Cathie Wood's Sweet Superficial Success

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by quoth the raven
Wednesday, Nov 24, 2021 - 17:36

Submitted by QTR's Fringe Finance

“Live by the bullshit growth narrative sword, die by the bullshit growth narrative sword.”

At least, I think that’s how the old expression goes.

On my last podcast, while ranting in a stream of consciousness about Cathie Wood and her firm, Ark Invest, I brought up an interesting point that nobody on the financial news networks, or any of her investors, seem to notice: without Tesla’s raging (and mysterious) success, there is no Cathie Wood success story.

Sure, you’ve heard this one before from me, but bear with me.

And don’t get me wrong, I have defended Wood’s success more than once, including when Vanity Fair’s William Cohan labeled her a “charlatan” on a podcast I did with him. I want to give credit where it is due because, even if Wood is a one trick pony, she has brilliantly wound up parlaying that one trick into billions of dollars under management. Hell, even Madoff must have had some decent organizational and marketing skills.

But at one point during my last podcast, I wasn’t feeling as charitable.

Rather, I kept arriving at the one key question any potential investor in ARK’s Innovation Fund should be asking themselves: how have Cathie Wood’s returns been, without the help of Tesla? After all, Tesla is only one component in an ETF that holds dozens of names. You can find the full list here, but these are the top 20 names that make up the ETF.

Over the last year, the market has started to understand why asking about Wood’s other positions is such an important question.

What should be worrisome to Wood’s investors is not only that her flagship fund has vastly underperformed the major market indexes by about 39%, 36% and 31% for the S&P 500, Nasdaq and Dow Jones, respectively, year-to-date…

…but also that it has done so while her flagship ETF component, Tesla - weighted at a monstrous 10% of ARKK - has done nothing but go up. Specifically, ARKK is down 1% over the trailing twelve month period while Tesla has posted gains of over 112%.

In other words, Tesla has been saving ARKK from a complete and total meltdown.

It is underperformance that only a visionary “active manager” could put together.

I’ve also noted on my podcast that when investing in companies that don’t generate cash, managers like Wood seeking capital must dutifully make their way on to CNBC and not only offer excuses for when these stocks go down, but more importantly, excuses for why in the everloving fuck they are going up.

And you can’t just truthfully cite your main investing strategy, riding a wave of pure Fed-induced market euphoria, on national television.

No, people want to know exactly why the stocks of growth companies are skyrocketing. Is the switch from value to growth permanent? Is there some exceptional long-lasting trend that Cathie Wood has the vision to see that we all don’t?

Of course, the answers to these questions are “no”, but whatever excuses Wood...(READ FULL ARTICLE HERE).


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