Stanley Druckenmiller’s advice
Stanley Druckenmiller shared his views on markets and the economy with Bloomberg TV in December. While the market environment has changed since then, his advice still holds value. He was quite vocal about the Fed raising rates in December, which he believed would challenge the already slowing economy. The Fed eventually adopted a much more dovish stance in January.
Druckenmiller said that stock markets (SPY) (VTI) could continue to disappoint investors for years to come. To navigate market ups and downs, he is short on financials and likes cloud-computing names such as Microsoft (MSFT). He thinks cloud names are disruptive and defensive, as even if a recession comes, their demand could rise because they can help cut costs. In the fourth quarter, he increased his stake in Microsoft and Workday (WDAY) and reduced it in Amazon (AMZN) and Alphabet (GOOGL).
He has also been buying US Treasuries (TLT) (AGG), which he believes could appreciate if the Fed slashes rates to support growth. He also noted that buying two-year Treasury notes in late 2000 was one of his best trades ever.
Exposure to gold
Druckenmiller dumped his gold (GLD) holdings the night before Trump’s election. However, he could not resist the metal for long and again dipped back into it in December 2016 and January 2017. He had wanted to buy currency, but no country wanted its currency to strengthen, so he bought gold (JNUG) instead, which was attractively priced. As of his latest filing, he had added some Barrick Gold (GOLD) stock to his portfolio. For more views on investments during market fluctuation, read Dalio’s Advice on How to Prepare for the Next Downturn.