Stanley Druckenmiller sends Wall Street a bear market warning


Stanley Druckenmiller has a warning for Wall Street: the stock market’s steep decline is not over yet.

“My best guess is that we’ve been in a bear market for six months,” Druckenmiller, who heads Duquesne Family Office, said Thursday (US time) at the 2022 Sohn Investment Conference. “For those who trade tactically, it is possible that the first step is complete. But I think it’s very, very likely that the bear market has a way of working.

Hedge fund legend Stanley Druckenmiller, who has a net worth of around $10 billion, managed billionaire George Soros’ money for more than a decade.Credit:Bloomberg

The Nasdaq Composite Index has fallen more than 20% from its previous high, the traditional definition of a bear market. While the S&P 500 was within a few points of that intraday threshold on May 20, a late afternoon rally technically kept the bull market intact for the benchmark, which has since rebounded 3%.

The catalyst for further losses is that the Federal Reserve has become aggressive in tackling the highest inflation in decades. This will likely lead to a recession sometime in 2023, Druckenmiller said.

About a year ago he said central bank policy was totally inappropriate and that “we are in a frenzy in all markets”.

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“It’s been an incredibly expensive period because a lot of assets have been bought over this period that a lot of people going off the risk curve will lose a lot of money on,” said Druckenmiller, 68, who managed the money from billionaire George Soros for more. more than a decade.

David Einhorn of Greenlight Capital, appearing at the same conference, said inflation was the big problem and was likely to persist, in part due to underinvestment in things like cement, housing, oil mining and paper.

Over the past six to eight months, Druckenmiller said he had bet against fixed income and stocks, avoided doing much with currencies and held key commodities such as oil, gold and copper. During the first quarter, Duquesne sold its shares in Google’s parent company Alphabet, Airbnb and Carvana, while strengthening its position in Chevron’s regulatory filings filed last month.

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