Stanley Druckenmiller: watch out for the Covid stock rotation
A lot of money has “rotated” into stocks that benefit from working at home. As we return to normal, it will flow back out, says Stanley Druckenmiller, chief executive of the Duquesne Family Office.
The prospect of one or more vaccines for Covid-19 has sent markets soaring. But certain stocks are set to do a lot better than others, as billionaire investor Stanley Druckenmiller points out.
“You’ve had a bunch of equities benefiting greatly from work from home. A lot of money has rotated into them. They are overvalued,” the hedge fund manager tells CNBC. “But then you’ve got a whole other sector of the market that has struggled mightily because of Covid-19. They’re selling at under-value relative to... a three-to-five-year outlook. So the rotation into that would seem entirely rational.”
Another legacy of the coronavirus pandemic will be less welcome to many investors. Druckenmiller reckons that inflation is likely to rise in the coming years, due primarily to the actions taken by central banks, and the US Federal Reserve in particular, in their efforts to protect the global financial system and offset the worst of the shutdown-related economic damage.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
![https://cdn.mos.cms.futurecdn.net/flexiimages/mw70aro6gl1676370748.jpg](https://cdn.mos.cms.futurecdn.net/flexiimages/mw70aro6gl1676370748-320-80.jpg)
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Druckenmiller holds both gold and the cryptocurrency bitcoin as hedges against inflation. While he owns a lot more gold than he does bitcoin, he expects the latter to “work better”, notes Billy Bambrough on Forbes. “Bitcoin could be an asset class that has a lot of attraction as a store of value to both millennials and the new West Coast money and, as you know, they got a lot of it.” Druckenmiller adds that the digital currency is becoming more mainstream. “It’s been around for 13 years and with each passing day it picks up more of its stabilisation as a brand.”
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
-
Tesla and Alphabet announce results – should you invest in Big Tech?
How profitable are the world’s biggest tech companies? We share the latest so far this earnings season.
By Katie Williams Published
-
How working part-time in retirement could boost your pension by £87,000
Easing into retirement by working a few days a week could add thousands to your pension pot. We crunch the figures to see how working part-time can boost your pension po
By Ruth Emery Published
-
UK mid-caps: an improving outlook
UK mid-caps have perked up and the rally may run further, but long-term investors should remain selective
By Cris Sholto Heaton Published
-
The tobacco industry is going smoke-free - how to profit from it
Tobacco companies have realised their traditional products are on the wane. But new opportunities have opened up – and should prove lucrative
By Rupert Hargreaves Published
-
Is it time to invest in creative industries?
Any industrial strategy should not overlook the creative industries, one of our top national assets
By David C. Stevenson Published
-
Is Mercia Asset Management set for success?
Mercia Asset Management helps the government fund smaller companies in Britain’s regions. Should you invest?
By Rupert Hargreaves Published
-
British stocks set for a boost
British stocks are due for a bounce as the UK looks more stable compared to many economies
By Alex Rankine Published
-
Ocado shares jump by a fifth
Ocado takes a turn for the better after attractive profit forecasts were announced
By Dr Matthew Partridge Published
-
The AI boom is on borrowed time
The hype around the AI boom could be on its way out – but why?
By Alex Rankine Published
-
Diploma: a blue-chip set for strong growth
Diploma, whose niche products include seals and fasteners, serves an array of growth markets. Should you invest?
By Dr Mike Tubbs Published