Druckenmiller on the 2000s Tech Bubble
I made a lot of mistakes, but I made one real doozy. So, this is kind of a funny story, at least it is 15 years later because the pain has subsided a little. But in 1999 after Yahoo and America Online had already gone up like tenfold, I got the bright idea at Soros to short internet stocks. And I put 200 million in them in about February and by mid-March the 200 million short I had, lost $600 million on, gotten completely beat up and was down like 15 percent on the year. And I was very proud of the fact that I never had a down year, and I thought well, I’m finished.
So, the next thing that happens is I can’t remember whether I went to Silicon Valley or I talked to some 22-year-old with Asperger’s. But whoever it was, they convinced me about this new tech boom that was going to take place. So I went and hired a couple of gunslingers because we only knew about IBM and Hewlett-Packard. I needed Veritas and Verisign. I wanted the six. So, we hired this guy and we end up on the year — we had been down 15 and we ended up like 35 percent on the year. And the Nasdaq’s gone up 400 percent.
So, I’ll never forget it. January of 2000 I go into Soros’s office and I say I’m selling all the tech stocks, selling everything. This is crazy…at 104 times earnings. This is nuts. Just kind of as I explained earlier, we’re going to step aside, wait for the next fat pitch. I didn’t fire the two gunslingers. They didn’t have enough money to really hurt the fund, but they started making 3 percent a day and I’m out. It is driving me nuts. I mean their little account is like up 50 percent on the year. I think Quantum was up seven. It’s just sitting there.
So like around March I could feel it coming. I just — I had to play. I couldn’t help myself. And three times the same week I pick up a — don’t do it. Don’t do it. Anyway, I pick up the phone finally. I think I missed the top by an hour. I bought $6 billion worth of tech stocks, and in six weeks I had left Soros and I had lost $3 billion in that one play. You asked me what I learned. I didn’t learn anything. I already knew that I wasn’t supposed to do that. I was just an emotional basket case and couldn’t help myself. So, maybe I learned not to do it again, but I already knew that.
1/ Since a lot of people are waking up to see their perps positions closed and wondering what the hell “Auto-Deleveraging” means, here’s a quick and dirty primer.
What is ADL? How does it work? And why does it exist?
how to spend crypto profits in ways that will actually make your life better:
- throw away every one of your socks and boxers. buy brand new, all the same color/style. your drawers will never look so good.
- get a coach for whatever hobby you care about - sports, chess, art, language, it doesn't matter. just pay someone to shortcut your own learning time
- buy an in-home sauna if you have the space. it's ~$3,000, the same as a high end TV, and if you use it everyday its absolutely worth it
- pay for a personal stylist to redo your wardrobe
- upgrade your zoom setup - nice camera, nice lights, nice microphone. this will boost your perceived credibility more than you think
- pay for your mom/dad/sibling to go on a fancy trip. pay for everything, including flights, hotels, food. it is the single thing that will make you feel like you made it, and the memory will last a lifetime.
- get an inroom IV drip when you travel and watch your jetlag disappear (s/o @calilyliu)
- pay for a 3 hour couple's massage. get the body scrub, it's better than you think.
- buy a package for facials and get one every ~6 weeks
- start getting haircuts every other week. nothing to make you feel fresh like a fresh cut.
- only travel in nice cars. always get the expensive Uber/Grab/Careem. it will cost you ~$2k extra over the course of the year, but the feeling of luxury is worth much more (s/o @akshaybd)
- get a personal chef to come a few days a week and meal prep for you
- get an at-home massage every sunday
- if you're balding, get a red light hair mask. proven to work, and better to start sooner rather than later
- if you live near family/friends, pay a private chef to make a nice dinner for all of you once a month
- get a personal assistant for shopping, travel, and general research tasks. if you're in dubai or india, @dxbcare is quite good and affordable
- spend less time investing by giving your capital to professionals (liquid, venture, hedge funds, etc). make investing someone else's headache
- buy your wife/girlfriend/mother a new watch instead of buying one for yourself
- set aside a new wallet with a substantial amount of stables, yield farm on @jup_lend, and tell yourself that in 2 years you're going to give it to a family member
- buy a really nice mattress and desk chair and watch your back problems disappear
- send a gift (chocolates, cupcakes, etc) to your friends on their birthdays instead of just sending a text
what else?
I see too many people who want to do it all in one go.
Buy it all in one go, sell it all in one go, full port into one thing - those are gambling techniques, not investing techniques.
at $1700 $ETH, my biggest regret was not taking any profit on my long-term bags
at $3600 $ETH, my biggest regret is not buying more
perpetual dissatisfaction is a feature, not a bug.
learning to be content with decisions instead of indulging in this vicious cycle of regrets.
gratitude maximalist.