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Cathie Wood: Not in a bubble, and here's why she remains bullish on growth stocks

Dec. 01, 2021 12:00 PM ETARK Innovation ETF (ARKK), ARKW, ARKQ, ARKGTWTR, TSLA, TDOC, ARKF, HOOD, ARKXBy: Jason Capul, SA News Editor246 Comments


Petrovich9/iStock via Getty Images

  • Cathie Wood says, "we are not in a bubble," and explains the reasons behind her bullish views on Twitter (NYSE:TWTR), Robinhood Markets (NASDAQ:HOOD), Tesla (NASDAQ:TSLA), and Teladoc Health (NYSE:TDOC) in a CNBC

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Comments (246)

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Wild to see all the Cathie hate and doom scenarios. Everyone is a bear but no one will short Tesla. Everything is speculation, this may be a enormous bubble, we may just continue this bull run for another 10x years with volatility mixed in. It’s just a guessing game, if it was easy everyone would make money shorting the market now and be rich in a year according to the comments.
The cult she has created is mind boggling. There are dozens of YouTubers with tens of thousands of followers that push her stocks and they blindly buy in to companies that either dilute their share holders (Palantir is a notorious one) or simply just keep loosing money hand over fist. Her bubble has already popped and keeps deflating…
GrahamBrecker profile picture
@Dinandriver @Vangel --- you liked this ?? Really, mate, what's up ???
Stonks Go Up profile picture
I am just here to read the comments.

Cathie Wood and ARK ETFs are a cautionary tale.

Her gig is up. $ARKK will be under $50 by June 2022. Maybe even sooner if the redemptions mount up.
Vangel profile picture
@Stonks Go Up What happens to Tesla if she has to sell to meet redemptions? Musk has already sold $10B worth of shares so finding new customers may be a bit tough given that most speculators were on the long side and the short position was only around 3%. Good luck boys and girls. You better hope that the Fed saves you again.
Gestalt Capital profile picture
@Vangel This new generation of investor doesn't attribute their success to the Fed. They're just smarter than everyone else on Wall St because "they get innovation" and recognize that "this time is different". Your stocks are in a bubble but not Cathie's.
@Vangel 2022 is going to be interesting. I'm old now but I was one of those this time it's different types in 1999. A whole new generation is about to get their battle scars.
Not in a bubble? Lol

The biggest money printing in history
@Mountain Walker LOL, definitely a bubble and definitely going to hit $30 price handle by end of next year. The implosion is just getting started.
Sermer profile picture
There are multiple obvious bubbles. EVs are probably the biggest right now but the mistake bears make is lumping everything together. Really the bulls are making the same mistake.

TSLA is in a solid position to be worth many times what it is today. While the valuation is high, it isn’t a bubble. The problem is that other EV companies that aren’t in the same boat as TSLA get treated as if they were the same. That’s what is causing the bubble. Unless LCID, RIVN, or any other EV player starts making serious headway into autonomy, they are bubbles waiting to pop. If they pop, I wouldn’t be surprised to see TSLA fall with them anyways.

Really I think I would rope F and to a lesser extent GM into the bubble discussion. Both have autonomous solutions in the work but neither have any hopes of catching Tesla. Cruise is the closest but I feel the same way about it as I do about Waymo. Essentially fancy tech demos that won’t be anything but a niche solution for roughly the next decade. Both F and GM are dinosaurs that are facing an extinction level event. If TSLA achieves Robotaxis, that’s basically the end for them. They just wouldn’t be able to survive having their revenues slashed.
Cathie Woods reminds me so much of a gambler on tilt.
Vangel profile picture
@Cash Flow Seeker Many fund managers are the same as she is. They just tend to hedge more and be a bit more timid than she is.
@Cash Flow Seeker "Double or nothing!" attitude. Also, the gambler's fallacy and survivorship bias
GrahamBrecker profile picture
@mfriedman50 @Gestalt Capital @mfriedman50 @dmzporter

No, that's just not what she is up to in ARKK - read the company's investment philosophy and the distinctive long-horizon, value + growth, futuristic and disruptive oriented flavour of the portfolio.


Given the above, it is easy and logical to accept that the gambler reference is so misplaced here that it's really tragic to think someone could actually define her approach as analogous to that of a gambler.
Vangel profile picture
Cathie would have made a great officer on the Titanic.
slash32is4 profile picture
lol just because we are in a bubble that has lasted 8 years doesn't mean we are not in a bubble... raise interest rates to 4% stop giving out free $$$ stop QE stop the Fed from buying MBS.... then tell me there isn't a bubble
@slash32is4 you're right, but the game has changed and the fed is now an integral part of the system. It won't allow the market to plummet organically as it would in the past.
Wez profile picture
"It won't allow the market to plummet organically as it would in the past."

That is the thinking that has caused the bubble, I doubt it is actually true. At some point, the appetite for risk dries up and no amount of printing and keeping rates low will work to stop the outgoing tide.
@Wez The phases of the bubble take years, but we are now seeing signs of profit taking. Wouldn't be surprised if we see down-side 2022/2023. I'm hedging. GLTA
deercreekvols profile picture
Lots of folks saying that looking at the negative returns of Ark Funds YTD and over the last year does not give an accurate picture of Cathie Wood as a fund manager. What about the winning years at Ark? Let's go back a touch further and see if four years of gains at Ark are the norm for Cathie Wood.

She had 18 years at Jennison Associates where there are no surviving funds and no record that she was a fund manager.

She spent 13 years at Tupelo Capital where her AUM shrank over 80% during her time there.

Let's not forget about her 12 years at AllianceBernstein. 8 out of 12 years her fund under performed T Rowe Price's Global Stock Fund. This was used a benchmark for how her fund performed.

From AllianceBernstein, Cathie Wood founded Ark Investing.

Not seeing the decades of experience with "innovation and disruption." Not seeing the decades of returns that beat benchmarks.

Cathie Wood has decades of fund management where she did not have a good long-term record of returns.

Her positive years with Ark Investing, four of them, are far outnumbered by her decades of negative returns.
Pillpoppinpuppy profile picture
@deercreekvols In 10 years we may not even remember her name, just as we can't remember the financial crisis one-hit wonder.

Not seeing the decades of experience with "innovation and disruption." Not seeing the decades of returns that beat benchmarks.

Her positive years with Ark Investing, four of them, are far outnumbered by her decades of negative returns.

How about:

- Jennison Associates;
- Tupelo Capital; and
- Alliance Bernstein.

Did they actually specialized with "innovation and disruption" decades ago when it comes to trading/investments?

Can you please provide reliable/credible data they actually were traders/investors of high-tech stocks in the old days?


High-tech Stocks became popular in late 1980s to 1990s. Then in the mid- to late 2010s to date. Almost everybody were losers during the Lost Decade of 2000 to 2009 = 9 years, and high-tech were not popular in early 2010s.

Far too many dotcom stocks went bk'ed after the Dotcom Bust of 2000 to 2001 followed by 9/11 and Iraq/Afghan Wars toward October 2002 bottom.

But then, I read an article that said 1 out of 4 Dotcom Stocks of the 1990s became big caps in in the 2010s to date. Amazing if true since that article did not provide verifiable factual data.

- ARKK: s3.tradingview.com/...


- INTC: www.tradingview.com/...
- MSFT: www.tradingview.com/...

- AMZN: www.tradingview.com/...
- AAPL: www.tradingview.com/...
- NFLX: www.tradingview.com/...
- TSLA: www.tradingview.com/...

Let's say you invested in 100 high-tech IPOs in order to capture only 1 'Amazon' or 'Microsoft' and all the rest went bk'ed, would you be happy or sad?

Vangel profile picture
@deercreekvols I suggest Taleb, who has talked and written about this for a long period. Below is an excerpt that I liked. Substitute 'fund manager' for 'trader' and you get the idea.

"Carlos is now out of the market. The possibility that history may prove him right (at some point in the future) has nothing to do with the fact that he is a bad trader. He has all of the traits of a thoughtful gentleman, and would be an ideal son-in-law. But he has most of the attributes of the bad trader. And, at any point in time, the richest traders are often the worst traders. This, I will call the cross-sectional problem: At a given time in the market, the most successful traders are likely to be those that are best fit to the latest cycle. This does not happen too often with dentists or pianists—because these professions are more immune to randomness."

Taleb, Nassim Nicholas. Fooled by Randomness: The Hidden Role of Chance in Life and in the Markets (Incerto) (p. 86). Random House Publishing Group. Kindle Edition.
What's the difference between Growth vs. Value Investors?

- Nasdaq: www.tradingview.com/...

- Russell2000: www.tradingview.com/...


- Dow Jones: www.tradingview.com/...

Nasdaq is considered high-growth high-tech mid- to large cap stocks while R2K a cornucopia of numerous small-caps many considered to be high-growth by virtue of being small and could grow fast in the future if they succeed.

Blue-chip Dow Jones of course contains the biggest and safest dividend stocks and hence not considered a high-growth major index = more suitable for retiring /retired investors.

- Utilities: www.tradingview.com/...


- Semiconductors: www.tradingview.com/...

The un-loved XLU with crappy 56% intermediate rally also being rotated massively since November 2020 despite being considered undervalued for a long long time already, but for value investors specially retirees Utilities among the most reliable dividend providers.

Most-loved SOX gave back bigger 15.42% in March double-dipped by 14.24% correction in May 2021, but measured using Fibonacci Retrace was super-stingy comparatively.

That's how you know, that's how you can separate the strongest from the weak ones. Also how to separate those with staying powers from others that may show considerable strength during run ups but with weak or crappy staying powers during pullbacks/corrections, by using the Fibonacci Retrace Technique.

- buy strong stocks on pullbacks/corrections;

- dump or short weak/lagging stocks.

A few newly IPO'ed high-tech stocks in recent years I saw might be headed to bankruptcy as they already retraced more than 100% of short-lived or dead-cat bounces from March 2020 bottom. Hence, if you bought some (value-trap) investments that kept under-performing and/or most times spending massive amount of time whipsawing around for years on ends; better get rid of them as most likely they have very deep fundamental chinks not even the extremely strong 63.5% short-term upside tide of the SnP500 from March to Sept 2020 could lift them out of their super-crappy performances.

Hold-on-tight to the outperformers, even if they overheated due to short-lived irrational exuberance as more often than not there are very good reasons why even some conservative investors fall prey to FOMO chasing despite being overvalued already.

Like what buy-low-then-hold specialist Warren Buffett said: Better to buy excellent companies at reasonable valuation during normal pullbacks /corrections rather than buy crappy companies cheap. Or if you prefer the much more conservative Charles Munger = Buffett's sidekick or right-hand man aka King Maker, who prefers buying excellent companies when they became undervalued due to panic selling like Alibaba most recent example.

Unfortunately for value investors, when it comes to highly successful disruptive companies like Amazon, Netflix, Tesla, etc. and many other high-tech stocks in the USA, they seldom if ever become reasonably valued nor undervalued. Hence, like Buffett that has been severely criticized by successful high-tech investors since the 1990s up to the 2010s; true-blue value investors will almost always be LEFT Behind for reluctance to buy overvalued high-tech stocks.

Cheers and Good Luck.
alpha scorpii profile picture
After - 40% correction, she will repeat the sentence: "we are not in a bubble".
What bubble?? Growth stocks have been hammered for 6 months. Valuations and multiples are way down.
Cathie, must have a vast supply of LSD on hand and I love her insights for that. But, now, she’s swinging for the stars and it’s not good for those who invest with her.
What's the difference between Facts and Perceptions?

- ARKK: s3.tradingview.com/...


- SnP500: www.tradingview.com/...

Perception by biased or instant-gratification analysts/commentators is that ARKK is headed to the dumpster with 39% correction most recent low back in May 2021, and right now is headed toward the May 2021 bottom of $97.22.

Intermediate correction of 39% proved to be far more than what many other stocks/ETFs gave back thus far this year as the massively notorious Sector Rotations rages on and on and on for several months now. And far more than whatever pullbacks the trending SnP500 ever produced from May 2021 to date.

Congrats for the very successful Buy-High-Sell-Low traders and investors.


However, for Buy-Low-Sell-High traders and investors; fact is ARKK has just executed an intermediate rally with massively outstanding 384% vs. 93% by SnP500. And up to now is very stingy in giving back some of those massive paper profits and still ahead of the SnP500 with net paper profits of 198% from March 2020 bottom vs. 106% by SnP500.

- ARKK Fibonacci Retrace: www.tradingview.com/...

Very stingy giveback, not even the minimum 38.2% Fibonacci Retrace compare to usual Fibonacci Retracements of 38.2% to 61.8% by other stocks. Weak stocks the ones who usually retraced more than 50%, the crappiest stocks would retrace much more than 61.8% before heading toward bankruptcy.

I allocated 1% of portfolio buying ARKK in May 23, 2021 after finding they also have substantial biotech holdings and a kicker not-bad 2% dividend yield back then. I expect ARKK to produce and A-B-C correction similar or comparable to the 2nd wave with maximum 45% intermediate correction loss.

I'm simply an 'ignorant' person when it comes to analyzing individual biotech stocks for lack of scientific knowledge and experience in chemistry much less high-tech biotech, and not an expert when it comes to Fundamental Analysis. Hence I could never trust myself to make the correct high-tech biotech analysis as well as fundamental analysis when it comes to each individual biotech companies.

- Biotech Fibonacci Retrace: www.tradingview.com/...

Since then ARKK could not rally substantially since the biotech sector has been in a massive whipsaw-maniacal Sector Rotation since February 2021 and many other high-tech disruptive stocks also giving back substantial portions of their overheated intermediate rallies from March 2020 cyclical bottom, a few stocks I saw might be headed to bankruptcy as they already retraced more than 100% of their intermediate rallies from March 2020 bottom.

Cheers and Good Luck.
is this possibly because she's long those fantastic growth stocks?
Charles Agbakwu profile picture
Cathie Wood was given too much praise during her period of massive outperformance in 2020, and is now being excessively derided during underperformance.

She is not a bonafide discretionary money manager moving in and out of various sectors based on macroeconomic conditions. The mandate of her funds are to invest in leading edge technology companies. The majority of companies legitimately belonging to that cohort are often early stage and unprofitable. Companies having those characteristics outperform when monetary and fiscal policy is very loose with low inflation, and underperform when those macroeconomic factors flip. We have been in the latter condition and therefore her funds have underperformed. It has nothing to do with stock-picking or market timing skills.
@Charles Agbakwu exactly spot on. CW got big because of the low treasury yields, going on TV to shill her bags, and the fact that people were bored at home/trading stonks.
@Charles Agbakwu Just to show that she only got lucky because COVID was the best thing to happen for her, at beginning of 2015 ARKK was at $20.3 and at beginning of 2020 ARKK was at $50.3 (2.4x in 5 years).

QQQ went from $102 to $214 (2.1x in 5 years).

This only shows that her performance was just slightly above the QQQ in the years before COVID. I guess COVID was a good event for her but when will the next event be?
Another Mountain's Rock Investing profile picture
@techniques well her holdings favor long-term outlook and high growth so I imagine they will likely continue beating QQQ which is close to SPY at this point because of the megacaps.
02 Dec. 2021
No one can be 100% correct on stock pick 100% of the time. Thus give break to all money managers including CW. What I appreciate about her approach: investment thesis and transactions are transparent ( worth reading v and listening to their content e even though one might not agree with it all the time but their work adds to one’s understanding of investing); she is trying to be early in stock growth and share it with rest of us normal individuals. One of her recent pick and one of top holding is Unity ( whatever she might lose in DKNG, Unity will more than compensate the loss-thus she can take a chance in a stock and still do well over 5 yr period ). If she was the part of investment fraternity she would not be taking such a flack. I do not think investment fraternity will allow her to join because unlike others she shares are investment thesis in detail and subsequent transactions with rest of us who are not privileged to be the part of exclusive financially society. CW might be wrong or not do well from time to time but she is doing a great service of explaining the secrets of exclusive investment club. Everyone ridiculed her but finally every tight lipped investment Gurus bought TASLA in their portfolio at much higher price than lots of us individual investors. I hear in TV that market in in bubble because individual investors who have not studied investment are investing. Sorry, internet has shattered information and knowledge arbitrage away from investment club and gave access to all of us. Further person like CW started to expose and teach everyone about new trends/technologies etc.
Longbow Archer profile picture
""Tesla is in the full position to become the autonomous taxi network certainly in the U.S. and perhaps elsewhere as well.""


Lets just throw in there Mars colonization after we have TSLA doing last mile deliveries for door dash on the moon.

CW has no clue, outside of marketing presentation soundbites, what she is talking about in regards to DNA anything, Robotics or AI.
Longbow Archer profile picture
CW is simply reverting to her mean of historically underperforming the market. Remember kids, she has been in this game for decades before ARK funds.
What a joke.
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