Taps Coogan – October 25th, 2022
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Legendary investor Stanley Druckenmiller, arguably the most successful fund manager alive today, who produced average annual returns of 30% from 1986 to 2010 without a single down year, spoke at CNBC’s Seeking Alpha conference a couple of weeks ago with Joe Kernen. I usually don’t post interviews from that long ago but the video of that discussion has just recently been released and it’s definitely worth a watch.
Mr. Druckenmiller’s discussion is very wide ranging but the punchline is as follows:
“Conventional wisdom, which I agree with, (is) that stocks go up over the long term. The problem is that we’ve become a little complacent about what long term means. If you bought the Dow in 1929, you got back to even in 1954… The Dow was in 1966 where it was in 1982. When I look back at the secular bull market that started in 1982, we had a president that said that government was the problem not the solution. We had a guy who fired all the air-traffic controllers in the country when they wanted a big raise. We now have a president who says he is a union man… We have a president who thinks government is the solution… Maybe more importantly… the stock market was 50% of GDP. It’s now 150%, down from 225%. Real rates were high. That’s why we were at eight times depressed earnings. We’re now 18 to 19 times inflated earnings that I have a very strong feeling are going to be down next year. Then you have the secular forces. You were right on the initial ramp of globalization… that’s been a trend for 25 or 30 years. (It’s) going the other way now. Disentangling all that, it’s going to be inflationary. And finally… the last ten years of the bull market you put it all into hyperdrive with $30 trillion in QE and zero rates. Now, the consequences of that are borne and all those factors that caused the bull market, they are not only stopping, they are reversing…”
“You can have a period of 10, 15, 20 years where the market doesn’t go anywhere. That doesn’t mean you can’t make money… I wouldn’t be surprised, in fact it’s my central forecast, the Dow won’t be much higher in 10 years than it is today.”
Enjoy the full discussion above.