Stock market will remain flat for next 10 years, billionaire investor predicts

The reversal of globalisation, which led to strong productivity and disinflation, is one significant change, according to Druckenmiller. In order to promote growth after the Global Financial Crisis in 2008, central banks also adopted generally lax monetary policies; nevertheless, they are currently taking a more restrictive approach.

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In order to control inflation, the Fed raised interest rates four times in 2022 and is likely to do so again. It added a further .75 basis point to its benchmark interest rate in July. This is the fourth rate increase in 2022 by the Central bank. Since the late 1980s, there haven’t been rate hikes this quick or this significant. It follows a similar increase in June.

While calling Central banks “reformed smokers”, Druckenmiller said gains in the bullish stock market since 1982 would likely taper off. However, there were companies that did extremely well during the flat stock market period in 1966-1982. That was when Apple Computer was founded, Home Depot was founded, Druckenmiller reminded.

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Because of the war, the pandemic and how the world has responded, Druckenmiller claimed it would be more difficult than ever to predict how the market might move over the following six to 12 months.

The coronavirus, the war and the political responses in the United States and around the world, he continued, have made this the most challenging environment Druckenmiller has ever had to predict. The circumstances that had supported bull markets since 1982, notably during the previous 10 years, had come to an end, Druckenmiller observed.

Druckenmiller, in order to further support his position, asserted that his bearish bias had to be overcome because he had had it for 45 years. “I like darkness,” he said.

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