Cathy Woods On Capital Allocation

Cathy Woods defends ARK ETF performance and says be patient: To those who are betting on the failure of ARK, Wood said the idea of shorting innovation is “ridiculous,” referencing funds, including Tuttle Capital Short Innovation ETF which can be used to wager against ARK’s roster of investments.

https://www.msn.com/en-us/money/markets/stock-market-faces-t…

Woods says that investments in ETF are part of a 5 year returns goal.

OTFoolish

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She was on CNBC Half time report for over an hour yesterday. Very smart lady. Excellent program. Her stocks are thoroughly researched and are selected for potential for 50% compound return over 5 years.

She thinks deflationary pressures will bring down inflation by year end. Covid and shipping delays caused shortages. Businesses that lost orders are double triple ordered to restore inventory. Excess inventory will cause sales to move inventory later this year.

Feds raising interest rates by 0.5% could give inverted yield curve signalling recession. That will cause businessmen to hesitate on new investments.

Investor fears send them to safe investments–the ones most impacted by innovation. Failure to invest in updates makes them vulnerable. Price cuts will be needed to move outdated products.

Robots and AI will increase productivity and reduce costs putting pressure on old line industries.

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I am still in the same camp as Cathy Woods, although the intensity of the current inflation is greater than I had expected.

david fb

Cathy Woods defends ARK ETF performance and says be patient: To those who are betting on the failure of ARK, Wood said the idea of shorting innovation is “ridiculous,” referencing funds, including Tuttle Capital Short Innovation ETF which can be used to wager against ARK’s roster of investments.

Innovation is a great and wonderful thing, and follows a more or less upwards linear trajectory, with occasional outlier inventions that alter the slope dramatically. The microchip, the internet, etc.

But the stock market does not follow in tandem; sometimes it gets far ahead of itself, sometimes it goes in the crapper because of the prior ebullience. It took 15 years for the NASDAQ to return to its high of 1998-2000. It took many companies longer than that, and of course some did not survive at all.

Humorously, I recall headlines - and posters on these boards - counseling “patience” after the dot-com wall came tumbling down, because “the internet will change everything” (and it did, just not in any way predictable for so many industries).

It happens to so many rock-star managers, and then the tide turns. Innovations will continue. The stock market and/or Cathy Woods’ picks? Maybe not.

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