I thought what we are talking about was happening and I don't see a sign of it yet. I'm just open-minded to it. I would be much bigger. I'm like 25% nav short, uh, 10 year equivalent.
Nicolai Tangan: Moving on to the stock market, uh, the leadership is very narrow. It's led by not so many stocks, just how do you read this narrow leadership?
Druckenmiller: Um, it's never been great, but the leadership is not as narrow as it was last April. So, you're starting to get some broadening out, the financials are doing better. It's not great, we've never had a bear market start without the leadership narrowing and it's narrowing enough that you're starting to get toward a necessary condition being satisfied, but it's early, but it's a yellow light, it's not a red light, that's how I read it.
Nicolai Tangan: So how do you think the tech sector will develop? What kind of signs are you seeing there?
Druckenmiller:The AI boom is going unabated, Nicolai. I think the private sector just sees it as an existential threat to their business if they don't um spend money on it, because if they don't spend money on it and their competitors do and their competitors are right, they're going to have a big big competitive problem and of course the hyper scalers they're all in and their demand is just continuing. So look, you've got very rich prices in the tech sector, stuff like apple selling I know 25 or 30 times earnings, it's certainly not growing at 25 or 30%, but we don't have that much exposure to the tech sector and we're not short it, so not really involved.
Nicolai Tangan: But you were very early into it, um how do you spot these early trends? What is said that you look at?
Druckenmiller: Honestly, uh, I've got young, really good, analysts here, who are on top of things and they started, um, we noticed about three or four years ago that the kids that go to Stanford and MIT, the engineers were shifting from crypto to AI, that was the first sign. Then my young partners started talking more and more about AI. Uh, I asked them how to play it. They mentioned a company called Nvidia, which I thought was a gaming company. I hadn't done work on it a long time. Um, I bought a pretty good chunk of it, and then like a month later ChatGPT happened. It was just total luck, I had no idea of ChatGPT, but the AI drum around here was big enough and the stock was down, I think from 400 to 150 or something. So, that's how I got started in it.Once we invest in something like that, then we really start to dig deeper and then there was a whole chain of things. We knew it would affect power, we knew it would affect uranium, we just went through the whole chain and it was a pretty easy trend to spot, not not, unlike, um, the cloud was. You know these things come in waves, but AI, the question with AI now, that I'm wrestling with, and the reason our exposure is really neither long nor short, is how to play it, because we started with pix and shovels which is Nvidia, and to some extent, um, Microsoft. But now, we're seeing just massive amounts of capital being spent by these modelers and if AI is for real and I think it is, they're all going to give you the same answer. So, we're going to have four or five companies will spent masses amounts of capital, but I don't see it as a win or take all model. On the other hand, I think applications, um, that I haven't even thought of and nobody's thought of they're going to spring up. I mean who would have thought of Uber or Facebook when the internet started, so we're very bullish on AI, but we're not bullish currently on exactly where we're supposed to be and how to play it aggressively, not unlike the internet in 2001, you could have believed in the internet, not been exposed, and then got your exposure on a more timely basis or I could just be wrong which is wouldn't be that unusual.
Nicolai Tangan: But, you were also early into the anti-obesity drug producers.
Druckenmiller: Oh that was easy. I mean, I don't know what it's like in Norway, but in America, yeah, if you go to Disney World, everything and if you know the American psyche, if you know an American, they got a way to lose weight without doing any work, and, uh, I knew the drug worked early on, just because we were exposed to it. But I, and then when I heard, if you get off the drug, you gain the weight back. Then I knew, it was sort of a razor blade business, cuz people would have to stay on the drug.
Nicolai Tangan: Yeah, hey, it's not like you're the only one who is walking around in Disneyland and looking at these kind of things, right. So, but you, actually act on your intuition or all the data that's in front of you.
Druckenmiller: I do. But, it's you know, it's not all brilliance. I bought Nvidia very well, but I sold it 8 or 900 right? When the party was really getting going and I sold my Lily in the high 700s, granted had a nice profit. But, yeah, I look for big trends. I'm not a Buffet guy, that holds for 20 years, I look for 2 to 4 years stuff, and both fit into that category and frankly we're looking now for AI applications, that might not have been recognized yet. I think I'm on the board of ....., have been for almost 30 years and the applications in cancer are unreal.
Nicolai Tangan: And just FYI, the ..... is the leading cancer hospital in the world, yes and they have a lot of money in the endowment, partly because you are on the board, or the investment committee.
Druckenmiller: Well, they have a lot of money in their endowment, and I wouldn't say partly because I'm on the board, but thank you.
Nicolai Tangan: Now, um, when we last met, you mentioned the concept of buy first analyze later, tell me about that.
Druckenmiller: Yeah, Soros used to call it invest and then investigate. I think I just gave a classic example. I didn't know that much about Nvidia. I just knew that AI and I had some people here tell me how to play it. So, we bought Nvidia and then we we were in the process of doing a lot more work and then ChatGPT, and but I've always had the view that markets are smart, they're fast and they're getting much more so, with all the communication and the technology we have today. And that, if I hear a concept, and I like it, uh, if I wait and spend two or three months analyzing it, I may miss big part of the move and then psychologically be paralyzed. It's hard to buy a stock you're looking at 100, it's 160, even if it's going to 400. Somehow, your head is screwed up, and you're waiting for the pullback. So we will buy something a meaningful position, but not Earth shaking, and then really do the work. And if I think we made a mistake, I'll sell it. And if I don't think we made a mistake, we'll add to it if we have to.
Nicolai Tangan: I happen to have worked exactly the same way, uh, in my life. It really focuses in your your work and your efforts, your thinking, but have you always believed in your own pattern recognition?
Druckenmiller: Yes. When I started in the business, I got promoted too early, so before I had really learned the nuts and bolts of the analysis to the extent that I should have. I was promoted to a leadership position and I had to rely a lot on charts and I had to rely a lot on intuition. But, I found it's not that hard if you're dealing with a cyclical company and they're losing money or they're not profitable and everybody in their industry is shutting capacity down. It doesn't take a rocket scientist to try and envision 18 to 24 months out if nobody's adding in capacity, they may not be losing money anymore, they might be making a lot of money.I have found it's very important never to invest in the present, always try and envision the situation as you see it in 18 to 24 months and then see if if you feel things would be differently than they are now, would security prices reflect that. I think that's probably the biggest mistake investors make, is they invest in the present rather than forward looking.
Nicolai Tangan: Yeah, now, um, a few people believe in other people's gut feel. Did Soros believe in your gut feel? or did you have to show him analysis?
Druckenmiller: Soros and I had a rocky start. I went there, I had some, uh, significant success running public funds. He told me I was his successor, but I don't really think his mind was completely made up. When I got there and the first 6 months were quite Rocky, because it wasn't clear who was in charge. Um, frankly, we're both trading badly and I was flying to Pittsburgh cuz I still had Duquesne. I was running both and, um, when I got off the air plane, I think we had pay-phone back then, we didn't have cell phones and, uh, the head trader there told me, he had sold out my bond position, so I probably had a higher opinion of myself at the time that I should have. I was young and I had always been in charge, so I was quite upset and uh, basically, uh, expressed extreme displeasure and he said we'll talk about it when you comeback to New York, um, implied that I wanted to quit and he said that, uh, maybe there were too many cooks in the kitchen and he was going to Eastern Europe for four or five years. He'd be out of touch and then he'd find out whether he had been in my hair or if I really was incompetent. That's sort of the way he talks, the way we think except he actually says it. And luckily for me, while he was gone, the Berlin Wall came down. I invested in the Deutsche Mark, but I think it was lucky for both of us. I went on like the best run I've had before or since for like four years. So, he kept seeing the results, so I think he trusted my intuition only because the record started that way.
Nicolai Tangan: Do you trust the intuition of your colleagues now?
Druckenmiller: I trust their analysis. They're so much deeper and better at analysis than I was. Um, but I can see the intuition developing, that, uh, I'm probably as bullish on the talent, the equity talent, in my firm, as I've been in 45 years so. They're not as intuitive as I am, because it'll have to be. I was sort of forced to be intuitive, because I don't, I never, acquire their analytical skills.
Nicolai Tangan: You mentioned some examples of where you had sold, um, a bit early. Do you generally sell early?
Druckenmiller: No. I mean embarrassingly I did an interview on Nvidia, I think it was like 370 or something, and I said this is one we're probably going to own for a few years, but I didn't think it was going to go to 900 in a year, uh, and to over a $2trillion market cap. I think it started like 100 billion or 150 billion it was something crazy.Um, so no, I don't necessarily sell early. I'm a technician, so I usually wait for tops. Um, Nvidia had no top. A top is something, the rate of change of it, is going up, changes. And, it tends to flatten out for quite some time, the trick is, in the technical world, that could end up being a bull flag, where it just consolidated for a bit, and then did a new leg or it could be a top, where that was it. You don't know what's it. You have an opinion and um you express it, and sometimes you're right and sometimes you're wrong. With Nvidia, um, there was no top, but I just, I've analyzed the semiconductors industry not particularly well, but since the1970s and it's a cyclical industry. And, I knew Nvidia had staying power and they had 4,000 software Engineers. So it wasn't just Hardware, you know, they have a Cuda, this thing called Cuda software that they do, to make their GPUs, but I just thought once it went through two trillion, this is just too much and worst case it'll have a big correction, and I'll get another chance and of course I didn't get another chance. I don't know, from this price, I assume I will or would have bought it back.I don't mind buying something back higher than I would. I don't like it, but I'm perfectly willing to buy something back higher than I sold it.
Nicolai Tangan: Some people can't get themselves do it.
Druckenmiller: Oh, I can. I'm, the one thing I'm strong on, is I'm not emotional.
Nicolai Tangan: But, um, you never had a down year. Why is that important?
Druckenmiller: No good reason. I think it's it's important, because other people talk about it and uh my investors loved it. You know they have this stuff in our industry, you know called risk weighted return. I'm not big on that, but I will say it's a stressful job and there's less stress if you don't have big drawdowns. I have had significant drawdowns in inner-year. So, part of the down year is just luck.
Nicolai Tangan: What does a drawdown do to you.
Druckenmiller: I get, uh, anxious, upset.
Nicolai Tangan: Uh, you get upset even though it's only your money.
Druckenmiller: Yes, yeah. I'm just, um, I'm a very competitive person even if it's just my own money. I wish I wasn't, but I am and uh it's probably one of the reasons my results are as good as they are. But, I prefer myself not to be, um, it's a bit of a sickness, but it works for me.
Nicolai Tangan: Who do you compete against?
Druckenmiller:I compete against what I would call the opportunity set. And if there was a great opportunity set that year, and I missed it, um, I'm disappointed in my myself. Like, if I'm up 20 and I think I should have been up 50, I'm disappointed in myself. If the opportunity set was basically to be up 10 or 15, and an up 20, I'm thrilled.
Nicolai Tangan: You, um, are quick at selling your losers, what's the key to that?
Druckenmiller:If the reason I bought a stock is no longer the case, I don't care what I paid for it. And if I bought it at 60 and it's 50, because the markets discovered the problem before me, I have no emotion whatsoever. Um, Soros was the same way, I didn't really learn it from him, but it was certainly reinforced. Like after a while, Nicolai, you will develop enough confidence that you're not afraid to clean the slate, and start over, cuz you have the confidence that you'll be successful again and you're not going to sit there in a lazy position that you're not that sure about anymore. Just clean the house, and if you've been doing it for decades, and it's worked, you kind of have the confidence to take a loss and not worry about it too much. Once I'm out I'm out.
Nicolai Tangan: You said you don't have feelings. What do you what do you mean by that?
Druckenmiller: You mean about taking losses? What I mean by that is I think one of the reasons charts work. We have the reason, there's support and there's, um, resistance. The resistance is a bunch of people that bought it at 60 and it went down and they've been waiting for three or four years for it to get back to 60, while they could have been in something else that was going up the whole time, um, I just don't care what I paid for a stock. It's absolutely irrelevant, uh, in terms of my investment process going forward.
Nicolai Tangan: Now, this, uh, combination of being, on the one hand stubborn, but other hand being able to change your mind, it's pretty rare.
Druckenmiller: I'm told it is, yeah, I told by my friends and other investors that I'm entirely unemotional. And like, yes, I am told it's rare.
Nicolai Tangan: Is that the key to your success you think?
Druckenmiller: One of them, I I think. I think it's a big part of it. I think, again, um, being open-minded and having humility. The only reason you can change your mind is, if you're not arrogant about a position, has mattered. I think I had some great mentors, the one in Pittsburgh, and then Soros in terms of sizing, and I think I learned some lessons very early on. Uh, concentration, not to be afraid of concentration, that's a big reason for my success and probably the other big reason was sort of self-taught, is being willing to go into other asset categories. And, if you're going to concentrate, it's better to have five buckets to plan than to plan one. So, I was brought up in the equity market, but sometimes the risk reward in the equity market is not that clear, when it actually is clear in the bond market or the currency markets. And, it's a coincidence, you asked about never had down year, part of it, is the most action in bonds and currencies tends to happen in bear markets and equity markets. So, you can put the equities in the drawer for a while, and just concentrate in those markets. I think, that's been a huge part of my successes. It gives you the discipline not to play in areas that you don't have a lot of conviction in, because if you got credit to play in, if you got commodities to play, in currencies or bonds, you can usually find something that you think there's a great risk reward. It's also they tend to be more liquid than equity markets, so to our earlier conversation, you can change your mind when you're wrong.
Nicolai Tangan: What do you learn about sizing from Soros?
Druckenmiller: I don't know whether you know about baseball at all or would your listen about. When I went to Soros, I thought I would learn what would make Deutsche Mark go up and modestly I found I was better at that than him. Um, in baseball terms, I had a very high betting average, he had a much higher slugging percentage. Um, so what I learned from Soros is, when you have conviction, you should bet really big. I know your listeners have probably heard it before, but probably the best illustration is the pound. So, I'm in the office in New York and Scott Bessent, um, who was a partner of mine in Europe, mainly trade the European area. He's in London and he tells me the London housing market is in big trouble and the British economy is in trouble. Economies at the time, it's very much driven by housing and so forth. The UK economy is going down. But I need to take you back about 3 years, when the Berlin Wall came down. It probably saved me my job, cuz, I probably would have been fired at Soros, 6 months after he went to Eastern Europe, had the Berlin wall not come down. But, um, the Deutsche Mark went down for two days dramatically, because the theory in the market was the Osmark which was the East German currency, was going to pollute the Deutsche Mark. I knew German history, and knew they were obsessed with inflation, because the Weimar Republic, and then that led to Hitler and so forth and so on. So, I knew the Germans were absolutely obsessed with inflation. I knew that all bringing all these East Germans into the labor supply, was going to cause a boom in the economy. So we were very bullish on the overall German economy and we were very convinced that there is no way the Bundes Bank would let inflation, so we're very convinced, it would be accompanied by tight monetary policy, so we had shorted the Italian Lira successfully, um, during that period. So, when Scott called me, we were already sort of on this D-Mark journey. We've been for a few years and the British economy is going down and new currencies are linked, so it was a peg. So, um, I called and asked how much it would cost me to short the pound versus the D-mark for six months, it was a half percent. I think the fund was around 7 and a half billion at the time, Quantum fund, and I decided to do an invest and then investigate position, so I did a billion and a half or like 20, 25% of the fund short the pound, long the D-mark, figuring I'd probably lose a half percent, because it's a peg and it won't break within 6 months. But I wanted the position on. Fast forward, probably about five or six weeks, the day I believe was September 15th, not that I would remember, um, I read the financial times and the head of the Bundes Bank, now I'm sure, I'm aging, but I'm pretty sure, it was ... has written an editorial in the financial times, basically in more proper language, but he's basically saying that the D-Mark and the pound should no longer be linked. So, I decide to take Duquesne and the Quantum fund to 100% long the D-Mark, short the pound, because it's still a half a percent unbelievably. Now you're going to hear vintage, Soros, so he happens to be in New York at the time which he wasn't always. I go into his office and I explain to him why I'm going to 100%. And he had a rather large personal account, that's how we kept each other out of each other's hair. He traded that and you know it was 90, 95% overlap. Told him, why I was doing this and he had this, um, unpleasant puzzled look on his face when I'm telling him my thesis that this one economy is booming and they need higher rates, this other economy is falling apart, they need lower rates, that's these two currencies shouldn't be linked and I'm thinking what does he not understand about this, because this guy pretty much understood everything and he says, uh, look this is, uh, this is a one-way bet, they come along very very rarely, it's ridiculous doing 100%, we should put 200% of the fund in this trade. So there you have it. He thought we should have $15billion short the pound long the D-Mark. Um, it turns out we never got there, but it shows the way the man thinks. When I started selling it that night, I noticed a lot of other hedge funds started selling at the gossip community and the currency markets and by midnight to 1:00, the forwards had blown out they'd started at a half a percent, they were like 6 or 7% and it basically wasn't trading after 1:00 in the morning, then the British raised rates, I think from 6 to 9 to try and stop the bleeding. And then, they went to 12, I knew it was over but the forward to rout so much didn't matter and it was done by noon the next day. At the time, we only got 7 and a half billion done, ironically, well I have to, had it not been for Soros, I probably would have not got to the 7 and a half, cuz, you know intending to do 15, I was in a bigger hurry. It was exciting, I didn't feel bad because I thought the British economy needed it. I was gratified years later when they changed it from black Wednesday to White Wednesday. Then I went into action after it broke because the gilts were down two points, which I thought was ridiculous. British needed lower rates. There's some theory in the Academia that if you have a weak currency, your interest rates have to go up. So I bought gilts, I bought British stocks, there was a whole, because what happened was that the currency depreciated and it was good for exports. So the stocks went up afterwards. The stocks went up, the gilts went up, because they needed lower rates and you know they'd been held artificially high. So there was all kinds of other stuff I did around it, uh, which is kind of the way I trade. You get a theme and then you look at the concentric circles or The Dominoes that fall, because of a theme and but the point was with Soros. If he really believe something, the position could be never be big enough. Particularly, if it's in a liquid market and I learned from him. I like to play the turn, maybe my ego in a big turn, in something. He was perfectly happy to play from the third to the sixth inning, if we go back to baseball terms. It's a nine inning game, he was perfectly happy to play the third to sixth inning, when there was more certainty on much greater leverage, he had more courage than I did in terms of sizing positions. I don't think it totally rubbed off on me, but it certainly helped and it it was a huge learning experience. I think the major thing I learned with him is it's not whether you're right or wrong, it's how much you make when you're right and how much you lose when you're wrong. And, that's what he was probably as good as anybody who's ever been at .
Nicolai Tangan: Any trades you regret not making?
Druckenmiller: Oh, there's trades I regret not making, um, constantly. I'd say one of the biggest mistakes I made was having predicted the inflation really early and feeling so strongly about it. I wrote apiece in the Wall Street Journal with my partner...in the spring of 21. I had a mass of short, for me, in two years, um, sort of like, we just talked about with the pound, it was a one-way bet. They were 15 basis points and I was so measured by where they'd win, where they'd been. I took most of them off at like 150 basis points, it seemed like a great win from 15 to basis point to 150, but as you know they went to 500. I regret deeply not holding that position, there's probably 30 others, but I prefer to forget my mistakes.
Nicolai Tangan: Do you think machines can take the place of humans when it comes to investing?
Druckenmiller: No, I don't. But I think they can work, um, as a co-pilot and the combination can beat anything a mere human could be. I'm lucky enough to have known...for along time. I'm co-founder of the...Chess Foundation, um, for no good reason. I can hardly play chess, my 9-year-old daughter was beating me, that's how I started with...but, um, he was probably one of the first guys to use machines to train himself and work with them. I could see the same thing happening with money management. So I don't think the pure machines they'll make money because they have a disciplined process and there's math, but I think if you could find an intuitive investor who's using AI and other things to supplement, I think that would probably be the top investor in the world, not a machine.
Nicolai Tangan: You took sabatical in 2000, yeah what was the reason behind that?
Druckenmiller: It's a painful, but really fun story. Um, it really starts in 1998, well, no it starts in the spring of 1999. I shorted, I think, it was 11 or 12 internet stocks, not the leaders like AOL or Yahoo, and I believe the position was like 600 million, so it was the first time I'd ever had a big drawdown. I was down like 16 or 17% in the spring of 99, I then pivoted and realized that Greenspan because of the Asian financial crisis, while our economy was strong and we had the internet and all this behind it, I went out and hired, um, a couple of young managers to buy tech stocks that I didn't know how to spell. They had their own little accounts, and like I would plow in on top of their positions and we ended up the year I think something like 42 net or something after being in this hole, because you know I rode this crazy stock wave in 99, so then uh in January, I just said this is ridiculous and um I sold out all my tech holdings, like I can't remember, it was like they had grown to like $billion dollar or it was enormous for that period of time and I actually went and told Soros why I had sold them out and next thing that happens, the two little satellites inside, they don't sellout, they're gamblers. I don't really care, cuz Quantum is huge and they're this little thing, they're not going to affect the performance that much, but they're making like 4 to 5% a day. I mean the market is still roaring going into March and I'm watching this and I'm getting really annoyed with myself that I'm not still in this trade and then uh around early March I can't take it anymore and I told you earlier I'm not emotional, this was a real emotional, really dumb move. Um, I buy everything back, I think I missed the top by about an hour, so I buy back all these tech stocks and within a week I know I'm dead and Quantum goes from like up 14% to up 1% in a week. And, I go in and I now I've already been through the trauma of the spring before, I recovered from it, but it it had a big effect on me, the stress I had young kids, you know, and it's like a repeat of the year before. So I go into Soros and I tell them two things: A. I'm getting out of all this stuff; B. uh, I'm quitting, um, we can't tell anybody, cuz I got to liquidate this portfolio, but the NASDAQ is in the beginning wave of a down 90% move and you can't get out. So by the time I get out, takes a few weeks. The fund is down like 17% and Duquesne is down 17% and uh I'm just exhausted. I've been running this high-profile fund for 12 years, so I sell everything out, everything of Duquesne. Send my investors a letter and say, uh, I'm going on a sabatical, I don't know whether I'm coming back or not, you can take all your money out, but if you take your money out, if I decide to comeback, I can't guarantee I'll let you back in. I think I had like 200 clients, one of them pulled their money, I remember who it was, but they'll remain anonymous for now. so I shut everything down, I go to Africa with my wife and kids and the best thing I did is during the summer I refused to expose myself in any way to something that would tell me where the markets were. So I'm not allowed to watch TV, I'm not allowed to see the Wall Street Journal prices, nothing. So I come back in labor day ,I think, my wife couldn't have handled me being around once the kids go back to school, uh, sort of humor, maybe not. Uh, so I come back and it's remarkable, because the S&P has rallied back almost to the high, the Nasdaq's retrace about 85% of the decline, but the dollar is up, interest rates are up and oil is up, three death nails for markets if you look at history. So, I then start calling all my clients who are basically small businessmen, they're not fancy institutions, and all their businesses are terrible. So, then I call Ed Heyman, and probably was the number one institutional guy, whatever that rating, Institutional Investor Economist, and um I say this is very odd and I've been out of touch. Dollars u...blah blah blah blah...and uh two days later in his daily missive, he has regression analysis and it says, um, it's 50%, I think currency, 25% oil and 25% interest rates and it looks one year forward and it predicts earnings and it's predicting that earnings are going to decline 36% the next year and the Wall Street consensuses are going to go up 18%. So, combination of that, listening to my clients, the fact that Greenspan got a tightening directive on which I think is inappropriateI, start buying all these treasuries and the market doesn't go my way but all the information keeps going. So, I keep buying more and more, so now I have a 350% ten-year equivalent in the fund and then I get lucky with the...economy falls apart. I end up making 40% in the fourth quarter, so I had written the year off, when I came back, I'm down 18, I assume okay at least I got don't have to worry about this anymore. It's like the best quarter I ever had, and to this day if I had stayed managing money, I think I'd been tied of knots and there's no way I would make that trade. It was the fact that I was a raid for four months, had a clean slate, had a clear head, and just looked at the new evidence, so it was a very horrible beginning and a very lucky ending.
Nicolai Tangan: Now you don't take um four months off very often, uh, you work very hard. When do you wake up in the morning?
Druckenmiller: 4 in the morning, yeah, I immediately go to the Bloomberg. Yeah, I make a cup of coffee, I go up. I don't shower yet, check all the markets, read the journal, check like all the emails overnight, when I say check, I mean skim them for the important ones. Then, it's probably, uh, 5:15 or 5:30, take a shower, go to work, start all over again. Go to bed, uh, usually around 8:30 or 9 as soon as I see Japan what's happening. My mother-in-law said a long time ago, I'm an idiot savant, she thought she was joking, but she's correct. It's the only thing I'm really good at, I really enjoy it, keeps me young, I'm dealing with brilliant young people here as analysts, but also I force to read the newspaper and force to learn about these waves and uh keeps me stimulated. I love it.
Nicolai Tangan: Last thing, we got 10 thousands of young people here now, they want to be like you, make a lot of money, be successful in financial markets. What should they be doing? How should they enter? What what should they think about?
Druckenmiller: First of all, if they're going in it for the money, they should go elsewhere. Yeah, there's too many people in the business like me that just love the game and the passion for reasons I just articulated and they're not going to be out work the people that are passionate in the game. And it's not a fun game, if you're losing. It's horrible, I just told you and how I respond to drawdowns. So, but if they have a passion for it, if I was a young person I would not get an MBA. I'd go find a mentor, and if they didn't want me, I would just relentlessly bug the hell out of them until they finally accepted me to go and work for them, learn what I could from them. If they still like the business, just keep trying to grow your knowledge base. I would say an analyst skill set in our business is completely different than a portfolio manager skill set. Once in a while, you'll get an overlap, but I would be careful if they really love the analyst part, which is where we all start of thinking they have to become a portfolio manager. I've seen it ruin people's lives who weren't built for trigger pulling, so they should be open-minded. I got in the business because I wanted intellectual stimulation and you're going to get plenty in either one. But that would be my advice to them and be open-minded.
