Market Watch: Why Stanley Druckenmiller Says the Risk-reward of Investing in Stocks Has Never Been Worse

Article by Steve Goldstein in The Wall Street Journal Market Watch

Stanley Druckenmiller has seen a crisis or two in his storied career.

The famed former hedge-fund manager says, “the risk-reward for equity is maybe as bad as I’ve seen it in my career.”

The S&P 500 has climbed 28% from the lows of March, even in the face of data showing the economy, at best, plateauing after a severe downturn.

Speaking at a webinar run by The Economic Club of New York on Tuesday night, the chairman and chief executive of Duquesne Family Office says it is just not true that it is profitable to be on the side of the Federal Reserve, which has cut interest rates to nearly zero, swelled its balance sheet and initiated several emergency lending programs. He thinks stocks are at high multiples given the uncertainty of the current environment and looming bankruptcies.

Druckenmiller says it doesn’t make sense that financial markets surge on news about the Gilead Sciences intravenous anti-COVID-19 drug remdesivir. “I don’t see why anybody would change their behavior because there’s a viral drug out there,” he said.

The focus is on Federal Reserve Chairman Jerome Powell, who is discussing the economy at a webinar run by the Peterson Institute for International Economics. Powell in a prepared speech said the central bank would be prepared to use “additional policy measures” if needed. He also told Congress more fiscal policy boosts would be “costly but worth it if it helps avoid long-term economic damage and leaves us with a stronger recovery.”

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