Believe it or not, Stanley Druckenmiller hasn't been a real hedge fund manager for almost a decade now. And that's a relief to Big Druck because running a hedge fund sucks these days, and he can tell you exactly why:
Druckenmiller, 65, explained that his investment process has always involved divining so-called market signals. But quantitative funds, which now account for $1 trillion in assets, have muted or even silenced those cues, making it a lot less clear what’s behind price moves.
“I think the message over eight or nine months is still great," said Druckenmiller, who converted his hedge fund to a family office after closing Duquesne Capital Management in 2010. "I just think over a week or two, you’re getting noise that used to mean something, and now it doesn’t mean anything."
Druckenmiller wouldn't manage outside assets right now if George Soros dropped to his knees and begged him [well , we don't want to spoil that possibilty], because these goddamn nerds and their algorithms are ruining EVERYTHING!!! Now that these virgins with math degrees are letting any Tom, Dick or Einhorn think they can run a hedge fund, it makes running a hedge fund way harder and way less cool...
"Volatility is only good if it’s part of the trend and it’s giving you entry points within a trend," he said. "When you’re going up and down, but there’s no real trend, that’s a nightmare. You might think that a volatility move is the beginning of a trend and get yourself whipsawed."
And Big Druck isn't alone, the guy who is somehow still running the Treasury Department agrees that quants suck butts:
U.S. Treasury Secretary Steven Mnuchin blamed volatility in equity markets partly on high-speed trading and the effect of the Volcker Rule, adding that he planned to conduct an inter-agency review of market structure.
“Over a longer period of time the market reflects various different economic components but a normal trading day now is a 500-point range. A lot of that has to do with market structure, and that’s something we’re going to take a look at,” Mnuchin said in a roundtable interview Tuesday at Bloomberg’s Washington office.
Setting aside the hilarious irony of Mnooks bagging on a regulatory rule put into law to prevent the kind of shit that made him rich in 2009, it's pretty hilarious to imagine an "It's A Wonderful Life" scenario in which Mnuchin was never appointed Treasury Secretary.
Because based on Mnooks professional history of being the Zelig of financial fads [Goldman -> Soros -> PE -> hedge fund -> mortgage crisis profiteer -. Hollywood money man] Steve Mnuchin would almost certainly be running an HFT quant fund in 2018, and that that would definitely be a "long-short equities play with some interest in cryptos and cannabis."
What would guys like Druckenmiller have thought about RatPac Capital LLC:
"I’m not surprised at all by the hedge funds not doing well," Druckenmiller said. In the future, "there’s probably going to be 10 to 20 of them that are great," and the rest shouldn’t be charging traditionally high fees.