We Study Billionaires - The Investor’s Podcast Network - TIP232: Billionaire Stanley Druckenmiller Lessons (Business Podcast)

Starting point is 00:00:00 You're listening to TIP. Hey, how's everyone doing out there? On today's show, we're going to be talking about one of our favorite investors, Mr. Stanley Drucken Miller. Mr. Drucken Miller was born in 1953, and he's been in the investment world since dropping out of his PhD program at the University of Michigan in 1977 to take on a job at Pittsburgh National Bank. After only one year, he became the head of the bank's equity research group. And by 1981, Mr. Drucken Miller formed Duquesne Capital Management. Then in 1988, he was hired by George Soros to work at the Quantum Fund. This is when Stanley became a household name because he famously broke the Bank of England

Starting point is 00:00:39 by shorting the British pound and realizing a billion dollar gain. In addition to being one of the smartest investors in the world, Mr. Drucken Miller is a philanthropist and is donated in excess of a billion dollars. So without further delay, here's our coverage of Mr. Stanley Drucken Miller. You are listening to The Investors Podcast, where we study the financial markets and read the books that influence self-made billionaires the most. We keep you informed and prepared for the unexpected. Hey, everyone. Welcome to the Investors podcast. My name is Preston Pish, and as always I'm accompanied by my co-host, Stig Broderson. And like we said in the introduction, we're going to be covering

Starting point is 00:01:26 Stanley Drunken Miller today. And in this first audio clip that we're going to play for you, Stan was talking about his thoughts on optimal monetary policy. And here's what he had to say. There's now a mix of financial repression and central bank intervention has made long-term interest rates largely determined by government fiat. Bond buying by central bankers, commonly referred to as QE, has become so ingrained in current thinking that is now in the Fed's conventional toolkit. A tool once reserved for a depression or financial crisis is now to be used at the first inkling of the next recession.

Starting point is 00:02:05 For those of us old enough to have seen the dangers of price controls, they led to shortages, wasted resources and disincentives to invest in what consumers want. They inevitably led to an allocation of resources by political actors in another great affront to capitalism. So it is most surprising that 40 years after wage and price controls were soundly rejected by every economic textbook and policymakers, today we are, have settled to allowing the most important price of all long-term interest rates to be regularly distorted by public intervention. The excuse of this radical monetary policy

Starting point is 00:02:46 has been the obsession with a fixed 2.0 percent inflation targeting a rule. The decimal point shows the absurdity of the exercise. Anything below 2.0 percent was a failure in risk deflation, the boogging man of the 1930s to be avoided at all costs. This has meant that years after the Great Recession ended, the Fed has not only kept interest rates below inflation, but have accumulated an unprecedented $4.5 trillion on their balance sheet by doing QE. Global central banks, in part to keep their currencies from appreciating of these over-abundant dollars, have followed with 10 trillion of their own. Now, the irony of this, is over the last 700 years, inflation has averaged barely over 1%,

Starting point is 00:03:37 and interest rates have averaged just under 6%. So, we are seeing an unprecedented, ultra-monetary, radical monetary expansion during a time of average inflation over the last number of centuries. Moreover, the three most pernicious deflationary periods of the past, century did not start because inflation was too close to zero. They were preceded by asset bubbles. If I were trying to create a deflationary bust, I would do exactly what the world central bankers have been doing the last six years.

Starting point is 00:04:17 I shudder to think that the malinvestment that occurred over this period, corporate debt has soared, but most of it has been used for financial engineering. Who knows how many corporate zombies are out there because free money is keeping them alive? individuals have plowed ever-increasing amounts of money into assets at ever-increasing prices. And it's not only the private sector's getting the wrong message, but Congress is well. I have no doubt we would have not gotten such a big increase in fiscal deficits if policy had been normalized already. Of all the interventions by the not-so-invisible hand, not allowing the market to set the hurdle

Starting point is 00:04:56 rate for investment is the one I see with the highest costs. The government should get out of the business of manipulating long-term interest rates and canceling market signals. Whenever Stanley Dronke Miller is referring to long-term interest rate here, he refers to bonds whose repayment is guaranteed by the government. So it's typical longer than 10 years. Now, long-term interest rates are so important because it's one of the key determinants of business investments.

Starting point is 00:05:25 And these long-term interest rates can, if they're low, encourage investments in new equipment and whereas high interest rates discourage that everything else equal. So it's also one of the key determinants of economic growth. So the key takeaway for me here really is that Stanley Drunk Miller is saying that we should focus more on creating the best climate for growth and we should manage our asset bubbles. And really, if needed, we should allow for a minor recession in the short term instead of taking the risk for the more likely scenario of a more severe crisis. if we keep on putting all that liquidity into the system.

Starting point is 00:06:04 Let's take a quick break and hear from today's sponsors. All right. I want you guys to imagine spending three days in Oslo at the height of the summer. You've got long days of daylight, incredible food, floating saunas on the Oslo Fjord, and every conversation you have is with people who are actually shaping the future. That's what the Oslo Freedom Forum is. From June 1st through the 3rd, 2026, the Oslo Freedom Forum is entering its 18th year, together activists, technologists, journalists, investors, and builders from all over the world,

Starting point is 00:06:36 many of them operating on the front lines of history. This is where you hear firsthand stories from people using Bitcoin to survive currency collapse, using AI to expose human rights abuses, and building technology under censorship and authoritarian pressures. These aren't abstract ideas. These are tools real people are using right now. You'll be in the room with about 2,000 extraordinary individuals, dissidents, founders, philanthropists, policymakers, the kind of people you don't just listen to but end up having dinner with. Over three days, you'll experience powerful mainstage talks, hands-on workshops on freedom tech, and financial sovereignty, immersive art installations, and conversations that continue long after the sessions end. And it's

Starting point is 00:07:20 all happening in Oslo in June. If this sounds like your kind of room, well, you're in luck because you can attend in person. Standard and patron passes are available at Osloof Freedomform.com with patron passes offering deep access, private events, and small group time with the speakers. The Oslo Freedom Forum isn't just a conference. It's a place where ideas meet reality and where the future is being built by people living it. If you run a business, you've probably had the same thought lately. How do we make AI useful in the real world? Because the upside is huge, but guessing your way into it is a risky move. With NetSuite by Oracle, you can put AI to work today.

Starting point is 00:08:01 NetSuite is the number one AI cloud ERP, trusted by over 43,000 businesses. It pulls your financials, inventory, commerce, HR, and CRM into one unified system. And that connected data is what makes your AI smarter. It can automate routine work, surface actionable insights, and help you cut costs while making fast AI-powered decisions with confidence. And now with the NetSuite AI connector, you can use the AI of your choice to connect directly to your real business data. This isn't some add-on, it's AI built into the system that runs your business.

Starting point is 00:08:36 And whether your company does millions or even hundreds of millions, NetSuite helps you stay ahead. If your revenues are at least in the seven figures, get their free business guide, demystifying AI at net suite.com slash study. The guide is free to you at net suite.com slash study. NetSuite.com slash study. When I started my own side business, it suddenly felt like I had to become 10 different people overnight wearing many different hats. Starting something from scratch can feel exciting, but also incredibly overwhelming and lonely.

Starting point is 00:09:10 That's why having the right tools matters. For millions of businesses, that tool is Shopify. Shopify is the commerce platform behind millions of businesses around the world and 10% of all e-commerce in the U.S. from brands just getting started to household names. It gives you everything you need in one place, from inventory to payments to analytics. So you're not juggling a bunch of different platforms. You can build a beautiful online store with hundreds of ready-to-use templates,

Starting point is 00:09:38 and Shopify is packed with helpful AI tools that write product descriptions and even enhance your product photography. Plus, if you ever get stuck, they've got award-winning 24-7 customer support. Start your business today with the industry's best best. business partner, Shopify, and start hearing, sign up for your $1 per month trial today at Shopify.com slash WSB. Go to Shopify.com slash WSB. That's Shopify.com slash WSB. All right. Back to the show. Some really good thoughts there, Stig. And in addition to what you're explaining, I think it's also important to talk about Stanley's investment philosophy in general.

Starting point is 00:10:23 unlike Warren Buffett and many other value investors, Stan typically focuses heavily on central bankers. And for instance, I'm going to read you a quote here. Stan said, earnings don't move the overall market. It's the Federal Reserve Board. Focus on the central banks and focus on the movement of liquidity. Most people in the markets are looking for earnings in conventional measures. It's the liquidity that moves markets. So if you're like me and it's really hard to hear that quote because,

Starting point is 00:10:53 much of this Warren Buffett value investing style revolves around looking at the individual companies and ignoring the macro factors that are being impacted by central banks. But I think it's at the same time really important for people to hear how Stan thinks through his methodology. Since the inception of his Duquesne Capital Management Fund, his return has been 30% annually since 1981. That figure is absolutely absurd. So let me, I have another quote here that I want to read that kind of digs into the way he thinks about this central banking impact and how he kind of starts with that narrative to understand where he's at in cycles.

Starting point is 00:11:34 And the second quote goes like this. The major thing that we look at is liquidity, meaning as a combination of an economic overview. Contrary to what a lot of the financial press has stated, looking at the great bull markets of this century, the best investments for stocks is a very dull. slow economy that the Federal Reserve is trying to get going. Once an economy reaches a certain level of acceleration, the Fed is no longer with you. The Fed instead is trying to get the economy moving. The Fed, instead of trying to get the economy moving, reverts to acting like the central bankers that they are and they start worrying about inflation and things get too hot.

Starting point is 00:12:14 So it tries to cool things off, shrinking liquidity. While at the same time, the corporations start having to build inventory, which again, again, takes money out of the financial assets. And finally, if things get really heated, companies start engaging in capital spending. All three of these things tend to shrink the overall money available for investing in stocks and stock prices go down. So the reason I'm reading all of this is to really highlight the importance that he places on understanding this cycle and this dynamic and really the focus in the primary start by looking at what the central bankers do. So when we play that sound clip and you kind of hear him talking about his views on what the central banks should be

Starting point is 00:12:56 doing and the impacts, this is truly where Stan Drunken Miller starts his analysis. So let's go ahead and dig into the next topic, which is really kind of a fascinating area to explore. And in this question, Stan was asked a question about machines participating in the markets, specifically with respect to artificial intelligence. And Stan was asked about the lack of signals that he seems to be getting in the markets now compared to what he was seeing in the previous decades. And so this is how he responded. Someone said the other day, you've been very critical of these algos. And I said, well, I'm not critical of the algos.

Starting point is 00:13:34 They just made my life very inconvenient. I don't, it's not that they're doing anything wrong. So what I meant by that is a big part of my process is taking signals from markets. I've always believed markets are smarter than I am. they sent out a message, and then if I listen to them properly, no matter how powerful my thesis, if they're screaming something else, it's telling me you've got to reevaluate, you've got to re-evaluate, and you go back to it, and it's still all right fine,

Starting point is 00:14:04 but you've got to be open-minded. About six or seven years ago, a combination of central banks canceling the signals, but maybe more importantly, the algos coming in with very, very sophisticated models based on historical events and maybe stuff they're picking up on the internet about who's shopping or this kind of stuff and also on standard deviation away from price have come up with their own methodology of how to predict price movements and how to behave. well, I grew up with someone fundamentally likes the security and they buy it from somebody who fundamentally doesn't like security and somehow the invisible hand spit out a very good answer

Starting point is 00:14:55 and it was predictive over time and I also learned that things would change and when the trends started to go up that's what I'm supposed to pile in Well, the algos, machines trading, they tend to have different motivations. Like they're not nearly as momentum oriented. And just when the trend may look like it's going up, it may be just some algo who's got some standard deviation or something going on. And it has severely inhibited my ability to read the signals.

Starting point is 00:15:32 So my first mentor, Burroughs Drellis, back in Pittsburgh, used to say 100 million Frenchmen can't be wrong. And that was just saying that the voice of the market was always correct, and I need to listen to it. And it was true. If a company was reporting great earnings and everybody loved it, and the stock just didn't act well for three or four months, almost inevitably, something happened that you didn't foresee six months down the road. And I'll never forget, about two or three years ago, Facebook had afforded great earnings. Stock was like 122, opens at 131 after hours, and like three days later, trading at 116. So the analysts come in, and they're giving me this story.

Starting point is 00:16:24 I said, nothing's wrong, it's great, it's great. I said, no, kid, you're wrong. Something's going to come out. You just don't know it yet. Something terrible in the next three or four months. Anyway, a year later, the stock was like 220. So that didn't mean anything. Conversely, I can remember so many examples.

Starting point is 00:16:43 When a company would report bad earnings, it goes down 5% on huge volume and then closes up on the day. Almost invariably, three to six months later that stock was higher, doesn't mean anything anymore, rather than some hedge fund, maybe being a wise guy or somebody's doing something all the time I've seen that, and a month later the stock's actually lower. So they certainly don't work the way they used to. I still like price action versus news, but it used to be a very, very important part of my process. Now it's a much diminished part of my process.

Starting point is 00:17:18 It does feel good to hear that one of the greatest who's seen close to everything in the financial markets, he's saying that the markets have changed. And while there's probably some truth to confirmation bias and you just want it to be confirmed in what you already believe, I do think that this validates the thesis behind value investing even more. Now, I'm not so stubborn to say that you can't make money out of trading and reading price signals. But I think you have to be very smart to do that. If not standing drunk email is smart, then very, very close to. Because you're not engaging in this game with a tailwind from equities that's going up because the companies you're investing in and making a profit. No, now as a trader, you're not only competing with

Starting point is 00:18:05 professional traders. You're also competing with computers. And it's just going to be harder and harder to compete in that space. Yeah, I really couldn't agree more, Stig. And when you hear a guy like Stan say that AI bots are making life hard for him, it really makes you wonder how an amateur investor can get out there and outperform. If anything, it makes me second guess technical analysis and pattern analysis, especially in the short-term basis because so many of these automated systems, which make up 90% of the trading on the market, are relying on decades of data to assist in their decision-making in the timing.

Starting point is 00:18:43 All right. So as we move on to the next question and clip that we're going to play here, this was recorded in December of 2018. and these are stands thoughts on the current market conditions. We did predict the last four recessions, and our returns going into them, and as they started, we're always well above our average returns over time. So inside the stock market is one indicator. The second would be the yield curve.

Starting point is 00:19:09 Again, amber, not red, but we've inverted, as you know, from fives and twos, just slightly, two years of 269, five years or 268, to 10 years 285. So there's not only a big flattening going on, it's a very confusing bull flattening because it's not like we're looking at high rates to start with here, and the Fed has told us that there's going to be three to four hikes next year after this hike, and the market is just saying, no, no, no.

Starting point is 00:19:39 Then the other thing we've looked at historically is credit tends to lead the economy. There seems to be a confidence that this cycle, we don't have the danger we had in the last cycle because the bad stuff, a la housing back then, has not infected the banks. It was more done in the high-yield loan market. And to me, it's true. It's great that it's not in the banks because that would probably be

Starting point is 00:20:10 a systemic problem in financial crisis. But the economy doesn't really care whether credit is in the banks, or it's in the investment community with high-eil loans. In fact, I would argue that if you're on the other side of it, you'd much rather work your loan out with a bank than you would with some hedge fund manager out there. So the fact that I'm sure you read the article in the Financial Times yesterday, and the fact that credit is drying up to the extent that it is,

Starting point is 00:20:42 and there are all sorts of warning signs there. I think the GE-CDS has gone from 50 basis, points to 200 basis points since September 1st. IBM's gone from 30 to 80. High yield indexes are moving. Leveraged loans are down 3%. But more importantly, because we've had eight years of free money

Starting point is 00:21:04 and the kind of excesses and pushing people out on the yield curves that's created, it's just a time for caution that you want this bubble to unlined slowly now, because if you don't, and let's say these indicators turn red, you may have to do a lot more crazy monetary stuff, and actually it'll be more of a problem in terms of someone like me who eventually wants to normalize, wants to de-leverage,

Starting point is 00:21:35 that's the train I've been on, I understand, but this isn't an effort to let that bubble out slowly. Someone, I believe, used the term three or four years ago that this is a beautiful de-leveraging taking place. I have no idea what he was talking about. How do you have a beautiful de-leverging with U.S. debt going through the roof at the government level and corporate non-financial debt growing at the rate it was?

Starting point is 00:22:01 So what I'm asking for now is not a cut just to take stock of everything I've said and wait and see what happens. and what I'd really like to think my business, as you know, is risk reward. So let's just talk about the risk reward here. Let's suppose I'm completely wrong, and three to four months from now, none of this stuff mattered. All the financial people were crazy and they were panicking

Starting point is 00:22:33 because of some technical factor in the market. And let's suppose the Fed did not hike tomorrow. What is the cost? Okay. I'm not sure what the cost is, but there's got to be some cost to their credibility, two to three months down the road when they start hiking again. Not a big cost, in my opinion. Let's suppose that these economic indicators, the stuff we're looking at, the forward-looking stuff, is right, and we have big potential problems brewing, and that they could.

Starting point is 00:23:13 could be even bigger than we think because there's stuff hiding out there we don't know about in terms of malinvestment. Think about the cost if they hike tomorrow and if they continue to shrink their balance sheet $50 billion a month right when the ECB is not offsetting it. I mean, that cost to me is 5 to 10x. So some really interesting comments that he brought up here, particularly there at the beginning where he was saying, I think we're in a yellow status. I think we're potentially in a topping process. I think the Fed needs to hold back on the tightening that they're doing because

Starting point is 00:23:51 we're seeing the inversion and the bond yield curve. In general, I would say there's just a lot of caution that he's recommending here for investors and also for central bankers that are implementing their monetary policies. I also found his jab there at Ray Dalio kind of interesting where he said that, you know, he doesn't understand how in the world this is a beautiful de-leveraging, which I'm sure that would be an interesting discussion to hear him and Ray hash that out. But just some real nuggets from a billionaire investor who gets 30% annual returns on where he kind of sees where we're at entering 2019 in the stock market. Let's take a quick break and hear from today's sponsors.

Starting point is 00:24:35 No, it's not your imagination. Risk and regulation are ramping up. and customers now expect proof of security just to do business. That's why VANTA is a game changer. VANTA automates your compliance process and brings compliance, risk, and customer trust together on one AI-powered platform. So whether you're prepping for a SOC 2 or running an enterprise GRC program, VANTA keeps you secure and keeps your deals moving.

Starting point is 00:25:01 Instead of chasing spreadsheets and screenshots, VANTA gives you continuous automation across more than 35 security and privacy frameworks. Companies like Ramp and Ryder spend 82% less time on audits with Vantta. That's not just faster compliance, it's more time for growth. If I were running a startup or scaling a team today, this is exactly the type of platform I'd want in place. Get started at Vanta.com slash billionaires. That's Vanta.com slash billionaires.

Starting point is 00:25:32 Ever wanted to explore the world of online trading, but haven't dared try? The futures market is more active now than ever before, and Plus 500 futures is the perfect place to start. Plus 500 gives you access to a wide range of instruments, the S&P 500, NASDAQ, Bitcoin, gas, and much more. Explore equity indices, energy, metals, 4X, crypto, and beyond. With a simple and intuitive platform, you can trade from anywhere, right from. from your phone. Deposit with a minimum of $100 and experience the fast, accessible futures trading

Starting point is 00:26:09 you've been waiting for. See a trading opportunity. You'll be able to trade it in just two clicks once your account is open. Not sure if you're ready, not a problem. Plus 500 gives you an unlimited, risk-free demo account with charts and analytic tools for you to practice on. With over 20 years of experience, Plus 500 is your gateway to the markets. Visit Plus 500. to learn more. Trading in futures involves risk of loss and is not suitable for everyone. Not all applicants will qualify. Plus 500, it's trading with a plus. Billion dollar investors don't typically park their cash in high yield savings accounts. Instead, they often use one of the premier passive income strategies for institutional investors, private credit. Now, the same passive income

Starting point is 00:26:58 strategy is available to investors of all sizes, thanks to the fund-rides. income fund, which has more than $600 million invested and a 7.97% distribution rate. With traditional savings yields falling, it's no wonder private credit has grown to be a trillion dollar asset class in the last few years. Visit fundrise.com slash WSB to invest in the Fundrise income fund in just minutes. The fund's total return in 2025 was 8% and the average annual total return since inception is 7.8%. Past performance does not guarantee future results, current distribution rate as of 1231, 2025. Carefully consider the investment material before investing, including objectives, risks, charges, and expenses. This and other information can be

Starting point is 00:27:46 found in the income fund fundrise.com slash income. This is a paid advertisement. All right. Back to the show. So in this question, Stey Drunk Millers asked, when you had a down year, normally a fund manager would want to get aggressive and try to win it all back. What you do is to take lots of little bets that won't hurt you. Why? And this is how Stained Drunken Miller responded. Yeah, one of the lucky things was the way my industry prices is you price on it at the end of the year, you take a percentage of whatever profit made for that year. So at the end of the year, psychologically and financially, you reset to zero. Last year's profits are yesterday's news.

Starting point is 00:28:35 So I would always be a crazy person when I was down in a year. But I know because I like to gamble that in Las Vegas, 90% of the people that go there lose. And the odds are only 33 to 32 against you in most of the big game. So how can 90% lose? It's because they want to go home and brag that they won money. So when they're winning and they're hot, they're very, very cautious. And when they're cold and losing money, they're betting big, completely irrational. And this is important because I don't think anyone has ever said it before.

Starting point is 00:29:12 One of my most important jobs as a money manager was to understand whether I was hot or cold. Life goes in streaks. And like a hitter in baseball, sometimes a money manager is seeing the ball, and sometimes they're not. And if you're managing money, you must know whether you're cold or hot. And in my opinion, when you're cold, you should be trying for buntz. You shouldn't be swinging for the fences. You've got to get back in a rhythm. So that's pretty much how I operated.

Starting point is 00:29:42 If I was down, I had not earned the right to play big. And the little bet you're talking about were simply on to tell me had I reestablished a rhythm and was I starting to make hits again. The example I gave you of the Treasury bet in 2000 is a total violation of that, which shows you how much conviction I had. So this dominates my thinking. But if a once-in-a-lifetime opportunity comes along, you can't sit there and go, oh, well, I have not earned the right.

Starting point is 00:30:18 Now, I will also say that was after a four-month break. My mind was fresh. My mind was clean. And I will go to my grave believing if I hadn't taken that sabbatical, I would have never seen that in September. And I would have never made that bet. It's because I had been freed up. And I didn't need to be hitting singles because I came back and it was clear and I was fresh. And so that's kind of, it was like the beginning.

Starting point is 00:30:47 beginning of the season, so I wasn't hitting bad. But it is really, really important if you're a money manager to know when you're seeing the ball. So to me, this was a very interesting response because what he's talking about here is how fund managers are really incentivized and how they're working due to their incentives. So basically, he resets every year. And that makes a lot of sense if you are a money manager. But I also want to put out, if you are a private investor, you probably are since you'll listen to this podcast. This is generally a crazy strategy. A loss of $1, you know, the last day of the year is just as important as $1 loss in January. And I'm not really saying here that Staining Drunk Mill is unethical. Not at all. If anything,

Starting point is 00:31:35 he's very ethical. He actually closed down his fund in August 2010. Whenever he told his clients that he was returning the money because he couldn't sustain his 30-year record of beating the market because he had so much money. And to me, that was a very ethical decision. Most money managers would probably continue and just collect their annual fee. But I think this response was very interesting because it also tells you what you should look out for whenever you are investing together with the money manager. That's also one of the reasons why I've never invested in private equity or in hedge funds for that matter. Because basically you reward your money manager not only by taking annual fee, but also to take a cut off the price.

Starting point is 00:32:17 Consider this. If the portfolio is down 10% in October, you incentivize your money manager to take big bets on making a profit. So if there's a slight probability to make a profit for the year, but a much larger probability to lose 40% of the portfolio, you're really giving him incentive to take an irrational risk. All right. So this is the point in the show where we play a question from the audience, but today's going to be a little bit different. And instead of playing a question, we're going to read a question. And Stig and I really wanted to cover this topic because this is something that we've never been asked before.

Starting point is 00:32:54 And so what I'm going to do right now is I'm going to read out loud the email that we received from our listener, Sarah. So this is what Sarah wrote. Hi, Preston and Stig. My name is Sarah. Thanks so much for the show. My question is, why are mutual funds disparaged while hedge fund managers like Ray Dallio are celebrated?

Starting point is 00:33:11 I understand the outcomes are different in many scenarios, but the process of taking fees to actively manage money is the same. In fact, hedge funds take a lot more fees when you take into account the percentage of gains that they actually take from the limited partners. I look forward to hearing your response and thank you so much. All right, Stig, let's hear what you got. So let's talk about the difference between a mutual fund and a heads fund. So heads funds are managed in a much more aggressive fashion. Hets funds take speculative positions in derivatives, and they can also short-sell stocks. Standing Drunken Miller and Radalio would be example of that. Now, hedge funds are only available to accredited investors who meet a specific set of

Starting point is 00:33:57 criteria to qualify in terms of wealth and in terms of how much money they make. Now, while there are many types of mutual funds, they generally do not take the same highly liberalist positions, which is also why they're available to us retail investors. Now, I do want to say, that if I can give a counter-argument to what you're saying about the celebration of heads fund managers, I could mention Peter Lynch. He's probably the most famous mutual fund manager. He managed the Magellan Fund and a fidelity investment between 1977 and 1990, he averaged 29.2% annual return. And he's definitely a household name if you're an investor. But generally, I think you were right in arguing that heads fund managers are more celebrated.

Starting point is 00:34:45 And I think there are a few reasons for that. Heads funds in general, they take on more risk and they also see more volatility. So for that reason alone, you see some perform much better than mutual fund managers. Another thing is, it's easy to talk about how Redalia came out of the financial crisis with a positive result. But it's a lot harder for a mutual fund manager that is long only in equities, even though he might have the same skill set in evaluating the current market. because he does not have the same instruments available when everything crashes.

Starting point is 00:35:20 Another thing is that generally heads-fired managers have more interesting stories to tell. I mean, consider this. If you're a value investor, saying that you bought a stock in a cemetery and just kept it there for 30 years because you felt the demand was pretty stable, no one's going to listen to that. It's a lot more interesting to hear stories about Stenidronkimer reading price signals, redal you thinking that the dollar could appreciate or depreciate by 30% and how to take precision in that.

Starting point is 00:35:51 And, you know, as an investing podcast, we are guilty in that celebration too. So, Sarah, I don't have much to add to Stig's comment, but I'll say we really appreciate this question because it's not a topic that we typically discuss or provide clarification on. So as a token of our appreciation for sending in your question, we're going to give you access to one of our free courses on the TIP Academy. me page on our website. The course that we're going to give you is our intrinsic value course, and our intrinsic value course teaches people how to determine the value of an individual stock.

Starting point is 00:36:23 It also teaches you how to think about the market cycle and when you're buying your stock, and it also teaches you some stuff about options trading. So we're really excited to give you this course. If anybody else out there wants to check out the course, you can go to tip intrinsic value.com, or you can just go to our website and click on Academy, link at the top of the page and courses right there. So if anyone else wants to leave a question on the show, go to Ask the Investors.com. And if your question gets played on the show, you'll get a free course. All right, guys. That was all that Preston and I had for this week's episode of The Investors podcast. We see each other again next week.

Starting point is 00:36:57 Thanks for listening to TIP. To access the show notes, courses, or forums, go to theinvestorspodcast.com. To get your questions played on the show, go to AsktheInvesters.com and win a free subscription to any of our courses on TIP Academy. This show is for entertainment purposes only. Before making investment decisions, consult a professional. This show is copyrighted by the TIP network. Written permission must be granted before syndication or rebroadcasting.

We Study Billionaires - The Investor’s Podcast Network - TIP232: Billionaire Stanley Druckenmiller Lessons (Business Podcast)

There aren't comments yet for this episode. Click on any sentence in the transcript to leave a comment.