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Thoughts from Stan Druckenmiller
Stan Druckenmiller is one of the world's most brilliant investors. Over the past 3 decades, he's achieved 30% annual returns with not a single down year. In the past 5+ years, he's been heavily concentrated in FAANGM stocks which we all know have been phenomenal winners.
Stan credits his track record to being a macro investor (ie. His ability to jump across asset classes). He's also someone that watches chart trends - zero surprise there.
Thus, it's always interesting to hear Stan talk about what he's seeing. He did this 20-min interview with Goldman last week:
Stan's medium-term view (next several years) can be summarized as:
Bearish: TLT, USD
Bullish: Asian stocks, Commodities
Neutral: US growth stocks (although FAANGM does OK)
His view on bonds, US dollar, foreign stocks and commodities is all tied to a rise in inflation. And it aligns with what I’ve been seeing on the charts. For example, here's the semi-annual charts for EEM and the US Dollar Index:
EEM is coming out of a 14-year base, while the US dollar is breaking 6-year support. This is consistent with the prior 3 major declines in the dollar:
1970s: Foreign stocks & commodities were top performers
Late 80s: Japan was a top performer
2000s: Emerging markets & commodities were top performers
The reason why Stan is neutral (not bullish) on growth stocks is because of his view of rising bond yields (due to inflation). This relationship between Growth:Value and bond yields is one I've discussed a few times. See here.
Longer term, Stan believes cloud stocks have a lot higher to go. The cloud is only in 3rd-4th inning (would've only been in the 1st inning without Covid). Comparisons with the late 90s are ridiculous. Amen.