Stanley Druckenmiller’s investment style
Photo of Stanley Druckenmiller, retrieved from The Hustle.
Stanley Druckenmiller is an investor and hedge fund manager known for being the founder and leader of Duquesne Capital. Druckenmiller graduated with a Bachelor’s degree in English and Economics from Bowdoin College in 1975, and then proceeded to pursue his Ph.D. in Economics at the University of Michigan before leaving this position for an oil analyst position at Pittsburgh National Bank, or the forerunner of PNV Financial Services Group.
He also is the protégé and longtime colleague of superinvestor George Soros. Both investors employ a similar top-down style of investing. (NASDAQ)
Investment style
Druckenmiller has a top-down style of investing that involves using a mix of securities and long and short exposure. Top-down portfolios often consist mostly index funds of specific regions or sectors. The idea is to use macro variables to find particular sectors that outperform the market. (Investopedia)
An overarching theme that Druckenmiller follows is his bullishness on beaten-down commodity stocks. He moves quickly in and out of holdings as opportunities dictate.
In an interview with Money Week, he states that sizing is a major part of the equation, while “part of the equation is seeing the investment, part of the investment is seeing myself in a good trading rhythm. 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.” (Money Week) He acts first, and researches later, as markets move rapidly and so do good ideas.
In addition, he explains in an interview that if the reason you bought security changes, then you should sell. In 1981, he was bearish and did not follow his instincts, thus losing 12% during the third quarter of that year. This was when his investment philosophy changed to going for a 100% cash position if he ever feels that bearish about the market again.
He stresses that it is important to be disciplined and fight emotions, and to remind yourself why you own that security.
