Stan Druckenmiller is one of my favorite trader/investor. He is one of the legends in the macro world.
Here are some of the lessons we can learn from him:
Here are some of the lessons we can learn from him:
1/ SIZE SIZE SIZE one of his biggest motto is having extreme size on something when you have a strong thesis and it is going your way.
Jumping in with a thesis and if it's working staying with it.
He believes sizing is 70-80% of the equation.
Jumping in with a thesis and if it's working staying with it.
He believes sizing is 70-80% of the equation.
2/ Sometimes you have major inflection points where you can anticipate change and his approach is to really pile in with size in those particular trades.
Some of these situation were 9/11, berlin wall, etc. these things create 2-3 trend in assets which you can play.
Some of these situation were 9/11, berlin wall, etc. these things create 2-3 trend in assets which you can play.
3/ Another example of crazy size is he had 350% long 10yrs in late 2000 in Bond Market. He has had about 200-300% of his NAV in one currency too.
But he does this in really liquid markets that trade 24 hours a day.
But he does this in really liquid markets that trade 24 hours a day.
4/ He believes in being ruthlessly objective about his position. If you are gonna put on big sizes then you have to be objective about the situation.
He has put on positions he was 100% sure he would have for 2-3 years and 10 days later facts changed and he was out of them.
He has put on positions he was 100% sure he would have for 2-3 years and 10 days later facts changed and he was out of them.
5/ He believes in being completely open minded and exit the position instead of doubling down if you are doing heavy concentration.
Being open - minded is one of the biggest skill an investor or trader can have.
Being open - minded is one of the biggest skill an investor or trader can have.
6/He has never used a SL in 40yrs of his career but have exited a lot of positions not because the price was down but the facts changed.
7/ Instead of using top down statistics like tradition economists Stan uses bottom's up approach.
There are industries that lead the economy and some that lag the economy like housing is a leader so if they are turning up or down then that's a signal you can use.
There are industries that lead the economy and some that lag the economy like housing is a leader so if they are turning up or down then that's a signal you can use.
8/ He believes have to be able to imagine the world in a different state than it is today.
You are not investing in the present think about what can happen in the next 12months. Change moves stock prices not present.
Imagination is also one of the biggest skill for an investor.
You are not investing in the present think about what can happen in the next 12months. Change moves stock prices not present.
Imagination is also one of the biggest skill for an investor.
10/ He has performed the best in bear markets what he did was just take equities completely off the table and buy bonds and go home.
11/ He believes that every investor has streaks, one of your main jobs is to know if you are on a hot streak or a cold one.
If you are up 40% on the year that doesn't mean you close up shop and enjoy. That is the year in which you push and get amazing returns.
If you are up 40% on the year that doesn't mean you close up shop and enjoy. That is the year in which you push and get amazing returns.
12/ He Has made a lot of mistakes in his career and he wears them proudly.
One of the most famous one is losing 2-3 billion in a couple of days in 2000 and when asked what did he learn from that mistake his answer was nothing he already knew the mistake but it happened anyway.
One of the most famous one is losing 2-3 billion in a couple of days in 2000 and when asked what did he learn from that mistake his answer was nothing he already knew the mistake but it happened anyway.
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