Stanley Druckenmiller and the $1 billion trade

Soros told the new hire he was going to Eastern Europe for four or five years. He wanted to find out one thing: was he holding this new hire back, or was this new hire simply not good enough.

The new hire was Stanley Druckenmiller. For the first six months into the job, they were at war.

Four years later, that same young man would call his boss at 7am and tell him they'd just made $1 billion in a single trade. By the end of that year, Druckenmiller would take home $110 million. His boss would take home $650 million, more than any person on Wall Street had ever made in a year.

This is how a kid from Pittsburgh, Pennsylvania became the man who helped break the Bank of England.

A Fighter From the Start

Druckenmiller was born in Pittsburgh, Pennsylvania. He grew up middle class outside Philadelphia. His parents split when he was still in grade school. His sisters stayed with mom. Stan went with dad, first to Gibbstown, New Jersey, then to Richmond, Virginia. The kid was intensely competitive. About everything.

He went to Bowdoin College in Maine, studied English and economics, graduated magna cum laude. While he was there, he ran a hot dog stand with a classmate named Lawrence Lindsey, who later became an economic advisor to President George W. Bush. Even back then, Druckenmiller was finding ways to make money outside the classroom.

After Bowdoin, he started a Ph.D. in economics at the University of Michigan. He realized it wasn’t a good fit for him, so dropped out halfway through his second semester. He landed a job as a stock analyst at Pittsburgh National Bank. He moved up fast, head of equity research, then division head, nearly five times his starting salary in just a few years.

Then in 1980, at 28 years old, he walked away from a great buy-side seat. A securities firm executive had offered him $10,000 a month just to talk to him about investments. He smelled a business opportunity, so he started his own shop, Duquesne Capital Management.

Building a Track Record

Six years later, in 1986, Dreyfus Fund came calling. They wanted Druckenmiller to run stocks, bonds, and currencies, long and short, and they let him keep running Duquesne on the side. Dreyfus even built funds specifically for him to manage. Remember, this same firm once took George Soros's advice to buy Allianz stock and watched it triple.

His biggest fund at Dreyfus was called Strategic Aggressive Investing. In its first 17 months, it was the best performing fund in the entire industry.

Getting the Call From Soros

While working at Dreyfus, Druckenmiller read George Soros’s book The Alchemy of Finance. Using the Dreyfus connection and a mutual broker, Druckenmiller arranged a meeting with Soros.

Timing was perfect as Soros was looking for a new head for the Quantum Fund and to run his firm.

Druckenmiller already knew all about Soros. His friends told him not to take the job. He thought about the risk-reward. Worst case, he lasts a year, gets fired, and walks away having learned from the best and with Quantum Fund on his resume. That's not really a worst case at all.

Meanwhile, Soros went full-court press on the courting. Before Soros even officially hired him, Soros was already introducing Druckenmiller as "my successor."

In September 1988, Soros made the offer official. Druckenmiller said yes.

The Rocky First Six Months

Druckenmiller had already proven himself running big money at Dreyfus. He wanted full autonomy. He wasn't looking for a boss looking over his shoulder. The problem: Soros wasn't ready to relinquish control. What ensued was a rocky first six months between the two.