Real Vision Interview With Stan Druckenmiller – Full Video And TranscriptJacob Wolinsky
Investment visionary Kiril Sokoloff, chairman & founder of 13D Global Strategy & Research, sits down with a revered titan of the investment world: Stanley F. Druckenmiller, whose unrivalled track record spans many decades, making him one of the world’s most successful money managers. This interview provides an unrivalled opportunity to learn the previously unheard secrets of an investment legend.
Please note the full transcript is below its a computer transcript we created using a special top notch software and is about 95% accurate but not 100% you can get an idea 0 all readers can get a basic idea of the quality by seeing the first few unedited paragraphs below
Hi I'm Raul Powell and the sea of real vision. It it's my pleasure to personally choose one of the most incredible conversations that I've ever seen or we've ever had a real vision. And it's led by my good friend Carol Sokoloff. Carol is one of the most legendary people in the investment research business. You can see by the quality of the guests that he brings the real vision that his contacts in the finance industry and the wider world are completely unparalleled. And this time Kiran is going to do something extraordinary for us in this episode. He's going to interview one of the greatest investors of all time. Stanley drunk Stanis perhaps the best 30 track record in money management history his company over 30 percent returns. And he's never had a down year over 120 quarters. He's only lost money in five men. How is this even possible. How has he managed to make money. Day after day year after year decade after decade that's a course that nobody's ever been able to answer. That is until now.
Stanley Druckenmiller has never given an interview like this before. And in this incredible conversation Stan tells Carol how he was able to build that track record how he's operates in this new world of distorted price signals and the opportunities and risks he says lie ahead. It's a truly extraordinary conversation that every investor wants to watch and then returns him. Time and time again there's so much learning in this. So now in the second episode Carol Sokoloff series please enjoy the full conversation with Stanley Druckenmiller.
Stan is a great pleasure to have you here.
Great to be here. Carol I've enjoyed your work for many many years so I'm excited about the opportunity. Thank you.
We are too. We've been friends for 25 years. Both of us are very low profile people. We avoid publicity. And thank you for trusting me to do this. What I really want to drill down on is that credible brain of yours that's created this phenomenal track record that is really the best in history.
30 years performance managing outside money never had a down year 120 quarters only five were down 30 percent compound at over 30 years. How did you do it. And to try to understand the mindset you approach to intelligence that enabled you to do that and secondly to take that and bring it forward to today's complexity. How are you look at the world. What challenges what opportunities. How are you operating differently given the fact that algos are running the markets. Free money has destroyed price signals. And third to discuss Stan Druckenmiller is other passions your family your extracurricular activities and your philanthropy which which you do in a very low key way which of course is the best way to do it. So let me start off by asking you a question on your balance life. People in our business tend to be very focused and very driven. But I wouldn't say that not that many of them are happy and you're a happy man. You've got a balanced life. You're one of the great philanthropists in America. You've have a beautiful evolved spiritual wife who you love. You've got three lovely daughters who are all successful.
And have this balanced life with this incredible performance and you're happy man. How do you do it.
That's kind of you to say. The balance life is the key. And in my case Fiona and I are both very private people so we don't really go out on the social scene in New York at all. We might go to three events a year whereas I think most of my peers might go to three a week. And that frees up a lot of time. I had the benefit of a very highly. Intelligent creative wife who's now had four different. Careers she reports herself about every 10 years who after my children were born. She gave up everything to raise those children and she did it in a very intense creative ways. You have this thing called special time where each child. One day a week for two or three hours after school could go anywhere and you aren't can any activity with her because she thought it was important. Sibling rivalry to have individual time with each. So it all it all sort of starts with her. And then I would really weigh in on the weekends and maybe because I married a little late with her which was when I was 35.
I was successful enough at the time and had acquired enough knowledge that I was able to spend most of my time with the kids on on the weekends. Had been in my 20s I think it would have been a disaster. That's been a very very important part of the balance. It's interesting we are. Someone ask me Oh Fiona and I talk about the difference between men and women and their response to their children and you have to understand our children are 28 27 and 25 and even today when she has full time jobs she's running a business. She says the first hour of her day is spent thinking of all the things she's going to do for the children that day. Texts and emails she's gotten and arranged and the first thing she thinks about of course the first thing I think about is Euro and the yen.
I love my trolling but it's just it's a whole different mindset and I've been a huge beneficiary of that and one of my early mentors said with children if you get the first five years right you were awarded the rest of your life and if you get them wrong you're tortured. It's very bitter Fiona extended the five to about 20 years but having a happy family provides a whole lot of happiness and a whole lot of balance. So I think that's that's pretty much been the key and that's freed up the extra time to do some physical activities swells up.
You mention we're all worried about entitlement for our kids and we're always struggling with that. How did you deal with it.
You know that is such a fascinating question. Fiona and I have a totally different philosophy on that. She felt no holds bar in giving the kids material stuff. And there was no reason to hide our wealth from them. I thought she was crazy and this is going to be a disaster. But it was her area and I deferred to her. I've never heard her say no to those kids on anything except video games. It's the only thing that was really heavily discouraged and she said no to.
I guess through osmosis or observing the parents values or whatever somehow strangely they all ended up being high achievers. We never ever talked to them about philanthropy or charity or giving back. And yet they've all done stuff very actively to help the disadvantaged. I'm not sure how or why it all happened but I guess it starts again with the mother that was with them so much time and taught them values. But it's bizarre because I'll never forget in the third grade we had a teacher review with our oldest child. She wasn't there and the teacher wanted to know what Fiona had done because the other wealthy kids were all bragging how had country houses and this and that and she said that Sarah Earl's daughter would never ever talk about any of them want to know how we had schooled her in that but it was never ever brought up. So we never hid their wealth from them. So Fiona kind of broke every rule in the book that you would read about in dealing with this subject. But things have worked out extremely well.
Congratulations. Nothing like a happy man and a happy family.
So moving on to the world we're living in. This has been an especially volatile year. We've got a new Fed here. We have the possible contagion in emerging markets. We have a huge new fiscal stimulus in U.S. distorting things and we have a very aggressive foreign policy and trade policy on the part of the United States. So taking you all that and whatever else you're focused on what are you really thinking about. What you where's your focus right now.
Yeah well since free money was instituted I have really struggled and I haven't had any down years since I started the family office. But.
Thank you for quoting the 30 year record I don't even know how I did that. When I look back and I look at today but I probably made about 70 percent of my money during that time. In currencies and bonds. And that's been pretty much squashed and become a very challenging area. Both of them as a profit center so while I started in equities and that was my bread and butter my first three or four years in the business I evolved in other areas and it's a little bit of back to the future. The last eight or nine years where I've had to refocus on the equity market and I also bear itis because I made my highest absolute return for all in bear markets. I think I was average term bear market was well over 50 percent. So I've had a bearish bias and I've been way too cautious the last say five or six years and this year is no exception. I came into the year with a very very challenging puzzle which is rates are too low. Worldwide you have negative real rates and yet you have balance sheets being expanded by central banks at the time of a trillion dollars a year which I knew by the end of this year was going to go to zero because the US was obviously going to go from printing money and QE to letting 50 billion a month starting actually this month run off on the balance sheet. I've figured Europe which is doing 30 billion euros a month would go to zero. So the question to me was if you go from a trillion in central bank buying a year to zero and you get that rate of change are all happening within a 12 month period.
Does that not matter if global rates are still what I would call any appropriate for the circumstances and those circumstances you have outlined perfectly you pretty much have had robust global growth with massive fiscal stimulus in states where the unemployment rate is below 4 if you came down from Mars you'd probably guess the Fed funds rate would be 4 or 5 and you have a president is screaming because it's 175. I may be because I have a bearish bias. Kind of had this scenario that the first half would be fine but then by July August you'd start to discount the shrinking of the balance sheet. I just didn't see how that rate of change would not be a challenge for equities that other than PCs and that's because margins are the all time record. We're at the top of the valuation on any measure you look except against interest rates and at least for two or three months I've been dead wrong. So that was sort of the the overcount overwhelming macro. You know interestingly some of the things that tend to happen early in a monetary tightening are responding to the QE shrinkage. And that's obviously as you've cited emerging markets.
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