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     Jul 21, '14

Druckenmiller, statesman
Commentary and weekly watch by Doug Noland

Hedge fund manager Stanley Druckenmiller rightfully attained "legendary" stature after achieving a phenomenal 30-year track record. Throughout his career, he has successfully implemented a "top down" macro approach to investing/speculating across global markets, including a highly successful stint partnering with George Soros. Druckenmiller provided cogent remarks last

Wednesday at the Delivering Alpha conference covered live by CNBC:

Druckenmiller: "As a macro investor, my job for 30 years was to anticipate changes in the economic trends that were not expected by others - and therefore not yet reflected in securities prices. I certainly made my share of mistakes over the years, but I was fortunate enough to make outsized gains a number of times when we had different views from various central banks.

"Since most investors like betting with the central bank, these occasions provided our most outsized returns - and the subsequent price adjustments were quite extreme.

"Today’s Fed policy is as puzzling to me as during any of those periods and, frankly, rivals 2003 in the late-stages to early-2004, as the most baffling of a number of instances I have in mind. We at Duquesne [Capital Management] were mystified back at that time why the funds rate was 1% with the 'considerable period' attached to it, given the vigorous economic growth statistics available at the time.

"I recall walking in one day and showing my partners a bunch of charts of economic statistics of that day and asking them to take the following quiz: Suppose you had been on Mars the last five years and had just come back to planet Earth. I showed them five charts and I said, 'If you had to guess, where would you guess the Federal funds rate was?' Without exception, everyone guessed way north of 1%, as opposed to the policy at the time which was a verbal guarantee that they would stay at 1% for a 'considerable period of time.'

"So we were confident the Fed was making a mistake, but More ...

Doug Noland is a market strategist for the Prudent Bear Funds.

(Republished with permission from PrudentBear.com. Copyright 2005-2014 David W Tice & Associates. All rights reserved.)




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