Asset Management CultureDecember 19, 2019

Market-Lagging Druckenmiller: I Was Wrong About Stocks

Famed investor had backed out of most equities so he missed 2019’s huge rally.

Reported by Larry Light

Stanley Druckenmiller famously exited many of his equity positions in favor of the safety of Treasury securities this past year. Now, with the S&P 500 up 29% in 2019, he regrets that move.

Freaked out by the US-China trade war and certain that a spell of low stock returns was imminent, he decided that caution was a better way to do business. “I couldn’t have been more wrong,” the legendary one-time hedge fund operator told Bloomberg TV.

Druckenmiller, who left the hedge world in 2010 to run his own family office, Duquesne Capital, indicated that he only barely has engineered a double-digit return last week. The heady surge of stocks in the fourth quarter and the Federal Reserve’s three rate cuts convinced him to do an about-face.

Nevertheless, he said he felt he doesn’t fully comprehend the investing world nowadays. One example he didn’t cite on TV: He shed his shares in Facebook and the social network’s stock has rallied almost 50% this year. He said that in recent years he has “become a coward.”

He still is actively investing, with holdings in copper and some U.S. and Japanese stocks. “I’m just too conservative in my old age,” Druckenmiller, 66, said. “I was well-positioned, but very timidly.”

Here’s a guy with a reputation for taking bold wagers, such as the time he “broke” the Bank of England. That was in 1992, when he was partners with another storied investor, George Soros, and they cleaned up by shorting the UK pound.