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A Worthy Advice From Druckenmiller

Welcome to our last newsletter for the month of October. We can safely say the street slang “Sope Otilo” best describes the speed with which the month flew by.

 

Today, I will like to discuss an advice from a hedge fund manager (Stephen Druckenmiller) I read about recently. Although the advice was tailored to novice investors, it resonated with me.

 

According to him, when investing in shares or stocks, investors should not invest in the present. He continued by saying that the present isn’t what moves stock prices.

 

Although this piece of advice focused on the stock market, I believe it is still applicable to all classes of assets.

 

For me, Mr. Druckenmiller was trying to stress the importance of processing macroeconomic information in making investment decisions.

 

For example, the investors who had taken proactive steps in investing in foreign currency investments as far back as 2016 would have witnessed astronomical returns compared to recent investors.

 

This also relates to real estate. Investors who made the early switch to short let or studio apartments made more returns than those who built larger-sized accommodations. These are just are few examples.

 

Apart from the importance of macroeconomic indices, “not investing in the present” also dictates that investors must always have an end-point mindset at the beginning of any investment journey.

 

The 2nd Habit in Stephen Covey’s bestseller “7 habits of highly effective people” best summarises this.

 

This habit – begin with the end in mind reminds us to think about how we want something to turn out before we even get started.

 

For me, this is a reminder not to be swayed by what I can currently see but to always remember to think long-term.

We are running a 70-day Smart Life and Financial Literacy Challenge to help us end the year on a great financial note, and it started yesterday, 23rd October 2022. With a weekly email and daily prompts, we believe our community members will find it useful. You may subscribe to join the challenge using this LINK.

 

Till we meet next week, do have a wonderful week.

PS: You can still access the replays of the 2022 Smart Stewards Summit here.

 

Toyin Oguntuyi