bwagy, the blog of Ben Young

Another kicker from the Druckenmiller interview I shared in the last post.

(for context he is a fund manager)

Skip to 49:00 minutes to pick this chat up.

They get in to, what do you do, after you’ve had a bad year? The analogy is the same with betting after you’re down.

As an aside, the investment principle: if you’re down 20%, you now need to make 25% on your principle to get back to where you were. Or if you’re down 80% you need to make 500% on your principle to get back to where you were. This is when people tend to get irrational and make bigger and bigger bets. Only to lose.

Druckenmiller goes on..

When you know you’re hot, make bigger bets. When you’re not, make smaller bets to find your groove.

It’s when you make big bets when you’re not hot, that really hurt, and create bigger losses.

A good fund manager should know when they’re hot or they’re not. And calibrate accordingly.

I like this simple approach.

This entry was posted on Tuesday, July 9th, 2019 at 2:46 am.