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- Cathie Wood has doubled down on her commitment to tech stocks and crypto despite a major market sell-off.
- The Ark Invest boss said “innovative” technology companies can expect exponential growth in coming years.
- Wood also said bitcoin is the currency of the future, despite it losing almost half its value since November.
Ark Invest founder Cathie Wood has doubled down on her commitment to early-stage technology companies and cryptocurrencies, despite a dramatic sell-off that has seen her flagship exchange-traded fund plunge almost 30% this year.
Wood predicted that tech companies in industries such as DNA sequencing, which Ark has heavily bet on, will deliver exponential growth over the coming years. She told Ark’s Big Ideas Summit Tuesday that investors need to keep their “eyes on the prize” and have a five-year time horizon.
She also remains resolutely committed to cryptocurrencies, which have slumped in recent weeks. She called bitcoin the first global, private, decentralized monetary system ever invented, and said crypto will have “profound ramifications” for the global economy.
Wood’s bullishness comes against a backdrop of dramatically falling asset prices. Tech stocks and cryptocurrencies have been particularly hard hit by expectations that the Federal Reserve will abruptly cut its support for the US economy this year.
Ark Invest’s flagship Innovation exchange-traded fund — ticker ARKK — has fallen 27% year-to-date. It is down around 55% since its February high, after soaring in 2020.
Investors have soured on the fast-growing technology stocks that fill the ETF and have instead been buying more economically sensitive companies such as banks and energy providers.
Tesla, ARKK’s biggest holding, is down 13% year to date. Crypto exchange Coinbase and virtual healthcare company Teladoc, two other major holdings, have dropped 26% and 22% respectively.
But Wood said she hasn’t been fazed by the wild swings in financial markets.
“We use volatility to our advantage,” she said. “We concentrate towards our highest conviction names, and that tends to work very well as we go through these corrections.”
She said she remains convinced that technologies such as DNA sequencing, robotics, energy storage, artificial intelligence and blockchain have rosy futures.
“All of them are on exponential growth trajectories,” she said, adding that they could grow at an average of 30% annually, compounded over the next 10 years.
Meanwhile, Wood also predicted that cryptocurrencies and blockchain technologies are going to cause revolutions in money, financial services, and the internet.
Plenty of analysts disagree with the Ark boss, and argue that speculative technology stocks are set for a long period of weakness and that cryptocurrencies face a dark “winter” as the Fed cuts back on stimulus.
Bitcoin has tumbled in recent weeks to trade at around $37,860 on the Coinbase exchange Wednesday. Earlier in the week, it tumbled to $33,000, more than 50% below its November record high of close to $69,000.
An ETF that bets against Wood’s ARKK, from the investment company Tuttle, has now amassed more than $240 million of assets, according to Bloomberg data. It has rallied more than 55% since launching in November.
Major investment banks such as JPMorgan have cooled on tech, and have said they favor so-called value stocks in the financial, mining, energy and travel sectors over the next year.
Mike Wilson, chief equity strategist at Morgan Stanley, said in a recent note that it is appropriate for “speculative” technology stocks to have fallen as much as 50%.
“These kinds of valuations don’t make sense in any investment environment,” he wrote. “In short, the froth is coming out of an equity market that simply got too extended on valuation.”
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