In his recent interview with Talks at GS, Stanley Druckenmiller explains why investing across multiple asset classes means there’s always an opportunity somewhere. Here’s an excerpt from the interview:
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Druckenmiller: First of all the no down years is true but a lot of it is luck. I’ve been deep in the hole three or four years and in every case something came along and it was just a coincidence of the calendar, December 31st. December 31st I happen to be up, had you measured from another part of the year, say May to May I would have had some down years.
But I would say Tony and you’re right, I referenced it earlier… the fact that I can travel around five or six asset classes does a couple of things.
Number one, it can point you in the right direction, and if you really believe something you can make big big gains there.
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’ve been wrong a lot of my career.
And number three… this is more subtle but it also gives you discipline, not to be playing around in an area that is dangerous.
If you’re an equity-only investor it’s your job to be in equities. If you have the latitude to say I’m just not going to play it’s too complicated, you don’t play in them.
So I think in many cases credit would be a perfect example. I’ve never lost money big in credit because the only time I’ve got credit is every eight years there’s a complete debacle in the credit market and we go in and we buy a bunch of credit.
Well if I was a credit investor I would have had three or four down 30% years.
You can watch the entire discussion here:
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