Stanley Druckenmiller is one of those closely followed billionaire investor types.
He gained much of that following in 1992 while running Quantum Fund for George Soros after he “broke the Bank of England” by shorting the British pound and making a reported $1 billion in profit.
Druckenmiller is also a good quote recently calling the stock market “an absolute raging mania”.
Another intriguing aspect of his personality is he’s actually quite open about his failures of which there have been few seeing that Duquesne Capital Management, which he ran until 2010, had average annual returns of more than 30 per cent.
Druckenmiller abruptly closed Duquesne Capital and returned his clients multiple billions of dollars admitting to them he’d been “worn down by the stress of trying to maintain one of the best trading records in the industry while managing an enormous amount of capital.”
Druckenmiller now runs Duquesne Family Office, which presumably is less stressful.
Which brings us to a very relatable story for any investor which Druckenmiller tells about his emotions getting the best of him during the technology bubble in 2000. This comes courtesy of zerohedge.com:
“So, I’ll never forget it. January of 2000 I go into Soros’s office and I say I’m selling all the tech stocks, selling everything.
This is crazy at 104 times earnings. This is nuts. Just kind of as I explained earlier, we’re going to step aside, wait for the next fat pitch. I didn’t fire the two gun slingers. They didn’t have enough money to really hurt the fund, but they started making three percent a day and I’m out.
It is driving me nuts. I mean their little account is like up 50 per cent on the year. I think Quantum was up seven. It’s just sitting there…”
Druckenmiller pauses stoically before continuing…
“So like around March I could feel it coming. I just – I had to play. I couldn’t help myself. And three times during the same week I pick up a – don’t do it. Don’t do it. Anyway, I pick up the phone finally.
I think I missed the top by an hour. I bought $6 billion worth of tech stocks… and in six weeks I had left Soros and I had lost $3 billion in that one play.”
Everyone listening takes a breath as the hedge fund billionaire scans the audience, sips from a tall glass of water and states confidently:
“You asked me what I learned. I didn’t learn anything.
I already knew that I wasn’t supposed to that.
I was just an emotional basket case and couldn’t help myself.
So, maybe I learned not to do it again. but I already knew that.”
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