Stanley Druckenmiller’s background:

Druckenmiller founded his hedge fund Duquesne Capital in 1981. In the thirty years that followed before he closed the fund in 2010, the fund returned 30% per year on average. That is one of the best track records in history.

Duquesne Capital had no loss years, which is extremely unusual. Macro-based investing is often considered one of the most difficult and unpredictable investment styles, partly because of the risks of arbitrary policy decisions. This makes the high average return and the absence of loss years even more impressive.

You can compare this to Peter Thiel’s company Clarium Capital, which is also macro-based, but despite this, has performed poorly. Despite Peter Thiel having one of the world’s best track records as a VC (with most of the value coming from Facebook). It is always difficult to analyze in hindsight, but perhaps Peter Thiel did poorly (despite talent) because he focused too much on macro, instead of value-based investments. If you take a lot of risk, you can get high returns or high losses. Which is probably what happened there.

Stanley Druckenmiller’s investment style:

Druckenmiller is a value investor and trader with a macro focus. His investment style is called top-down (the analysis is carried out first of all from the top of the overall state of the economy, and then down to the specific investment instruments).

This means that he starts from an analysis of the macroeconomic situation to build a likely future scenario, a chain of events.

Based on this scenario, he decides which positions in, for example, currencies and futures (often highly leveraged) and equity spreads (a balance of owned and sold positions) have the best combination of potential return and risk.

This is something that requires a lot of experience, access to multiple markets, and not something the average stock investor can do.

But we can all listen to his lectures about macroeconomy for free.

Over the last couple of years, one of Stanley Druckenmillers’ big messages have been that the United States debt has grown too large and that its annual interest rate payments will soon eclipse both social security and medical costs.  It will be bad in 10 years unless something drastic happens.

Read more: About other renowned value investors and their strategies.