In his recent interview with Conferences at GS, Stanley Druckenmiller explains why investing in multiple asset classes means there’s always an opportunity somewhere. Here is an excerpt from the interview:
Druckenmiller: First off, no-down years are true, but a lot of that is down to luck. I was at rock bottom for three or four years and either way something happened and it was just a coincidence of the calendar, December 31st. December 31st I happen to be up, if you had measured from another part of the year, say May to May, I would have had a couple of down years.
But I would say Tony and you are right, I referenced this earlier… the fact that I can cycle through five or six asset classes does a couple of things.
First, it can point you in the right direction, and if you really believe in something, you can make big gains from it.
Number two as a macro investor… currencies and bonds trade 24 hours a day and they’re very liquid, and you can change your mind, which I’ve had to do a lot in my career because I cheated a lot of my career.
And number three… it’s more subtle but it also gives you discipline, not to play in a dangerous area.
If you’re a stock-only investor, it’s your job to be in stocks. If you have the latitude to say that I’m just not going to play, it’s too complicated, you don’t play it.
So I think in many cases credit would be a perfect example. I’ve never lost a lot of money in credit because the only time I have credit is every eight years there’s a complete meltdown in the credit market and we go in and we buy a heap of credit.
Well, if I was a credit investor, I would have had three or four years of 30% declines.
You can watch the full discussion here:
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