After a hotter-than-expected inflation reading spooked investors on Tuesday, the Dow Jones industrial average sank over 1,200 points in the stock market’s worst showing since June 2020.

That same day, Stanley Druckenmiller, one of Wall Street’s most respected minds, argued that the pain won’t be temporary—and that stocks face an entire decade of sideways trading as the global economy goes through a tectonic shift.

“There’s a high probability in my mind that the market, at best, is going to be kind of flat for 10 years, sort of like this ’66 to ’82 time period,” he said in an interview with Alex Karp, CEO of software and A.I. firm Palantir.

Druckenmiller added that with inflation raging, central banks raising rates, deglobalization taking hold, and the war in Ukraine dragging on, he believes the odds of a global recession are now the highest in decades.

And given Druckenmiller’s track record, investors would be wise to heed his warnings.

The legendary investor founded his hedge fund, Duquesne Capital, in 1981, and routinely outperformed the majority of his peers on Wall Street over the coming decades, delivering an annual average return of 30% from 1986 to 2010, according to Yahoo Finance.

But Druckenmiller really made his name when he led George Soros’s bet against the British pound in 1992, helping the billionaire pocket a cool $1.5 billion profit in a single month.

Druckenmiller eventually shut down his hedge fund in 2010 and converted it into a family office—a type of private firm established by wealthy families to manage their money—as many hedge funders typically do when they unofficially retire. But the leading investor’s views are still widely followed on Wall Street.

Reformed smokers

Druckenmiller’s argument for why the stock market is facing a decade of “flat” trading is based on the idea that central banks’ policies are shifting around the world from a supportive to a restrictive stance.

This shift is a result of the globalization that characterized the past few decades fading amid the war in Ukraine and U.S.-China tensions. Druckenmiller points out that globalization has a deflationary effect because it increases worker productivity and speeds up technological advancement, but now that’s gone.