Movers and SHAKERS
Cathie Wood is Even More Positive About Innovative Companies with Global Turmoil
Does the sudden increase in traditional energy prices indicate a need to retreat back to drilling and fracking, or is it a sign of the need for renewables? Cathie Wood, founder of Ark Invest said the sudden increase in oil's price will further drive a switch to new technologies like electric cars (EVs). She believes the longer-term move is that, as she predicted, Ark Invest funds will see outsized returns as innovation prevails in the coming years.
Russia exports a third of all crude oil and is also a large exporter of natural gas, nickel, and wheat. The troublesome conflict in Ukraine has driven an increase in commodity prices, as the US and its allies consider whether they should implement a ban on oil from Russia.
On Sunday Cathie Wood was on CNBC’s “Capital Connection and expressed, "We're going to be looking at a lot of demand destruction and substitution into innovation. Electric vehicles, as opposed to gas-powered vehicles, would be the biggest one.” Ark Invest's flagship Ark Innovation exchange-traded fund (ARKK) has dropped more than 35% so far in 2022. Part of this fall-oof was Russia's attack on Ukraine which caused investors to shun high-risk assets. Wood expects the conflict will further tech innovation, which is the mainstay of Ark Invest. The new set of challenges, she believes, are solved by many of the innovative companies that are represented in the ARK portfolios. Wood expects automation and EVs to counteract concerns like higher gas prices and labor shortages.
Cathie Wood admitted, “We've been in a terrible bear market for innovation." She now sees a pattern developing similar to the early days of the pandemic, which resulted in gains for the Ark Innovation ETF that reached a high in early 2021. She reminded the CNBC interviewer, “… if you look from the bottom of the coronavirus to that peak in February of 2021, we were up 358%. Why? Because innovation solves problem."
Ark's funds have seen significant inflows since January 17, Ms. Wood believes investors are now averaging down, and as a strategy buying at lower levels. She said, "Given our expectations for growth in these new technologies, I think we're going to see some spectacular returns." The well-followed investor reminded that while public markets are pricing cutting-edge tech stocks lower, private markets have seen a 20% increase. She attributed this to the tendency of investors in public markets to be focused on benchmarks, which she called a massive misallocation of capital last month. Wood also dismissed the role of the tech giants in the S&P 500, saying, "Our technology stocks are going to be the future successes, and they will end up in the indexes."
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