Druckenmiller Warns ‘Bear Market Has a Ways to Run’ as Fed Hikes Rates
Stanley Druckenmiller has a warning for Wall Street: The sharp decline in the stock market isn’t over just yet.
“My best guess is that we’re six months into a bear market,” Druckenmiller, who runs Duquesne Family Office, said Thursday at the 2022 Sohn Investment Conference. “For those tactically trading, it’s possible the first leg of that has ended. But I think it’s highly, highly probable that the bear market has a ways to run.”
The Nasdaq Composite Index has dropped more than 20% from its previous peak -- the traditional definition of a bear market. While the S&P 500 came within points of that threshold intraday on May 20, a late afternoon rally technically kept the bull market intact for the benchmark, which has since rebounded 3%.
The catalyst for additional losses is that the Federal Reserve has turned aggressive about tackling the highest inflation in decades. That will likely lead to a recession at some point in 2023, Druckenmiller said.
About a year ago, he said the central bank’s policy was totally inappropriate and that “we are in a raging mania in all markets.”
“That period was incredibly costly, because a lot of assets were purchased during that period that a lot of people moving out the risk curve will lose a lot of money on,” said Druckenmiller, 68, who managed money for billionaire George Soros for more than a decade.