Here’s a great except from Stanley Druckenmiller’s 2015 Speech at the Lost Tree Club. Druckenmiller provides some great insights into why investors should never, ever invest in the present, saying:

Now, I told you it was kind of dumb luck how I fell into this. Ken Langone knows my first mentor very well. He’s not a well-known guy, but he was absolutely brilliant, and I would say a bit of a maverick. He was at Pittsburgh National bank.

I started there when I was 23 years old. I was in a research department. There were eight of us. I was the only one without an MBA, and I was the only one under 32 years of age. I was 23 years old.

After about a year and a half -I was a banking and a chemical analyst -this guy calls me into his office and announces he’s going to make me the director of research, and these other eight guys and my 52-year-old boss are going to report to me. So, I started to think I’m pretty good stuff here. But he instantly said, “Now, do you know why I’m doing this?” I said no. He says, “Because for the same reason they send l8-year-olds to war. You’re too dumb, too young, and too inexperienced not to know to charge. We around here have been in a bear market since 1968.” This was 1978. “I think a big secular bull market’s coming. We’ve all got scars. We’re not going to be able to pull the trigger. So, I need a young, inexperienced guy. But I think you’ve got the magic to go in there and lead the charge.” So, I told you he was a maverick, and as you can already see, he’s a little bit eccentric. After he put me in there, he was gone in three months. I’ll get to that in a minute.

But before he left, he taught me two things. A, never, ever invest in the present. It doesn’t matter what a company’s earning, what they have earned. He taught me that you have to visualize the situation 18 months from now, and whatever that is, that’s where the price will be, not where it is today. And too many people tend to look at the present, oh this is a great company, they’ve done this or this central bank is doing all the right things. But you have to look to the future. If you invest in the present, you’re going to get run over.

The other thing he taught me is earnings don’t move the overall market; it’s the Federal Reserve Board. And whatever I do, focus on the central banks and focus on the movement of liquidity, that most people in the market are looking for earnings and conventional measures. It’s liquidity that moves markets.

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