Stanley Druckenmiller, the hedge fund manager who made the bet that helped George Soros “break the pound”, announced his retirement on Wednesday, saying he was disappointed in his performance during this year’s market volatility.
For decades, Mr Druckenmiller, 57, ranked among the world’s most successful macro hedge fund managers – who seek to profit from long-term economic trends – and his retirement could trigger other such departures within the industry.
“This should have been a great year for macro,” said a former New York Federal Reserve Bank official.
“The swings and the volatility have been very painful. Stan’s retirement is the end of an era.”
Mr Druckenmiller’s most famous move came in 1992, while he was working for Mr Soros, when he correctly bet that the pound would fall against the Deutschmark.
In taking on the Bank of England, Mr Druckenmiller helped shape the image of the resourceful and fearless hedge fund manager outfoxing deeper-pocketed central bankers.
However, in recent months, Mr Druckenmiller confessed that like many others, he had been confused by conflicting signals in the markets.
“Look at the uncertainty,” said one senior Fed official. “Are we facing deflation or inflation? Are we up or down? Growing or not?”
In his letter to investors, Mr Druckenmiller said that having posted positive results in 2008 and 2009, he had been hopeful that his Duquesne Capital Management would continue its “unbroken record of positive performance” in 2010.
However, he said that he had now decided to close his fund after 30 years because the results so far this year “did not match my own, internal long-term standard”.
As a member of the international advisory committee at the New York Fed and a member of the committee that advises the Treasury on borrowing, Mr Druckenmiller was prescient in warning of the coming debacle in the housing market, according to participants in such discussions. He also correctly bet on European currency movements in the 1990s.
His most glaring error, according to acquaintances, was committed a decade ago, when he failed to reverse course and cut long positions on new economy stocks swiftly enough just before the dotcom crash.