During their latest episode of the VALUE: After Hours Podcast, Taylor, Carlisle, and Weber discussed The Druckenmiller Algorithm. Here’s an excerpt from the episode:
Tobias: Scott, to what extent does the macro factor into what you guys are doing? If you’re fully exposed, probably not a great deal, but how do you think about it?
Scott: Well, you’ve got to be aware of it. To the extent that you’re a ship going through an ocean, if you see a wave coming, you want to turn into it for stability. So we use, obviously, outside providers. I’m less interested in what an analyst forecast for the S&P 500 at the end of the year is. I’m more concerned with where we’re seeing inputs, obviously. I think the world has become more attuned to this, but liquidity absolutely matters. Not just rates, the liquidity. I want to say it was a Druckenmiller algorithm that fundamentals may move securities, but liquidity moves markets. It’s absolutely true. So we’ve got a host of tools that we’ve built internally to track that. We have one person on our team who comes through [unintelligible [00:12:28] data every Friday afternoon.
Going back to Alphabet, is the Fed activity going to change our investment thesis this week? No. Is it important over time and is it a consideration in the background to the extent you build a mosaic for each and every security? 100%, absolutely.
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