David Buik Comments: Black Wednesday Victor Stanley Druckenmiller Quits Hedge Fund - The Guardian

The billionaire investor who beat the Bank of England on Black Wednesday has given a rare glimpse of the emotional cost of the hedge fund industry as he announced plans to wind up his business.

Stanley Druckenmiller, the inspiration behind George Soros's famous bet against the pound in 1992, surprised investors by promising to close Duquesne Capital. In a letter to clients, he blamed the impact of three decades in the world of high-stakes finance, and the pain of losing money.

"While the joy of winning for clients is immense, for me the disappointment of each interim drawdown over the years has taken a cumulative toll that I cannot continue to sustain," wrote Druckenmiller, who has an estimated fortune of $3.5bn (£2.2bn). "I continue to care deeply about performing for our clients, and the stress of performing in a way that I consider to be disappointing – even if you do not share that view – persists in exacting a high emotional toll, with the result that I have concluded that this change is necessary," he added.

This has been a tough year for macro hedge funds such as Duquesne Capital, whose trades are based on changes in the global economy. Duquesne is thought to have lost about 5% so far this year, but many rivals appear to be performing worse. Data collected this week by the Financial Times showed several big names are sitting on significant losses for the year so far, some losing up to 10% of their assets.

Interest rates were raised from 10% to 15% on Black Wednesday in a failed attempt to keep sterling in the European Exchange Rate Mechanism. Memories of the defining moment of John Major's premiership are still fresh in the City today.

David Buik of BGC Partners was a money trader in 1992, and remembers seeing Norman Lamont "with sweat all over his brow and upper lip" as he announced that the UK would exit the ERM. "It was a horrific day, because we had never seen such seismic movements in interest rates and yields on a single day before," Buik recalled.

The ERM debacle cost Britain around £3.3bn, but it also allowed interest rates to halve over the next year to end the early 1990s recession. Lamont was sacked the following May, but the episode did not sink the career of his young political adviser, David Cameron.

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