The inventory market has left a path of tears this yr, particularly over the previous week, with the S&P 500 falling right into a bear market.
The celebrated investor Cathie Wood has seen her Ark Investment Management exchange-traded funds tumble, as their disruptive expertise shares have been hammered by roaring inflation and hovering rates of interest.
She stays dedicated to her technique.
If Wood had identified a yr in the past in regards to the coming conflict in Ukraine and the persevering with supply-chain turmoil attributable to China’s covid lockdown, she would have acted in another way, she stated in a June 14 webinar.
She would have put cash within the expertise sector’s “cash-like instruments,” reminiscent of Alphabet (GOOGL) – Get Alphabet Inc. Report and Apple (AAPL) – Get Apple Inc. Report inventory, Wood stated. “We probably would have avoided some of the carnage, but it still would have been difficult.”
‘Highest Conviction Names’
Instead, “we’ve concentrated on the highest conviction names in the last 18 months,” she stated. “Historically, that’s good technique, and I feel it would play out once more.
“Innovation tends to gain traction during difficult times because it solves problems.”
The biggest holdings of Wood’s flagship $7.1 billion Ark Innovation ETF (ARKK) – Get ARK Innovation ETF Report are videoconferencing service Zoom Video Communications (ZM) – Get Zoom Video Communications Inc. Report, electric-car giant Tesla (TSLA) – Get Tesla Inc. Report, video-streaming platform Roku (ROKU) – Get Roku Inc. Report and biotechnology company Crispr Therapeutics (CRSP) – Get CRISPR Therapeutics AG Report.
Scroll to Continue
The market downturn in March 2020, at the beginning of the covid pandemic, lasted only a month and could be a “warmup for this period,” Wood said. The pandemic showed that “real innovation does solve problems,” she said.
Innovation strategies have been hit particularly hard over the past year, but “with crisis comes opportunity,” Wood said.
Talk has arisen that we’re headed for a tech bust like the one in 2000. But this time is different, Wood said.
Technology sectors such as artificial intelligence and cryptocurrencies hadn’t matured back then. “Technologies weren’t ready and were much too expensive,” she said.
‘Dreams Coming True’
But now, “the dreams of the late 1990s are coming true,” Wood said. Tech companies are generating strong growth in revenue and gross margins, she said.
Turning to the economy, Wood reiterated that she sees deflation as a greater risk than inflation. Price gauges like the consumer price index are lagging indicators, she said. The CPI soared 8.6% in the 12 months through May, a 40-year high.
Wood prefers indicators like the price of gold, which is little changed from a year earlier, and the dollar, which has risen sharply.
Costs are dropping for her applied sciences, reminiscent of synthetic intelligence coaching, genomic sequencing and battery costs for electrical automobiles. Those applied sciences could have a huge effect on the economic system, she stated.
Ark Innovation ETF (ARKK) – Get ARK Innovation ETF Report has slumped 61% yr thus far and has dropped 77% from its February 2021 peak.
Source: www.thestreet.com