Legendary investor Stanley Druckenmiller was a guest on CNBC's "Squawk Box" Monday to share his thoughts on the market's recovery and what's next for stocks.
Growth Vs. Value Stocks: The stock market universe includes a "very limited number" of large-cap companies that benefit from the COVID-19 pandemic, and "hundreds of companies" that are hurt by COVID-19, Druckenmiller said. That's why the first 35% of the stock market rally was led by the growth stocks, and now it is led by value stocks, he said.
Amazon.com, Inc. AMZN and Microsoft Corporation MSFT rank as Druckenmiller's top holdings, while his exposure to growth stock is the smallest it has been in six or seven years, he told CNBC.
"I could change my mind in a week or two, this is very binary on how this comes out on the health front," he said.
But the investor said he acknowledges being "far too cautious," as he is up just 3% versus the market's 40% rally from its lows.
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Companies Making A Comeback: Many "casualties" of the pandemic are now given an opportunity to "come back — and come back in force" thanks to the support from the Federal Reserve and encouraging headlines regarding a vaccine, Druckenmiller said.
Druckenmiller On Staying Flexible: Druckenmiller said he remains flexible in how he invests because of the unknown trajectory ahead.
If a vaccine is introduced to the market in the coming few months, it will introduce "one distinct outcome," he said. Failure to launch a vaccine for one or two years will generate another "very distinct outcome."
Similarly, a successful introduction of new stimulus measures in July will generate "one distinct outcome" while failure to do so would result in liquidity "falling off a cliff," Druckenmiller said.
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