Cathie Wood Is Going ALL-IN On ONE Sector

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2021 has been a rough year for Cathie Wood, but Cathie now believes Ark Invest will generate an average rate of return of 35 to 40% per year over the next five years. That’s a bold claim to make, but Cathie’s conviction is backed by a multitude of factors that are all converging to provide the greatest opportunity she’s ever seen. Some individual investments that we will cover have the potential to achieve 8 to 25X returns in the next five years by Cathie’s projections.
There are numerous reasons to believe that the market will crash. The new COVID variant is spreading. China’s real estate bubble is suffering. Interest rates may increase and quantitative easing is likely going to decrease soon. Although some of these concerns have merit for the overall stock market, Cathie believes that Ark Invest related stocks are about to experience the biggest bull run in history. The short term spread between ARKK, which is the Ark Invest innovation ETF, and the S&P 500 has begun to expand over the past year. The reason for this centers around the issues I mentioned earlier. The most prominent economic concern of the list is inflation. More specifically, the impact that inflation has on interest rates and quantitative easing, which is when the Federal Reserve purchases bonds. High inflation hurts growth stocks the most because investors will want current profits rather than future profits. Fed chairman Jerome Powell recently implied that inflation is not transitory anymore, which is a sign that interest rates may increase faster than expected. Powell’s warning about inflation should have increased bond yields to adjust to new inflation expectations. This is because when inflation increases, inflation adjusted returns, also known as real returns, decrease. Therefore, bond yields must increase to keep real returns at a similar level. Essentially, the bond yield should theoretically increase if inflation expectations do as well. However, the bond market actually reacted in the opposite direction. Cathie Wood sees this market reaction as a signal that a massive crash is coming for consumer prices. Inflation has stayed longer than Cathie expected and inflation expectations are still increasing right now. The rising consumer prices are primarily spearheaded by a lack of supply, which won’t last forever. Cathie believes that consumer prices are about to crash dramatically once supply chains become overstocked with inventory. The bond market’s opposite reaction was a sign of the impending crash in prices.
Another factor impacting inflation is China. The Chinese economy is starting to slow down as real estate developers are failing to pay the interest on their debt payments. The government’s increased regulation has helped instigate the Chinese real estate crash. And when the Chinese economy crashes, commodities crash as well, which causes substantial deflation. I covered this topic in-depth in a previous video that is linked on the top right of the screen. Even if interest rates do increase, Cathie believes that consumer prices will crash so much that the Federal Reserve will have to rethink their actions.
So now you might be wondering, how would this impact Ark Invest and the stock market at large? The crash in the Ark Invest ETFs in 2021 was initiated by high inflation, but if what we talked about is true, then Ark Invest is about to experience one of the largest bull runs in history. Back in February 2021, Cathie only expected 15% annual returns, but now she sees 35-40% annual returns from here. This is because decreasing valuations equate to higher expected future returns, as long as future price targets remain the same. For instance, let’s say Cathie Wood expects Teladoc to reach $500 per share in 2026. If Teladoc dropped from $250 to $100 and the $500 price target remained the same, investors can expect a 5X return instead of a 2X return. This relationship is similar to how bond prices decrease when bond yields increase. Decreasing valuations for stocks only increase future returns if the fundamentals remain intact.
That’s right, Cathie Wood thinks Ark’s ETF is going to more than 4X in 5 years, but there are a few stocks that she believes will return even more than that.

[elijahethan]

My advice to new investors: Buy good companies stocks and hold them as long as they are good companies. Just do this and ignore the forecasts and market views which are at best entertaining but completely useless.

[un-confiscate-able-money]

There’s going to come a point in time when Cathie Wood is going to be tired of being wrong. Her investment fund is getting slaughtered and her company is in a lot of pressure from the ARKK shareholders.

[christopherbennett]

There would be no financial youtubers out there, if they didn't have this chic as a information hub.

[barbaralanders]

I hope she's right, because so far this year I'm not impressed with ARKK. And I don't share her enthusiasm for Teladoc.

[FuzzyAason]

Nobody would say that their own fund will do poorly in future.

I have faith in the companies that she picked... but not necessarily the stock price at which it is expected to grow and also buy in at.
Transition needs time unless infrastructures of the existing ones cannot catch up with the demands / requirements of the user. Right now, Telehealth only works for consultation that do not require taking patient parameters or at least for conditions where wearables can deliver consistent and proven medical reports of the patient.

Most of her company picks will be successful disruptor... but identifying the company is the easy part. Intricately navigating the stock market is a whole other thing.

[EllieCBirch]

It’s strange how people talk about all the profits, they have been making through trading of crypto, while am here making huge losses. Please can someone put me through on the right path or at least advise me on what strategy to follow.

[broski]

Cathies' strategy involves picking stocks that are picked from the tech sector, which is currently being thrown out as a whole, ignoring each company's potential

[cristinabaker]

How Look at the US stock market, even with all of its ups and downs, over time, with a constant savings of your income, taking advantage of IRA’s, 401k’s or just buying and holding S&P index funds, the earlier you start saving the more money you will, have at 50, 55 or 60 or 70.

[ozlems.]

Well folks, on the long term Cathie is always right. In 2018 when bitcoin crashed she predicted the 50k soon, when Tesla was around 100 dollar she saw 12X was coming. And she was alone but was right.

[levilevi]

How do i see the live portfolio like you have in the video at 11:35?

[annettetickner]

I’ve just doubled up on my ARKK, ARKF & ARKG investments. I’ve added to these funds when sp has dropped, but I’m now expecting small ordinaries to head back up. ARK funds will do well, they buy low and they’re growth companies. 5 years down the track

[Alex]

Price goes up BUY!
Price goes down SELL!

Inverse this mentality to win. Also don't panic sell for a lose, that's a losing strategy.

[detraed]

I just wonder when she invests if she looks at the leaders of these companies to see if they are beyond average leaders and managers cause you can have a great idea but if it's not executed, promoted, and marketed properly it will likely flop. I mean Elon is a genius and I do think that's what helped his EV company not just the fact that it's an EV company. Elon is the magic for Tesla. The best growth companies start out with having very exceptional leaders running the companies, like Jobs, Bill Gates, Bezos... etc. You can have a stale leader and the company can just fall apart and never do well.

[michaelweber]

Seriously, yes supply issues are part of the problem, but the prices will never go down to pre-covid levels. I would not call it deflation, it is more a return to "normal", pre-covid range of pricing metals, wood, etc. Matters, how the inflation manifests in higher salaries, how it gets built in permanently to product prices.

[johnny]

I see TDOC going up for sure, this old way of waiting 2 month for appt then spent half day of work to see a doctor is utterly stupid, inefficient and expensive. Insurance companies will love to work with TDOC

[thisiskjsworld]

It’s crazy how the sentiment is night, and day compared to 2020. Everyone thought Cathie Wood was a wizard, now they can’t stand her 😂

[cshell]

Great video with good insite. Thank you! Happy holidays everyone!

[brainwashboi]

I prefer your company analysis videos. I’m a little bored about constantly hearing about Elon and Cathie.

[donnydoit]

Apparently she was wrong was about TDOC. You were saying, what else she is buying, probably after she buys and the stock tanks I can buy it lot cheaper. You were saying 🤣😁

[davidx.]

No reason to short the old guard, imo. Shorting is tricky for even the most skilled investors, and sometimes markets keep losers on life support.

Holding good companies long will never fail, but shorting bad ones can, because the market may disagree and let you bleed out while you wait for it to see that you're right