Druckenmiller Recounting Soros Experiences Blasts Fed Policies

Stan Druckenmiller has spent the past two years appearing on public stages and television to criticize the Federal Reserve for taking unnecessary risks. He’s also done so in more intimate settings.

The billionaire investor, who has one of the best long term track records in money management, told an audience at the Lost Tree Club in North Palm Beach, Florida, on Jan. 18 that trouble is looming.

“I just have the same horrific sense I had back in ’04,” Druckenmiller said, according to a transcript obtained by Bloomberg News. “Our monetary policy is so much more reckless and so much more aggressively pushing the people in this room and everybody else out the risk curve that we’re doubling down on the same policy that really put us there.”

Patrick Clifford, a spokesman for Druckenmiller at Abernathy MacGregor Group Inc., declined to comment on the speech.

Druckenmiller, who produced average annual returns of 30 percent from 1986 through 2010, before shutting his hedge-fund firm Duquesne Capital Management, spoke at an event hosted by Sam Reeves and Ken Langone, former investors in his fund.

Druckenmiller said the Fed has encouraged a massive increase in low-grade debt issuance and loans that lack typical creditor protections. He pointed to how 18 percent of high-yield debt issued in the prior 12 months was tied to energy companies.

Texans Gamble

“I don’t mean to offend any Texans in the room, but if you ever met anybody from Texas, those guys know how to gamble, and if you let them stick a hole in the ground with your money, they’re going to do it,” he said, according to the transcript.

Druckenmiller also used the talks to explain his rise from a student with mediocre SAT scores to running a hedge fund. He noted the importance of mentors -- including George Soros -- in helping him define his investment philosophy. Druckenmiller recounted how he and Soros made a killing on the devaluation of the British pound in the 1990s and how he lost $3 billion within weeks on technology stocks in 2000.

(To read full transcript of Druckenmiller presentation, click here.)

Before it's here, it's on the Bloomberg Terminal.