The author is an expert in the field of multi-asset trading.
Druckenmiller and the Story of the Billion Dollars
Stanley Druckenmiller’s rise to the top came from quite humble beginnings growing up in a middle-class household in Philadelphia. He received a BA in English and Economics from Bowdoin College in 1975. And although he started a Ph.D program in Economics at the University of Michigan, Druckenmiller dropped out to accept a position as an oil analyst for the Pittsburgh National Bank.
In 1977, he became the bank’s head of research, and in 1981, he founded his own company - Duquesne Capital. In 1988, Druckenmiller was hired by George Soros as the lead portfolio manager for the Quantum Group of Funds.
While Soros was famously selling the British Pound Sterling in 1992 and making more than $1 billion in profits, Druckenmiller was still working with Soros and betting on the Deutsche Mark preceding the fall of Berlin Wall and the reunification of East & West Germany, at a time when German currency was at very low levels.
In the beginning, Druckenmiller bet on the rise of the Deutsche Mark with several million, then increased his positions to roughly $2 billion. The Deutsche Mark rose and he earned a staggering $1 billion for the Fund.
Druckenmiller parted with Soros in 2000 after several losses in technology stocks. He focused on his own company until 2010 when the company closed due to inability to deliver high returns to clients. The fund managed by his company had had an excellent record with an average annual return of 30% without any losing year. At the time of closing, Duquesne Capital had over $12 billion in assets, which was returned to clients.
Stanley Druckenmiller’s real time net worth is about $4.7 billion, which he made from managing hedge funds for more than 30 years. He now manages his money through a family office. In the first half of 2017, he invested in Chinese billionaire Jack Ma’s e-commerce titan Alibaba, as well as Microsoft and Facebook.
Druckenmiller and Soros employ a similar top-down style of investing, which included an examination of the general picture of the economy then dividing the different components into more precise details. This style involves trading long or short positions in different instruments based on the trader’s view of likely macroeconomics changes.
The "greatest money-making machine in history," a man with "Jim Roger's analytical ability, George Soros' trading ability, and the stomach of a riverboat gambler" is how fund manager Scott Bessent describes Stanley Druckenmiller.
Stanley Druckenmiller never had a single down year and only had five losing quarters out of 120. At his peak, Druckenmiller was managing more than $20 billion. When you study Druckenmiller you get the sense that he was built in a laboratory, and was put together piece by piece to create the perfect trader due to his character, mental flexibility, independent thinking and tireless inquisitiveness.
Druckenmiller said: “I’ve always loved to play games, and face it, investing is one big game,” he said. “You need to be decisive, open- minded, flexible and competitive.” He also advised that “if you are early on in your career and they give you a choice between a great mentor or higher pay, take the mentor every time.” This means that you should never give up learning and that the returns will come.