STREET DOGS

Stanley Druckenmiller and George Soros famously “broke the Bank of England” when they shorted the pound in 1992, reputedly making more than $1bn, in what came to be known as Black Wednesday.

“Probably nothing explains our relationship and what I've learned from him more,” Druckenmiller told his audience in a speech at The Lost Tree Club years later.

“So, in 1992 Britain looked like they were going into a recession while Germany was determined not to have another inflationary experience. That sounds normal except the deutsche mark and the British pound were linked. And you cannot have two currencies where one economic outlook is going this way and the other outlook is going that way.

“So, in August ’92 there was $7bn in Quantum. I put a billion and a half, short the British pound... fast-forward September, and the head of the Bundesbank, has given an editorial in the Financial Times, that basically said the British pound is crap and we don’t want to be united with this currency.

‘RIDICULOUS’

“So, I thought, well I’m going to bet like Soros on the pound against the deutsche mark. It just so happens that he’s in the office in Eastern Europe, so, I go in at 4am and I say, ‘George, I'm going to sell $5.5bn worth of British pounds tonight and buy deutsche marks.

“Here’s why I’m doing it, that means we’ll have 100% of the fund in this one trade. And as I’m talking, he starts wincing and he says, ‘That is the most ridiculous use of money management I ever heard. What you described is an incredible one-way bet. Do you know how often something like this comes around? We should have 200% of our net worth in this trade, not 100%.

“So, we started shorting the British pound that night. We didn’t get the whole $15bn on, but we got enough