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About Stanley Druckenmiller

One doesn’t become a billionaire without having considerable skills. Hedge fund Billionaire Stanley Druckenmiller is the man from whom you can learn how to go big. Fund manager Scott Bessent describes Stanley Druckenmiller as the “greatest money making machine in history”, a man with “Jim Roger’s analytical ability, George Soros’ trading ability, and the stomach of a riverboat gambler”.  Druckenmiller took his inspiration from the legend, George Soros. Initially, he worked as a lead portfolio manager for the Soros Quantum Fund and later on went on to start his own billion dollar company, Duquesne Capital.

Stanley’s Investing Technique

Stanley follows a top-down investment approach. It is very much similar to that of Soros’s approach. In this technique, he takes a general perspective of the market and after that chooses those parts that have a probability of giving immense benefits. In its most basic form, top-down investing involves trading long or short positions in stocks, bonds, futures, and currencies based on one’s views of likely macroeconomic changes. In top-down investment, investors use macroeconomic factors such as currency movements, GDP, trade balances, interest rates and other economic aspects. After which they allocate the assets to earn monetary benefits rather than betting on specific companies.

The Biggest Trades

Druckenmiller made two significant long bets in the same currency, as a trader for Soros’ Quantum Fund. Let’s find out about the bets that made him into trading genius:-

  • The first big bet was made amid the fall of the Berlin Wall. The fall of the Berlin Wall significantly depreciated the German Mark. Stanley had rightly anticipated the outcome of the mark and so he put a multi-million dollar bet on a surge in the prices of stocks and bonds. This bet helped him wager 60% return for the Quantum Fund.
  • The second big game changer happened a few years later when Soros was shorting the British pound sterling in his historic trade of 1992. Stanley knew Soros’ bet would depreciate the Pound against the German Mark. And so he sagaciously purchased German bonds in the hope that German stocks would see lesser growth than the British pound because a cheaper pound would result in an increase in export value, as compared to its European rivals. This resulted in a huge profit for the Quantum Fund.

Druckenmiller had real belief in his own ability and the courage and conviction to execute his trades right up until the end of the year. In 2000 he left Quantum Fund to solely focus in his own Hedge Fund, Duquesne Capital. He never displayed any sort of loss aversion that can ruin other trades results. With results like his, it is easy to see why he has become such an icon for aspiring traders and even the small glimpses of insight offered by the famed-trader can be of use to those just starting out in the markets.

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