Advice from Stan Druckenmiller

On September 7th, Cornerstone Macro (New York based Research provider) hosted their third annual Macro conference and finished off the day with a hour long conversation with Stan Drukenmiller of Duquesne. Among all the legends of Wall St and finance you read about, Mr Drukenmiller has always been a personal favourite of mine. During his conversation with Francois Trahan (Head of Cornerstone Macro Investment Strategy), Drukenmiller shared his thoughts about the FED and the missed opportunity to normalise monetary policy, what criteria he looks for in good managers today, and his advice on diversification (point 12  I really enjoy).

1) On the outlook: “The elephant in the room is the monetary experiment … lowest interest rates in 500 years”

2) Regarding the end of QE: “We’re going from buying 1$T/year to selling $1T/year”

3) On the Fed: “They had a golden opportunity to normalize – and they blew it.”

4) On the Fed: “Taylor rule – we’re the most out of bounds in history”

5) Regarding easy money: “A necessary part of capitalism is a shakeout in the financial markets – it’s ok to have a recession and a bear market”

6) On the outlook: “As an American, I’m not looking forward to the next five years, but as a practitioner I’m excited”

7) On career advice: “I can’t think of a more important thing for a person in their 20s than working with a great mentor”

8) What is liquidity: “My definition of liquidity used to be the financing gap for corporations; now it’s all about central bank balance sheets”

9) What do you think is the most important characteristic of a successful money manager today?: “1) Insanely competitive. Must hate to lose; 2) Not be emotional. Act with discipline; 3) Got to have some IQ, but not above 120. Must be open minded.”

10) On investing: “Arrogance is the enemy of a money manager”

11) Regarding central banks: “You give people free money for nine years, and they do dumb things”

12) Investment advice: “Put all of your eggs in one basket, and watch the basket”

source: Cornerstone Macro Portfolio Strategy (09/11/2017)

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