During his talk at the Lost Tree Club, Stanley Druckenmiller discusses his unique risk management approach, shaped by both luck and experience. He challenges traditional diversification, stating that the best way to achieve superior long-term returns is by being a “pig” — someone who makes concentrated, high-conviction bets.
He cites great investors like Warren Buffett, Carl Icahn, and Ken Langone, who focus on a few high-potential opportunities and invest heavily.
Druckenmiller emphasizes that most investors make the mistake of spreading their investments too widely, while real success comes from betting big on rare, exciting opportunities and monitoring them closely.
Here’s an excerpt from the talk:
The third thing I’d say is I developed partly through dumb luck – I’ll get into that – a very unique risk management system. The first thing I heard when I got in the business, not from my mentor, was bulls make money, bears make money, and pigs get slaughtered.
I’m here to tell you I was a pig.
And I strongly believe the only way to make long-term returns in our business that are superior is by being a pig. I think diversification and all the stuff they’re teaching at business school today is probably the most misguided concept everywhere.
And if you look at all the great investors that are as different as Warren Buffett, Carl Icahn, Ken Langone, they tend to be very, very concentrated bets. They see something, they bet it, and they bet the ranch on it.
And that’s kind of the way my philosophy evolved, which was if you see – only maybe one or two times a year do you see something that really, really excites you.
And if you look at what excites you and then you look down the road, your record on those particular transactions is far superior to everything else, but the mistake I’d say 98 percent of money managers and individuals make is they feel like they got to be playing in a bunch of stuff.
And if you really see it, put all your eggs in one basket and then watch the basket very carefully.
You can find the entire talk here:
Lost Tree Club Talk – Stanley Druckenmiller
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