Wednesday 28 February 2024

The Almanack of Stanley Druckenmiller

I dagens inlägg är det fokus på boken ”The Almanack of Stanley Druckenmiller”. Boken är skriven av Rui Zhi Dong.

Det är en bok som bygger på information och kunskap som Stanley Druckenmiller exempelvis delgett i intervjuer, Twitter-inlägg, presentationer samt information i böcker som har skrivits om honom. Strävan med boken är att läsarna ska få en lättillgänglig tillgång till Druckenmillers perspektiv och syn när det kommer till marknaden och investeringar samt kring livet och affärsverksamhet generellt.

Stanley Freeman Druckenmiller föddes den 14 juni 1953 i Pittsburgh, Pennsylvania. Han växte upp i ett medelklasshushåll i utkanterna av Philadelphia. Druckenmillers föräldrar skilde sig när han gick i grundskolan. Han kom efter det att bo med sin pappa.

Efter att ha flyttat runt och bott i New Jersey och Virginia landade Druckenmiller i Michigan, där han skulle doktorera inom ekonomi vid University of Michigan. Då han var besviken över upplägget på ekonomprogrammet valde han att under den andra terminen hoppa av skolan. Istället började han jobba som oljeanalytiker på Pittsburgh National Bank. Inom ett år hade han blivit befordrad till Director of Equity Research.

År 1981 startade Druckenmiller sin egen firma, Duquesne Capital Management, där han drev sin hedgefond. Han investerade i allt från obligationer, råvaror och valutor till aktier. Han var inte heller främmande för att använda sig av blankning. Bland annat gjorde han en spektakulär investering tillsammans med George Soros när de 1992 framgångsrikt blankade det brittiska pundet.

År 1988 blev Druckenmiller anställd av George Soros till Quantum Fund. George Soros var Druckenmillers idol. Efter ett tag lämnade Soros över förvaltningen av sin fond till Druckenmiller, medan han själv istället ägnade sig åt välgörenhetsinitiativ i Östeuropa. År 2000 lämnade Druckenmiller Quantum Fund för att istället fokusera fullt ut på sin egen firma, Duquesne Capital Management. Det gjorde han tills han stängde ned fonden år 2010.

På Duquesne Capital Management lyckades Druckenmiller åstadkomma en genomsnittlig årlig avkastning på 30%. Detta utan att ha haft ett enda minusår.

Boken innehåller cirka 115 sidor och går snabbt att läsa igenom. Jag tycker att det var en läsvärd bok, som bjöd på mycket klokskap och tänkvärda delar. Nedan har jag sammanfattat anteckningar jag gjorde när jag läste boken.

  • I just find (my work) so stimulating that it makes everyone think I am a hard worker because I am attracted to the game
  • I don’t know if I have a hard work ethic but that’s the end result of my passion
  • One of my jobs is to manage myself and know that bias exists
  • You are constantly fighting your own emotions
  • There’s something weird when a security goes up, every bone in your body wants to buy more of it. The higher they go, the cheaper they look
  • If the stock price goes down, it definitely means you should reevaluate your thesis, but it doesn’t mean you should sell the stock
  • You can talk about not being emotional but it takes incredible discipline to act on that
  • Particularly in this business, the people that love it like me, are so addicted to it and so intellectually stimulated by it, if you are not and you are in it for the money, you have no chance competing with these people. They are going to outwork you, they are going to outexecute you
  • If you are in the job for the money and not because you love it, you just blew 70 hours a week on the happiness quotient, that is pretty rough. So follow your passion
  • Think of the internet infrastructure like the railroads 150 years ago and think of the tech stocks as a company selling railroad ties building the guts of the internet
  • When I look at all the investors of very large reputations – for example Warren Buffett and George Soros – they only have one thing in common. And it is the exact opposite of what they teach in a business school. They make concentrated bets where they have a lot of conviction. They are not buying 35 or 40 names and diversifying
  • You tend to be in trouble is when you have 35 or 40 names and you stop paying attention to one. If you have big massive positions, it has your attention
  • Put all your eggs in one basket and watch the basket carefully
  • When you get in trouble is when you are not entirely focused
  • What my mentor made me focus on what is it that moves the stock price. You can’t just say, Stan, this is a great company and the earnings are great. Tell me how people are going to think differently in 18 or 24 months about this situation than they are thinking now
  • The present is not what moves stock prices, i.e. do not invest in the present
  • The biggest money I have made in equities have been in growth stocks over time
  • One of the cardinal rules I learned early on in venture capital is look where the kids are going
  • For whatever reason, stocks tend to lead the fundamentals by somewhere between 6 and 12 months
  • You can’t get into black and white. You have to constantly innovate and not be a slave to past models
  • Most recessions were preceded by a very low unemployment rate. That is what you do. You run out of capacity
  • You have to know how and when to take a loss
  • I have never hung onto a security if the reason I bought it has changed, and that is when you need to sell
  • If I have a thesis and it doesn’t bear out, which happens often with me, I am often wrong, just get out and move on
  • There is no reason to hang on to any security where you don’t have great conviction in it
  • When companies are overearning, margins are going to come down in 3 years
  • We have been short all of the financials because why in the world would you buy a group that needs rates to go up to own it
  • Buy first, analyse later. You just don’t have the time you had when I got in the business when you hear a good idea
  • If you have the intuition, you buy it first and then you do the analysis, and then get rid of it if it doesn’t pan out as oppose to wait and do the analysis
  • I have learned that sizing is probably 70-80% of the equation
  • It is not whether you are right or wrong, it is how much money you make when you are right and how much you lose when you are wrong
  • Soros has taught me that when you have tremendous conviction on a trade, you have to go for the jugular
  • As far as Soros is concerned, when you are right on something, you can’t own enough
  • If something needs to be hedged, you shouldn’t have a position in it
  • I think there is a lot of bull market geniuses around and it is not that they love the game, the love winning, but they were surfing with a hurricane behind their back that was giving them their nice waves
  • When you have had 11 years of free money, people do stupid things
  • The way to build long-term returns is through preservation of capital and home runs
  • I believe that good investors are successful not because of their IQ, but because they have an investing discipline
  • You need courage to bet big and bet concentrated, but also the courage to fight your own emotions
  • I have never made a buy at a low that I didn’t just feel terrible and scared to death making it
  • You don’t really get change unless bad stuff happens to catalyse the change

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