Investment tycoon Druckenmiller: My advantage isn't intelligence, but decisively pulling the trigger; after selling Nvidia too early, I'm kicking myself with regret.

Here is the English translation: Facing the current market environment, Druckenmiller pointed out that the US economy is already very strong, and will become stronger under massive stimulus policies, while the Fed is unlikely to raise rates and may even cut them. Based on this macro backdrop and the expectation of "great disruptions and changes" in the next 3 to 4 years, he has constructed a mixed matrix of long and short investments. On February 28, Morgan Stanley released a video in its “Hard Lessons” interview series. In this interview, Iliana Bouzali, global head of derivatives distribution and structuring at Morgan Stanley, engaged in a deep conversation with legendary macro investor Stan Druckenmiller. As founder of Duquesne Capital Management, Druckenmiller delivered a stunning annualized return of around 30% from 1981 to 2010, with no losing years. According to previous articles by Wallstreetcn, Treasury Secretary Besank and Fed chair candidate Walsh are both disciples of Druckenmiller. In forex and commodities, he bluntly stated: "We are bearish on the US dollar." He believes the dollar’s purchasing power is at the top of its historical range, and foreign investors are heavily overweight USD; with trade balances and position adjustments, “the dollar will fall on its own.” At the same time, he is heavily long copper and gold. Long copper is based on an extremely tight supply chain over the next eight years, as well as huge incremental demand driven by AI data centers; holding gold is mainly based on geopolitical considerations. In the bond market, Druckenmiller chose to short US Treasuries. His logic is very clear: "If I am right about the direction of the economy, it’s a disinflationary growth, so I basically break even and don’t lose money, which allows me to keep holding other risk assets. But if I’m wrong, and strong growth triggers inflation—if the Fed cuts rates during a boom and inflation spikes, which is not surprising—we could make a lot of money.” Investment Philosophy: Contrarian Investing Is Overrated, Strength Lies in "Pulling the Trigger" Reflecting on decades of investing, Druckenmiller re-examined popular market dogmas. He believes that with the influx of quants and smart people, traditional “technical analysis” is now only 20% as effective as it used to be, and strategies like “if a stock doesn’t rise on positive news, it will crash” have lost their edge because everyone has learned them. On contrarian investing, he is incisive: "I think contrarian investing is overrated. Soros once said, the crowd is right 80% of the time. You just can’t get stuck in the other 20%—that will wipe you out... But I do like investing when I have extreme conviction and nobody else believes it, because it gives me stronger faith. As long as the logic is right, I don’t care if a trade is crowded.” Discussing his unrepeatable success, he candidly attributes it to a hard-to-explain intuition and execution. "My edge isn’t IQ, it’s pulling the trigger (decisiveness)," Druckenmiller said. "My mother-in-law calls me an ‘idiot savant.’ I couldn’t crack the top 10 in my class. Many think I am smarter than I really am, but I just have a very narrow type of intelligence that lets me love and play this (investing) game well.” He especially emphasized the most valuable lesson from his mentor George Soros: "It’s not about being right or wrong, it’s about how much you make when you’re right and lose when you’re wrong." Interestingly, this legendary figure suffered from “impostor syndrome” for the first 15 years of his career, and only over time believed that his performance was not accidental. "I Can't Bear Success": Selling Nvidia Too Early Once, Druckenmiller's portfolio was heavily AI-driven, but in the past half-year, he has adjusted his positions substantially. Speaking about Nvidia, the most eye-catching AI stock of the past two years, he shared a dramatic and slightly regretful trade. As early as mid-2022, noticing Stanford’s top talent shifting from crypto to AI, Druckenmiller bought Nvidia on the strong advice of young partners. Two weeks later, the launch of ChatGPT made him "truly understand the significance," so he doubled his position. Later, at a Morgan Stanley macro call, after hearing a tech analyst’s view, he doubled it again. "I must admit, three months earlier I didn’t even know how to spell Nvidia," Druckenmiller confessed. As Nvidia's stock price soared from $150 to $390, he publicly stated he would never sell in the next two to three years. However, when the stock really rose to $800, he broke his promise. "I can't bear success," Druckenmiller joked. "It went from $150 to $800. I was supposed to be a long-term investor, but I didn’t know how to handle it, so I sold. Then five weeks later it went up to $1,400, and I deeply regretted it.” He humorously summarized his current trading mentality: “I chickened out, and I always chicken out. I’m Mr. Taco—not T, but DACO (Druck Always Chickens Out).” Finding Overlooked Corners: Heavy in Generics and Biotech As AI trading became “uncomfortably frenzied” and reminiscent of the 1999 internet bubble, Druckenmiller turned to more undervalued corners. He specifically mentioned Israeli pharmaceutical company Teva (TEVA). When he started, its P/E was only 6x, and it was at a high-growth phase transitioning from low-margin generics to biosimilars and innovative drugs. But the market made a severe pricing error: “Value investors hated the growth strategy and sold stock, while growth investors hadn’t realized the change.” After they took a $16 position, shares rose to $32, and the P/E was re-rated. He has also invested big in biotech. He noted that the sector has been at the bottom for four years, and as a 30-year board member at Sloan Kettering Cancer Center, he knows: "AI’s best application is in biotech, including drug discovery, diagnosis, and monitoring.” The original interview transcript follows: Druckenmiller: I think contrarian investing is overrated. But I really like those moments when you have extreme conviction and no one believes it, which only makes my conviction stronger. Narrator: Welcome to Morgan Stanley's "Hard Lessons," where iconic investors reveal the key moments that shaped their success. Today’s guest is legendary macro investor Stan Druckenmiller; interviewer is Morgan Stanley global head of derivatives distribution Iliana Bouzali. Druckenmiller managed Duquesne Capital from 1981-2010, delivering around 30% annualized returns with no losing years. He now leads the Duquesne Family Office managing his own capital, and is a philanthropist devoted to education, medical research, and anti-poverty initiatives. Bouzali: Stan, thank you very much for joining this interview. Druckenmiller: Glad to be here. I have high regard for Morgan Stanley, so this is the least I can do. Bouzali: It’s our honor to have you. In the last year or so, I’ve had the chance to learn about some of your stock trades, and sometimes you enter very early. Can you walk us through one or two examples and how they came about? Druckenmiller: I'll pick an unexpected example, not flashy and unrelated to AI, but it illustrates our process at Duquesne well. From mid-summer to fall last year, AI started to get overheated, uncomfortable, somewhat reminiscent of 1999/2000, so we looked elsewhere. The team brought in Teva, which if you didn’t know, would seem like a nondescript Israeli generics company, trading at just 6x earnings. We met the management, found they were undergoing a major transformation. Richard Francis joined—he’d executed the same strategy at Sandoz. He impressed us, especially in picking the “low-hanging fruit” of operational efficiency. More importantly, he’s turning the company from a generics firm to a growth company by embracing biosimilars and some true innovation, which is why the P/E is only 6x. Surprisingly, the investor base then were value investors who didn’t like this, so the stock stayed at 6x P/E, even as incredible changes were happening inside, but almost nobody believed it. Growth investors hadn’t seen the change yet so didn’t want it; value investors didn’t want it and were selling, because he was pursuing a growth strategy. That was about 6-7 months ago, stock at $16. Today it’s $32, and nothing much changed except he proved biosimilars were viable and launched a non-generic. So the valuation was re-rated from 6x to maybe 11.5 or 12x earnings. This trade is very different, but it captures what we look for: If you only look at today, you won’t make money. You have to look forward, think what could change and how investors will view things. This trade unfolded faster than I expected, but it’s a recent example. Bouzali: Fascinating. I say fascinating because a lot of people, maybe those outside the market, but certainly many, think of Stan Druckenmiller as a super macro investor. But I see you not just dabbling but truly entering niche areas, especially in equities like healthcare and biotech. Do you have to be an expert, like one who understands the entire drug pipeline, to get it right? Druckenmiller: Thank goodness, the answer is a resounding “no.” But I must have an expert at Duquesne, and I have to trust their judgment, and then I have to have a sense of how the market will take the change they describe. But yes, we went big into biotech. I could feel a leadership rotation coming, just because of fears about AI. And I’ve been on the board at Sloan Kettering Cancer Center for 30 years, so I know AI’s best external use case is in biotech, from drug discovery, diagnosis, monitoring, etc. And biotech was depressed for four years. I also grew up on technical analysis—you could see momentum changing. So that’s the logic for investing in biotech. But honestly, when analysts start talking about gene sequencing, gene editing, and proteins, Stan doesn’t understand it. But I can feel their passion. We have a great biotech team, and that’s crucial because I trust them. Their true passion to me is as important as the facts, because I’m not smart enough to grasp all those facts. Bouzali: So you filter not just the data, but the people working for you. Druckenmiller: Yes. My advantage isn't IQ, it’s ability to pull the trigger. I admit that’s a form of intelligence, but my mother-in-law calls me an “idiot savant.” I couldn’t crack the top 10 in my class; people think I’m smarter than I am because I’m good at this field. But I have a very narrow kind of intelligence that lets me love and play this game well. Bouzali: Many want to get inside your head and understand your mental model. You’ve told us your thinking style. Here’s a candid question: How much can be taught, and how much are you born with? Druckenmiller: Listen, I was given a gift—a gift for growing capital, and I don’t know why. Some of it’s innate—you either have the skills for this business or you don’t. That said, I had a great mentor when I started in Pittsburgh, and I’ve found great investors usually have extraordinary mentors—that’s common. So for me, having the innate skill or talent is necessary, but having a mentor is almost necessary too. Maybe others outside are different, but for me it’s both. I was lucky to have two mentors. One taught me everything we’re discussing. Then Soros. Interestingly, when I first got there, I thought I’d learn what moves the yen up and down in markets. Not to boast, but I found I knew much more than him in that area. What I did learn from him was position management. The key isn’t whether you’re right or wrong—it’s how much you make when right and lose when wrong. That’s a priceless lesson. So you can have some talent, but without mentors to teach you, you won’t maximize your talent as much as with them. Bouzali: Shall we talk about markets? Druckenmiller: Must we? Bouzali: With you, it seems inevitable. Druckenmiller: Ok. Bouzali: When talking about markets, to me, you approach them not as forecasts, but as some self-revealing system. Suppose you had no hedge fund, just arrived from Mars, and had to build a portfolio from scratch. At this moment, how would you anchor it? What would you buy first? Druckenmiller: Tough question. Before anything, a few basic principles. In my opinion, the US economy is already strong, and will get stronger because we’re seeing the “Big and Beautiful Act,” lots of stimulus. I guess the Fed surely won’t hike, and likely will cut. So that’s the backdrop. If we were undervalued, that would be fantastic. We’re not undervalued—we’re at the high end of the historical valuation range. Now, what’s exciting about building a hedge fund portfolio is, I’m only certain there’ll be huge disruption and change in the next three-four years. So about the opportunity set for the next 3-4 years, I’m really excited. Macro has been dormant for 10 or 15 years and I think that’s no longer the case. If you know me, I tend to change my mind every three weeks. In this backdrop, we’ll likely go long a more diversified equity portfolio, because for the last three years up to last fall, our portfolio was largely driven by AI. We still have some AI positions, but it’s no longer the engine. We still hold sizable positions in Japan and Korea, some AI-related, some not. We are bearish on the dollar, mainly because purchasing power parity is at the top of the historical range, and foreigners are heavily overweight USD. I don’t know if this is a "sell America" trade, but more, if due to trade balance and positioning, they don’t buy US assets net, the dollar will fall. We believe that’s the most likely path. We hold copper—it’s not a genius trade, but a consensus one. There’s no meaningful new supply for the next eight years, very tight. Obviously, AI and data center-driven demand will rise greatly. We’re not much long on copper equities, just rolling front-month futures. We have some gold, mainly a geopolitics trade, not currency. And since we’re long all these risk assets, we’re short bonds. I don’t necessarily expect to make money shorting bonds, but if my economic view is right—a deflationary growth—I may break even and lose nothing, so I can hold other assets I mentioned. If I’m wrong, strong growth triggers inflation—if the Fed cuts in a boom, inflation rises, especially considering commodities—that’s not too unusual. I’m open to it. We’ve built a matrix; bonds help us in both scenarios. Bouzali: Over the past decade, there have been big changes in equities—new types of capital, multi-strategy hedge funds, retail investors, quants, ETFs. Compared to ten years ago, how does this change the timeframe you feel you need to hedge? Are you more comfortable with week, month, year trades? Or maybe there’s no rule—how do you think about it? Druckenmiller: Most trades I do, the time boundary is 18 months to three years; I think they may need that long to play out. Not every trade is like this—some are a year, some five. I admit, I’ve done three-year trades and exited after five days, even reversed. But if you ask how I conceptualize it, all this noise about market structure changes hasn’t changed what I said. The sharp volatility helps more with entry points if it doesn’t fit my specific timeframe’s conviction. So, I think a lot of it’s noise. It makes my life annoying, because I’d rather have steady, directional markets, but it creates opportunities—you must exploit volatility, not be abused by it, apart from mental abuse—which I definitely get. But you can’t let yourself be a victim of volatility; you exploit it, though mentally it’s hard. Bouzali: You prefer trending markets—makes sense. I sometimes wonder, do you adapt better to going against the trend—is this true? Or do you accept consensus? How do you see it? Druckenmiller: I think contrarian investing is overrated. Soros often said, crowds are right 80% of the time. You just can’t get stuck in the other 20%—that can hurt you badly. There’s intellectual satisfaction from contrarian investing. But as a concept, I think it’s overrated. But when I have extreme conviction and others don’t believe, I really like that—it only makes me more convicted. I don’t care if a trade is crowded; if the theme is right and the trend suits me, I don’t really mind, it doesn’t bother me. I care about entry points, but not about the investment itself. Bouzali: In December 2022, we had an investor Zoom discussing macro, rates, USD, US versus the rest of the world. After a while, I asked you about rates. I’ll quote you: you said you really didn’t care about rates—the only thing that mattered was AI and Nvidia. Druckenmiller: I don’t remember, but that sounds good. Bouzali: What was happening then? How did you see it? Druckenmiller: Nvidia’s story is interesting; it perfectly demonstrates the process I mentioned—relying on other people. In my firm, I have several young superstars with personal networks; about early to mid 2022, they started really discussing AI. Then I noticed Stanford kids moving from crypto to AI. One thing we watch in venture is where young people are going. In ‘08/’09 we bought Palantir because it was the cool place—all young people wanted to work there. My partner brought in people from his Palo Alto AI circle; they explained AI. I didn’t understand most of it, but I knew it was big. Bouzali: Why did you think it was big? Maybe it’s just a fad, but you didn’t feel that about other fads. Druckenmiller: Because I completely trusted my partner, and I thought I’d grasped its huge potential. Actually, I hadn’t fully grasped it, since I didn’t know about large language models, but I knew all the other traditional things happening in AI. So I asked my partner, what should I buy? He said Nvidia—it’s the way to play AI. So, based on those bits, about as little as you just heard, I took a modest Nvidia position—enough to get hurt or make some money. Then two weeks later, ChatGPT came out—wasn’t mentioned in our conversation. Okay, even I—when I saw it could do foundational things then—I saw the huge potential. So I doubled the position. One of your services—Morgan Stanley macro calls—every macro person (including me, luckily before I spoke) explaining their views, worth maybe a nickel and a cup of coffee; then a tech analyst says, “You’re missing the point. There’s something bigger than anything you’re discussing—even for macro.” He detailed everything we’d heard about AI three or four weeks before. But this time, after that talk and him, I’d had the ChatGPT experience. So I doubled the position again. Honestly, three months earlier I probably couldn’t spell Nvidia. When the stock took off, I knew from experience that when big change happens, investors can’t keep up. Interestingly, among all those present, the person who knew AI ten times more than anyone—maybe fifty times more than me—sold out of Nvidia not long after. But I knew this stock would rise for two or three years, and a lot. About five months in, I said in a public interview, “I can’t imagine selling Nvidia in the next two or three years,” as it had gone from $150 to $390. That person couldn’t believe I still held it. I basically meant, not only to hold, but that the dynamic would play out for at least three years, minimum. Then the stock rose to $800, and I broke everything I’d said. I couldn’t bear success—I held from $150 to $800, supposed to be a long-term holder, but I couldn’t take it, and sold. Then about five weeks later, it rose to $1,400, and I felt awful. The surprising thing is, I knew so little about Nvidia—I probably couldn’t tell you its earnings. Bouzali: That’s confidence. You’re Stan Druckenmiller, so you can candidly share your thoughts. I think it’s inspiring for aspiring fund managers who feel they must always be intellectually on top. The ability to filter information, manage teams—not just stare at spreadsheets—is unique and useful. You broke your word, sold at $800. Would you have done so 20 years ago? Does this mean your trading is more mature now? Druckenmiller: Probably not. I’m not used to making six times my money in a stock in two years, and I’m no Warren Buffett. Even 20 years ago when I was at my best, I would have screwed it up, I think. Bouzali: In the past 20-30 years, what have you had to give up or unlearn? Druckenmiller: I don’t give up anything, because I keep those scars in mind—they help you survive. But I’ll say, due to circumstances I won’t repeat here, I was promoted too early. I was an analyst at 23, became some sort of chief PM by 26. I never went to business school, so didn’t learn all the basics. So I relied heavily on technical analysis—my mentor loved it, and nobody used it then—I learned all the nuances. I can tell you, technical analysis today is only about 20% as effective as then, because nobody used it then. When everyone uses it, it’s no longer effective—no unique basis to act. It’s sad—it’s easy and lazy, you didn’t have to work hard, just look at charts instead of digging into 10-Qs. But technical analysis is really a problem. Likewise, for me, over 20-30 years, price and news reaction was important—if you had great news and price didn’t move, 90% of the time the good news was priced in and things weren’t good. Unfortunately, around 2000, lots of smart people entered our business. I think I was the only Bowdoin grad going into finance, because we’d had a ten-year bear market. Then every smart person learned what I just said, and it no longer worked. Now, company posts bad earnings, stock drops after hours; next day it can rally 10%, nearly always higher six months later. Now it doesn’t work, because everyone learned it. So those are two major changes. I haven’t given them up, just don’t rely on them as before. Bouzali: So they’re overused. Conversely, have any signals grown more important? Druckenmiller: No. No panacea. I benefit from 40 years of scars and success, and lots of pattern recognition, since there’s little in this field I haven’t seen. My biggest disappointment in my career is, I think I’m wiser now than at 30-40, with more trading tools, but I was a better fund manager then because I had courage to make bigger bets. I’m working to regain some of that courage—it’s more fun. Bouzali: So you’re chickening out? Druckenmiller: Oh, for sure. I’ve chickened out for a long time. I’m “Mr. Taco”—not T, it’s DACO: Druck Always Chickens Out. Bouzali: In your other experiences, is there a don’t-give-up mindset? Does that make you better? Druckenmiller: No. Just that as a kid playing games with my father and sisters, I couldn’t stand losing. I love games, but hate losing. So I’m very driven—it’s a sickness, I don’t know where it’s from, but I’d rather channel it productively, not just treat it as an illness—because it’s not totally respectable. But that’s me. Bouzali: Embrace it. Finally, this show is “Hard Lessons.” Can you look back on your life or career and share a hard-earned lesson? Druckenmiller: I just want to say, I have so many scars, you wouldn’t believe. Everyone knows how I traded the ‘99 Nasdaq bubble. I sold perfectly in January, then bought back at the top. Someone asked what I learned—I said, nothing—I’d learned not to do that 20 years before, but got emotional, which I still fight daily. Before, when I suffered a drawdown, I was anxious enough to puke once or twice a week. At some point, I realized you’ll keep making mistakes, get emotional—it comes and goes. But you have a gift, so stop beating yourself up for 48 hours or longer. You’ve been in this business long enough, with a strong record—it’s not randomness anymore—I had 15 years when I didn’t believe that. So the “hard lesson” is hundreds of mistakes, and they’re just moments. When you’re in a drawdown, if you’re a good money manager—easier said than done—just push through and carry on. Bouzali: So Stan Druckenmiller had 15 years of impostor syndrome? Druckenmiller: Yes, maybe longer. Bouzali: As we wrap up, I want to thank you for joining. I only met you later in your career; watching you think, trade, and execute is fascinating. You generously gave your time; on behalf of Morgan Stanley, thank you very much. Druckenmiller: Like I said earlier, I don’t do this for many people. I highly value Morgan Stanley, so I’m happy to be here. Bouzali: Thank you, Stan. Druckenmiller: Thank you, Iliana. Risk Disclaimer The market carries risks; investment must be prudent. This article does not constitute personal investment advice and does not take into account individual users’ special investment objectives, financial status, or needs. Users should consider whether any opinion, viewpoint, or conclusion in this article suits their particular circumstances. Investment based on this is at your own risk.