Stanley Freeman Druckenmiller (born June 14, 1953) is an American investor, hedge fund manager and philanthropist. Stan Druckenmiller is one of the world’s greatest money managers and has traded through market cycles for more than 30 years.
Here are the key lessons I learned from Stanley Druckenmiller to achieve success:
Stay in sync with the market Do not have the hubris to think that you are smarter than the market.
- Don’t fight the Fed
- Listen to the Bond market
- Understand other trader’s perspectives and when all position on the same side
- Consider macroeconomic trends
Flexibility in one’s thinking. You need to maintain flexibility in order to identify unexpected opportunities.
- Be willing to admit you’re wrong
- Have the capacity to change your mind
- Be open to possible future outcomes
The importance of continuous learning You have to continually learn, read and be curious.
- Read macroeconomic and business books
- Gather information from a wide range of sources
Analyze situations through multiple lenses By viewing problems from different angles, you are better equipped to make a well-rounded decision.
- View the problem from different angles
- Brainstorm different solutions
- Consider the viewpoint of relevant stakeholders
Find a mentor “If you’re early on in your career and they give you a choice between a great mentor or higher pay, take the mentor every time. It’s not even close. And don’t even think about leaving that mentor until your learning curve peaks.”
It is no surprise that Stanley Drukenmiller is a billionaire. His ability to have conviction when it counts, but have the humility to accept being wrong without flinching is a trait we see from the best investors. Use these lessons to build your own framework.
In 2015, he gave what is now a timeless discussion about markets and processes at the Lost Tree Club.
Here are 7 takeaways from his speech.
1. Druck attests that he is not a genius. He was not in the top percentile at school. Instead, he believes that he made his success from three things:
- Passion for the business
- Great mentorship
- Risk management
2. “The mistake I’d say 98% of money managers and individuals make is they feel like they got to be playing in a bunch of stuff. And if you really see it, put all your eggs in one basket and then watch the basket very carefully”.
The ability to recognize when to make a bold investment. You need to recognize when making a big investment will pay off.
- Avoiding risk is not always beneficial
- Be prepared to take big risks when the return is worth it.
3. He says one his mentors taught him two crucial things:
- Never invest in the present; look 18 months out.
- The central bank moves the market, not earnings. “If you invest in the present, you’re going to get run over!”
4. Druck learned from Soros that “when you see it, bet big”. He also humorously remarks that Soros spent 10% the amount of time working than him, and still outperformed.
5. When the facts change, you have to be able to change your mind. Stay in sync with the market Do not have the hubris to think that you are smarter than the market.
- Don’t fight the Fed
- Listen to the Bond market
- Understand other trader’s perspectives and when all position on the same side
- Consider macroeconomic trends
6. After losing $3 billion on tech stocks during the 2000 bubble, Druck famously said “I didn’t learn anything. I already knew I wasn’t supposed to do that”
Minimise the downside. Don’t lose money.
- Concentrate gains
- Look for asymmetric opportunities
“The way to build superior long-term returns is through preservation of capital and home runs…When you have tremendous conviction on a trade, you have to go for the jugular.
7. What Druck looks for in money managers:
- Passion
- Ability to manage bear markets
- Humility and open-mindedness
- Integrity
