Monday, May 9, 2016

What Druckenmiller says

  • All your eggs in one basket. Buffett did it, Carl Icahn did it, Ken Langone did it.
  • Diversification as taught in Universities is a lot of bullshit.
  • Old warriors in a bear market for too long carry scars and cannot pull the trigger well.
  • Visualize the situation 18 months from now. Invest in the future, not the present.
  • The Feds move the market, not earnings. Focus on the movement of liquidity.
  • Paul Volcker put short term bonds at 18% when inflation was 12% and he went all in 30 yr bonds at 14% p.a.
  • 1989. UK rates linked to deutsche mark and German feared inflation and had a blazing economy while UK faced housing downturn. George Soros says bet 200% not 100%  shorting pound.
  • 80% of big money made in bear markets and equities because of crazy things in response to bear markets.
  • 2003. nominal growth in US is 9% and fed funds rate 1%.
  • 2005. betted too early on the sub prime. but 2007 2008 were fun for him.
  • 2015. April. US CPI nothing like Japan. no deflation ever before. 1st time in Fed history buying bonds and 0% rates.
  • Since Greenspan -> Volcker in 1987, 150% debt to 390% debt. 2008 crisis brought it to 365%
  • 2015 April. 18% of high yield debt issued in past year is energy.
  • Japan didn't print money when US did. so their currency appreciated and now they had to. so did Europe.
  • this current situation could be inflationary or deflationary but looking like deflationary esp if asset bubble burst.
  • 2001. felt the dotcom valuations were high but went in anyway near the top because underperformance. lost $3bn in a day.
  • Entitlement spending is high.
  • Not sure how to get out of this current situation in 2015.