Emphasis mine…
“…the loss was not bad luck; it was bad analysis.
I downplayed the importance of what was then an ongoing housing bubble. On the very same day, at the very same conference, a more experienced and wiser investor, Stanley Druckenmiller, explained in gory detail the big picture problem the country faced from a growing housing bubble fueled by a growing debt bubble. At the time, I wondered even if he were correct, would it be possible to convert big picture macro-thinking into successful portfolio management? Smart investors had been complaining about the housing bubble since at least 2001. I ignored Stan, rationalizing that even if he were right, there was no way to know when he would be right. This was an expensive error.”
“The lesson that I have learned is that it isn’t reasonable to be agnostic about the big picture.”
“Having my eyes open to the big picture doesn’t mean abandoning stock picking, but it does mean managing the long-short exposure ratio more actively, worrying about what may be brewing in certain industries, and when appropriate, buying some just-in-case insurance for foreseeable macro risks even if they are hard to time.”
–David Einhorn, Greenlight Capital
HT: Keith McCullough