The stock market is in a mania fueled by the Federal Reserve and investor speculation that will end badly in the coming years, longtime hedge fund manager Stanley Druckenmiller said Wednesday.
“Everybody loves a party … but, inevitably, after a big party there’s a hangover,” Druckenmiller, CEO of the Duquesne Family Office, told CNBC’s “Squawk Box.” “Right now, we’re in an absolute raging mania. We’ve got commentators encouraging companies to do stock splits. Companies then go up 50%, 30%, 40% on stock splits. That brings no value, but the stocks go up.”
The S&P 500 is up more than 51% after hitting an intraday low on March 23. Last week, the broader-market index hit an all-time high before a roll-over in tech shares knocked it back below that level. This massive market rally is due in large part to the measures taken up by the Fed since the pandemic began, Druckenmiller said.
He noted that, while the central bank did a “great job” in March by cutting rates and launching unprecedented stimulus programs to sustain the economy, the follow-up market rally “has been excessive.”
Druckenmiller, known for making investments based on big macroeconomic calls, added he doesn’t know where the market will go in the near term. He noted, however, the next three to five years will be “very challenging”
