This is my summary of the speech by Stanley Druckenmiller (see speech)
- People focus on earnings, but it is liquidity that moves the markets.
- It is helpful to be focused on a few select ideas rather than giving your best idea minimal opportunity. The biggest thing that he learned from George Soros wasn’t about to identify trends etc. but it was to bet big when you see it (the GBP bet was 2x the firm’s capital).
- The Fed made a mistake in ’03 and ’04. We said, imagine you’ve just come back from Mars and you have just looked at the economic data, and now guess where do you think the rates should be, and everyone thought that the rates would be meaningfully higher.
- The Fed keeps talking about the threat of inflation, but nothing is more deflationary than having a phony asset bubble blow up.
- When it comes to Fx, it can take years to unwind the dislocations in the currency if it’s been overvalued for a long time