The single biggest mistake capital allocators make is treating position sizing as an afterthought. Druckenmiller's framework inverts this: sizing is the primary decision, entry timing is secondary. You make or lose your decade on 3–5 positions. Everything else is noise management.
Start with the macro regime. Credit spreads widening or tightening? Dollar strengthening or weakening? Long-term rate trend? That gives you the sector headwinds and tailwinds. Then move to sector — which sub-sector has the macro wind at its back AND a visible catalyst that will force consensus repositioning? Then to the specific deal or security — does this asset capture the most asymmetry within the right sector?
For Dominion's deal pipeline in 2024–2026: energy infrastructure has macro wind (rising energy demand, grid transition, reshoring capex), a clear catalyst (IRA implementation and data center electricity demand), and a measurable consensus underestimate (most institutional capital still underweight real assets post-GFC). That is a high-conviction macro setup. The question is how to size the best individual deals within that setup — and the answer is: larger than feels comfortable.
- Energy infrastructure: high-conviction macro setup — size up, not sideways
- Data center power and grid adjacency: catalyst-rich, consensus underweight — deploy capital now
- Tech deals at growth multiples: mixed macro backdrop — probe size only until rate trajectory clarifies
- Real estate: currency-sensitive, credit-cycle-exposed — monitor credit spreads as primary signal
- Preserve 15–20% cash as optionality for the next dislocation trade — it is coming