Cathie Wood is the poster child for this bear market’s ongoing “tech wreck”…
And regular readers know we love to call out inconsistencies when we see them.
But we do it for good reason…
Wood founded ARK Investment Management back in 2014. Her company’s suite of exchange-traded funds (“ETFs”) all seek to capitalize on “disruptive innovation.”
However, they’ve performed terribly for almost two straight years…
For example, the company’s flagship ARK Innovation Fund (ARKK) is down about 80% from its February 2021 peak. And this week, the ETF plunged to its lowest point since August 2017.
That’s notable for a simple reason… It was more than five years ago.
Today, I’ll show you why that’s a significant milestone. And then, I’ll introduce you to a better spokesperson for your investments…
Wood’s ETFs have lost an incredible amount of shareholder value over the past 22 months. And yet, unsuspecting investors still entrust her with billions of dollars…
For example, ARKK currently has around $7 billion in assets under management.
As ARK Invest’s ETFs continue to bleed value, Wood is once again doing damage control…
She’s making the rounds in the financial media, continuing to preach about the long term. And she’s staying active on Twitter as well. In fact, Wood posted this message yesterday…
The world today appears to be run by the “profitless tech” companies of the past. ARK invests in companies that we believe will change the world [and] generate extraordinary cashflow at scale, not mature companies catering to short-term investors.
Every time Wood speaks, she regurgitates the message about “companies that… will change the world” or tells folks not to worry. She loves to cite a five-year time horizon.
Now, I think that five years is a reasonable time frame for investors. And that’s especially true for the type of innovative companies that Wood and ARK Invest seek for their ETFs.
However, I can’t help but ask… when is five years only five years?
If a seasoned investment manager tells you their preferred investment time frame is five years, you might be willing to go along for the ride. But when does the five-year clock start?
For investors in ARKK, the past five years have been a waste. Take a look…
Back in December 2017, ARKK traded for roughly $38 per share. Today, it’s trading for around $32.25 per share. That’s a 15% loss over Wood’s beloved five-year time horizon.
When you look at the opportunity cost over this five-year span, it’s even worse…
Heck, even after factoring in the COVID-19 panic in 2020 and a miserable 2022, the S&P 500 Index has still returned more than 40% in the past five years. And the tech-heavy Nasdaq Composite Index is up more than 50% over the same period.
Meanwhile, ARKK’s managers failed to deliver any returns with baskets of so-called “disruptive innovators.”
How can we believe ARKK will shine over the next five years with the economy on the verge of a recession? Interest rates are much higher than they were five years ago, too.
My point is simple…
We simply can’t rely on fund managers like Wood “talking their own book.” We don’t have an endless parade of five-year time horizons to wait around and hope for good returns.
Investors who bought into ARKK in 2017 and never sold are sitting on a 15% loss today.
Regardless of the companies that ARKK researches and invests in, we still need to pay attention to the trend. And today, the trend remains negative – especially in this space.
We know that’s the case because we have the Power Gauge at our side.
The Power Gauge first downgraded ARKK to “neutral” around its February 2021 peak. And it has stayed consistently in the “neutral” or “bearish” ranges over the past 22 months.
Don’t believe the hype from Wood until the technical indicators start to tell a similar story.
Instead, let the Power Gauge be your spokesperson.
Good investing,
Pete Carmasino
Editor’s note: Chaikin Analytics founder Marc Chaikin has used the Power Gauge to chart nearly every twist and turn in U.S. stocks this year. Now, he’s setting his sights on 2023…
In fact, Marc just put together an urgent briefing about what you can expect. In short, he says you now have a very narrow window to make financial decisions that will dictate your entire year to come.
And as an added bonus, Marc gives away the names and ticker symbols of what he believes will be next year’s best- and worst-performing stocks. Click here for the full details.
