Stanley Druckenmiller's Contrarian Investment Philosophy Helped Make Him A Billionaire: 'Put All Your Eggs In One Basket…'

Billionaire hedge-fund veteran Stanley Druckenmiller says the mark of every "great investor" is the willingness to make one outsized, high-conviction bet and then guard it like a hawk.

What Happened: "The mistake I'd say 98 percent of money managers and individuals make is they feel like they've got to be playing with a bunch of stuff," Druckenmiller told members of Palm Beach's Lost Tree Club in 2015. "If you really see it, put all your eggs in one basket and watch the basket very carefully," he added, invoking a well-known quote.

In a 2021 Q&A with The Hustle, he doubled down: "When I've looked at all the investors (that) have very large reputations—Warren Buffett, Carl Icahn, George Soros — they all only have one thing in common… make large concentrated bets where they have a lot of conviction."

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"In my thinking, [concentrating your bets] decreases your overall risk because… If you have a big, massive position, it has your attention," Druckenmiller told The Hustle, closing with, "My favorite quote of all time is maybe Mark Twain: ‘Put all your eggs in one basket and watch the basket carefully.' I tend to think that's what great investors do."

Backing It Up: Druckenmiller pointed to Icahn's move to plow about $3 billion into Apple a decade ago, calling it textbook conviction investing. He also recalled Soros urging him to short 200 percent of the Quantum Fund against the pound on Black Wednesday, a wager that pocketed $1 billion in a day.

The veteran speaks from experience. His Duquesne Family Office has averaged 30 percent annual returns and helped build a fortune near $10 billion, according to Benzinga tallies. His focus also echoes Buffett's warning that "risk comes from not knowing what you're doing," a line Buffett often deploys to defend his own concentrated portfolio.

Photo Courtesy: Reza Maftazani On Shutterstock.com

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