On Wednesday, Stanley Druckenmiller, former colleague of Soros, billionaire investor, and Chairman and CEO of Duquesne Family Office, expressed regrets about selling off nvidia (NVDA.US), the market's pricing in Trump's victory in the US presidential election, the Fed's 50-basis-point rate cut in September being a mistake, shorting US bonds against inflation rebound, etc., in a dialogue with the media.

Clearing nvidia was a major mistake.

Druckenmiller said that clearing nvidia was a "major mistake". If nvidia's stock price falls, he will buy the stock again. "I am licking the wound from that bad sale."

Druckenmiller said he no longer holds nvidia stock, he sold it in the range of about 800-950 USD, and now the stock is around 1300 USD (Note: nvidia split 1 for 10 on June 1st this year and closed at 135.72 USD on Wednesday). After selling, he missed out on the subsequent 400 USD increase.

Druckenmiller said that he has long believed in artificial intelligence (AI), but the reason he sold nvidia at that time was because the stock price tripled in a year:

Eighteen months ago, I fully expected to hold nvidia for several years, but at the time the stock price was around 300 USD. However, it changed as it tripled in a year. Although nvidia is a major beneficiary of the AI boom, due to the significant increase in its stock price, I decided to profit take at that time. Druckenmiller sold out due to cautious valuation, "I am not Buffett, I adjust positions based on market dynamics."

Despite reducing his positions, Druckenmiller remains interested in artificial intelligence and its infrastructure, stating, "We are long-term faithful believers in AI."

After Druckenmiller's statement, nvidia rose, and the intraday increase once expanded to 3.8%.

The market has priced in a Trump victory.

Druckenmiller said that the market has already priced in the fact that Trump will win the next month's usa presidential election. "In the past 12 days, the market seems very confident that Trump will win. You can see this from the banks' stocks, and even from cryptos, and you can see it from Trump's media technology DJT."

However, Druckenmiller said he will neither vote for Harris nor for Trump. He has not donated to either of the two presidential candidates. He previously supported Nikki Haley, who competed with Trump for the Republican presidential nomination during the primaries. Regarding the current two presidential candidates, Druckenmiller believes:

Druckenmiller called Trump a braggart. He does not support Trump's tariff proposals at all. He also predicts that if Trump returns to the White House, the Federal Reserve may become even more hawkish. Regarding the recent rumors of the Trump team considering establishing a shadow Federal Reserve, Druckenmiller called it a "terrifying idea."

Worth mentioning, Scott Bessent proposed the idea of ​​setting up a shadow chairman for the Federal Reserve, and Bessent, who has been providing economic advice to Trump's campaign team. Bessent himself has also worked at Soros Fund Management.

Druckenmiller said that it would be unfavorable for businesses if Harris is elected president. He predicts that even if Harris wins the presidential election, it is highly unlikely that the Democratic Party will control Congress.

Regarding the impact of the usa election on the American stocks, Druckenmiller expects that if there is a so-called 'blue sweep,' that is, the Democrats take full control, American stocks may fall into trouble within three to six months. 'Red sweep,' that is, the Republicans take full control, is more likely than Trump winning the presidency and the Democrats dominating the usa Congress.

The Fed's 50 basis point rate cut in September was a mistake.

Druckenmiller believes that the Fed's 50 basis point rate cut in September was a mistake, and he compared it to the Fed's policy mistakes in 2021:

Druckenmiller pointed out that the Fed was trapped by forward guidance in 2021, and warned that the same problem may arise again.

Looking back, he explained that at that time, the inflation rate had been above target for 13 months, while the Fed kept interest rates at zero and aggressively purchased bonds.

He emphasized that the Fed's inability to respond quickly enough to inflation pressure was a major mistake, and he hopes they won't make the same mistake now.

When discussing the broader macroeconomic environment, Druckenmiller stressed that the Fed's view that monetary policy is restrictive is disconnected from actual market conditions. He questioned the Fed's claim that the financial environment does not reflect the restrictiveness they assert:

I am a man of the markets. To be frank, over the years we have found that markets are better at forecasting than professors.

Despite the Fed's claim that monetary policy is tight and restrictive, the market tells a different story: the stock market hits historic highs, gold hits record highs, GDP is above trend levels, credit is tight, banks' profits and forecasts look good.

Druckenmiller believes that the market needs to lower its expectations for the speed and extent of the Federal Reserve's easing.

Druckenmiller revealed that when the Federal Reserve decided to cut interest rates by 50 basis points at the FOMC monetary policy meeting on September 17-18, they shorted bonds. He believes that the bond market still carries risks. Druckenmiller remains vigilant about the long-term impact of fiscal and monetary policies, stating that if inflation rises again, it could have a serious impact on market stability. Therefore, he hedges his positions by using the bond market rather than the stock market.

This article is reprinted from "Wall Street News", Author: He Hao, Zhutong Finance Editor: Xu Wenqiang.