January 24, 2025
By Steve Blumenthal
“The first job is to avoid the big mistakes – like the 70s, like the great financial crisis, like the big inflation we just had, but all this (Fed) fine-tuning and worrying about a soft landing, that is not the job of the Fed. Their job, in my opinion, is to maximize employment for the long term, not for the next three months or the next four months.”
I’m writing you this week from Snowbird, Utah. I’ll be sharing a few notable conversations I recently listened to. I hope you gain something from them- I certainly did.
The first is an excellent Stan Druckenmiller interview hosted by Nicolai Tangen, CEO of Norges Bank Investment Management. The bank is responsible for managing the Norwegian Sovereign Wealth Fund.
Addicted to the investment game, Stan is one of the greatest traders of all time. You’ll find a link to the interview along with my high-level bullet point notes below.
The interview is broad, and you’ll gain a real sense of Stan’s character. – a smart and humble man. One comment that caught my attention was what he calls “the three death nails for markets.” They are rising interest rates, dollar, and oil prices. When they occur at the same time, lights on. I share those three charts with you below in the Trade Signals section. Hint: two of the three are rising, and the third, oil, is bouncing off support and trending higher.
The second conversation is a podcast from The Pivot, courtesy of The Daily Coach. The Pivot is hosted by former NFL players Channing Crowder, Fred Taylor, and Ryan Clark. They interviewed best-selling author Mel Robbins. She is number three on Apple podcasts and number five on Spotify podcasts. Robbins is a talented speaker and writer. She seems to resonate with people—hat tip to The Daily Coach, who described the conversation as “raw, real, and actionable, offering insights that leaders at all levels can deeply resonate with.”
Raw is an understatement. The interview is about an hour and fifteen minutes long. Brace yourself for some bad words and some good advice about positive thinking and creating for yourself in a way that always helps others.
Grab your coffee and find your favorite chair. My chair this week is the Snowbird chairlift. I arrived on Tuesday and am flying home today—blue skies, good snow base, and, sadly, no fresh powder snow to float in. I had a great time skiing with clients/friends – discussions far-ranging and fun.
On My Radar:
- Stanley Druckenmiller’s Discussion with Nicolai Tangen
- Mel Robbins On Leadership – The Pivot
- Trade Signals: The Three Death Nails
- Personal Note: Baby It’s Cold Outside
See Important Disclosures at the bottom of this page. Reminder: This is not a recommendation to buy or sell any security. My views may change at any time. The information is for discussion purposes only.
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Stanley Druckenmiller’s Discussion with Nicolai Tangen
Click on the image to watch the full interview. Bullet points notes follow below.
Source: YouTube, Norges Bank and Investment Company, November 5, 2024
Stanley Druckenmiller, legendary investor, on his investment philosophy, career experiences, and market outlook.
Key Takeaways
- Druckenmiller emphasizes the importance of forward-looking investing, concentration, asset class flexibility, and sizing positions aggressively when highly convicted.
- He focuses on company insights and financial conditions rather than pure economic data
- He’s concerned about potential inflation resurgence and believes the Fed may have declared victory too early
- He attributes much of his success to being unemotional about trades, willing to change his mind quickly, and how he learned to size positions aggressively from George Soros
Current Market Focus and Inflation Concerns
- In his listening primarily to companies, he does not see material economic weakness in the U.S. except in housing
- Financial conditions remain loose despite recent tightening
- He’s worried about inflation potentially resurging, like the 1970s pattern
- Concerned Fed may have declared victory too early, cutting rates with tight credit spreads and strong markets
- He is critical of the Fed and its unwillingness to change its mind
Investment Philosophy and Approach
- Emphasizes forward-looking investing (18-24 months out) vs. investing in the present
- Willing to invest first, then investigate deeper (“buy first, analyze later”)
- He is unemotional about taking losses, focuses on forward-looking risk/reward, and is not afraid to pivot when he is wrong.
- Trades multiple asset classes (equities, bonds, currencies, commodities) for flexibility
- Will go long or short asset classes and individual securities
Career Highlights and Lessons
- Learned aggressive position sizing from George Soros (e.g., 1992 British pound trade)
- Had a difficult time at the peak of the tech bubble. He reversed his short positions and went long at precisely the wrong time.
- Told clients was taking a sabbatical and unsure if he’d return. They could keep their money in, and if he did return, he might not take their money back. One investor left. Stan returned with a fresh perspective and recovered the losses, and he ended the year (2000) profitable
- He claims he never had a losing year
- Emphasizes the importance of passion, finding mentors, and continuous learning for aspiring investors
- He manages his own wealth only
Market Outlook / Positioning
- Currently short 10-year Treasuries (25% NAV equivalent)
- Cautious on narrow market leadership, sees it as a “yellow light”
- Open-minded to potential inflation resurgence scenarios
Work Habits / Lifestyle
- Stan wakes at 4 AM, and immediately checks markets and news. Goes to bed around 8:30-9 PM
- Plans to continue working in markets “until I die.” Adding, “hopefully that won’t be tonight.”
Here are a few notable quotes from Stan’s conversation with Nicoli:
“Markets are smart, they’re fast, and they’re getting much more so with all the communication and the technology we have today.”
“I don’t care what I paid for a stock. It’s absolutely irrelevant in terms of my investment process going forward.”
“It’s not whether you’re right or wrong it’s how much you make when you’re right and how much you lose when you’re wrong. That’s what [Soros] was probably as good as anybody who’s ever been at.”
“The first job is to avoid the big mistakes – like the 70s, like the great financial crisis, like the big inflation we just had, but all this fine-tuning and worrying about a soft landing, that is not the job of the Fed. Their job, in my opinion, is to maximize employment for the long term, not for the next three months or the next four months.”
“I’m short the Fed. I’m not like mega-short. I actually had good timing for once. I shorted them literally the day that Fed cut.”
The views expressed are those of Stan Druckenmiller and are subject to change at any moment. This is not a recommendation to buy or sell any security. My views may change at any time. The information is for discussion purposes only.
Mel Robbins On Leadership – The Pivot
I’m stepping outside of the On My Radar box with this section. I listened to it on my plane ride west and thought I’d share it. Put your sneakers on, plug in, and listen as you take a walk. Mel Robbins is the author of The Let Them Theory, available for purchase here.
Intro from The Daily Coach:
“This is where our power lies. Are we stuck in our heads, overwhelmed by doubts and fears? Or are we connected to our hearts, grounded in presence, and aligned with our deepest truths?
Robbins’ journey is a powerful testament to resilience and self-discovery. She candidly shared some of the lowest points in her life: losing her job at 41, being $800,000 in debt, and feeling like a failure as a parent on the brink of divorce. She spoke about the shame and frustration of hiding her struggles from family and friends, feeling trapped in a cycle of despair with no clear way out.
Yet, this rock-bottom moment became the catalyst for Robbins’ transformation. It compelled her to uncover tools and mindset shifts that she now shares with millions worldwide. Her story underscores a universal truth for us as leaders: adversity is not the end—it’s often the beginning of something far more sacred, provided we stay the course and keep showing up.
As leaders, we all recognize areas of our lives where we fall short. Whether in personal relationships, professional endeavors, or our own self-growth, there are moments when we feel stuck, overwhelmed, or disconnected. Robbins’ work—from The 5 Second Rule to her latest book, The Let Them Theory—dives deep into the art of overcoming this sense of disconnect.
When asked on The Pivot about a pivotal moment in her life, Robbins shared a profound insight that inspires reflection and introspection:
“Understand that knowledge is up here, right?” Robbins said, pointing to her head.
“So is anxiety, so is self-doubt, so is hesitation, so is overwhelm. When you are up here in your head, you’re disconnected from source, your heart. You’re disconnected from your body, from your soul, from what you believe that is deeper. From love. One of the things that has made a huge pivot [for me] is the ability to drop in at a moment to my heart. This is where our power is. Connecting to the source of your power inside yourself. Connecting to being grounded in the moment. Connecting to what you know to be true here. When you can live that way, be present that way, and keep showing up that way, it’s unbelievable how your life changes. It’s unbelievable what you can create.”
“One of the things that has made a huge pivot [for me] is the ability to drop in at a moment to my heart. This is where our power is. Connecting to the source of your power inside yourself. Connecting to being grounded in the moment. Connecting to what you know to be true here. When you can live that way, be present that way, and keep showing up that way, it’s unbelievable how your life changes. It’s unbelievable what you can create.”
“… Drop in at a moment to my heart. Sage advice. You can find the full interview on The Pivot Podcast here.
Please note that the information provided is not recommended for buying or selling any security and is provided for discussion purposes only. Current viewpoints are subject to change.
Trade Signals: The Three Death Nails
Three Death Nails for Markets
Stan Druckenmiller talked about the “three death nails for markets” in the discussion: simultaneously rising interest rates, dollar, and oil prices. I share these charts in Trade Signals each week.
First, let’s look at why they are essential.
These three economic factors can create a challenging environment for the stock market:
1. Rising Interest Rates
When interest rates increase, it becomes more expensive for companies to borrow money. This impacts businesses in several key ways:
– Higher borrowing costs reduce corporate profits
– Bonds become more attractive compared to stocks, leading investors to shift their investments
– Consumer spending typically decreases as loan and credit costs rise
– Growth stocks are particularly vulnerable, as their future earnings are discounted more heavily
2. Strong US Dollar
A rising dollar creates multiple challenges for the stock market:
– Multinational companies see reduced overseas earnings when converting foreign revenue back to dollars
– US exports become more expensive, hurting manufacturing and export-oriented companies
– Emerging market economies face increased debt burdens as their local currencies weaken
– International investments become less attractive to foreign investors
3. Rising Oil Prices
Elevated oil prices create widespread economic pressures:
– Increased energy costs reduce corporate profit margins
– Transportation and manufacturing sectors face higher operational expenses
– Consumer spending is crimped as more money goes to fuel and energy
– Inflationary pressures intensify, potentially triggering more aggressive monetary tightening
When these three factors converge, they create a “perfect storm” for stock markets:
– Reduced corporate profitability
– Decreased consumer spending
– Increased investment alternatives (like bonds)
– Higher operational costs
– Potential economic slowdown
The compounding effect makes investors risk-averse, typically leading to stock market corrections or bear markets. Investors tend to move capital to safer, more stable investments during such periods.
Keep them on your radar.
Quick note: I use a weekly MACD trend indicator to help gain clarity on the intermediate-term trend. Green arrows are uptrend signals, red arrows are downtrend signals. Take a look at what was happening in 2022 and recall that it was a big down year for the stock market.
You’ll see in the charts that interest rates are rising, the dollar is rising, and oil may be nearing a move higher after bouncing off the red support line.
Interest Rates:
Source: StockCharts.com
Dollar:
Source: StockCharts.com
Oil:
Source: StockCharts.com
Bottom line: Two of the three are up, and oil looks to be on the verge of moving higher. Keep watch!
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TRADE SIGNALS SUBSCRIPTION ACKNOWLEDGEMENT / IMPORTANT DISCLOSURES
The views expressed herein are solely those of Steve Blumenthal as of the date of this report and are subject to change without notice. Not a recommendation to buy or sell any security.
Personal Note: Baby It’s Cold Outside
“Crisp air bites with silvery teeth, Breath clouds like smoke, hung underneath
The pale and silent winter sky— Cold’s silent breath, a crystal sigh.”
-Frost-Whispers
Have a great week!
With kind regards,
Steve
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Stephen B. Blumenthal
Executive Chairman & CIO
CMG Capital Management Group, Inc.
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Stephen Blumenthal founded CMG Capital Management Group in 1992 and serves today as its Executive Chairman and CIO. Steve authors a free weekly e-letter entitled, “On My Radar.” Steve shares his views on macroeconomic research, valuations, portfolio construction, asset allocation and risk management.
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