Fund or
affiliation
- Quantum Fund,
Duquesne Fund
Methodology
- Holding a core group
of stocks long and a core group of shorts, then
use leverage to trade S&P futures, bonds and
currencies.
Research Techniques
Employed
- Focused his analysis
on seeking to identify the factors that were
strongly correlated to the stock price movement
as opposed to looking at all the fundamentals.
- He also used
technical analysis.
Trading Techniques
Employed
- He never used
valuation to time the markets. He use liquidity
analysis and TA. Valuations only tells him how
are a market can move if there is a catalyst.
- To attain truly
superior l-t returns is to grind it out until
you’re up 30-40%, and then if you have
convictions, go for a 100% year. If you can put
together a few near-100% years and avoid losing
years, you can achieve really outstanding l-t
returns.
- Soros taught:
"when you have tremendous conviction on a
trade, you have to go for the jugular. It takes
courage to be a pig." As far as Soros is
concerned, when you’re right on something,
you can’t own enough.
- If a trade
doesn’t work, Soros is confident enough
about his ability to win on other trades that he
can easily walk away from the position.
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Philosophy
and beliefs
- When you earn the
right to be aggressive, you should be aggressive.
A philosophy reinforced by Soros.
- The way to build
long-term returns is through preservation of
capital and home runs.
History and other
facts
- At the age of 28
Druckenmiller launched Duquesne after a person
offered him $10,000/mo. just to talk to him.
- In 1982, after
losing all his money, he landed a client who had
sold out his software business. This individual
account allowed him to start using shorts and
leverage.
- The queen in chess,
which can move in all directions, is a far more
powerful piece than the pawn, which can only move
forward. [analogy: hedge funds vs. pension funds]
Examples
- Was dead wrong
entering 19 Oct. 87 with a leveraged long
position. Market opened over 200 points lower,
liquidated his entire position and went net
short; and made a small profit.
- Long Deutsche mark
right after the fall of Berlin Wall in
anticipation of expansionary fiscal policy and
tight monetary policy.
Performance Record
- 37% over 12 years:
"The longest-running measure of
Druckenmiller’s performance in the markets
is his own Duquesne fund. Since its inception in
1980, the fund has averaged 37% annually."
NMW, J. Schwager 1992.
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