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Cathie Woods has no idea what she is doing. She rose to prominence betting on tech stocks during the bull market and doubled down on them despite most being gro

Cathie Woods has no idea what she is doing. She rose to prominence betting on tech stocks during the bull market and doubled down on them despite most being grossly overvalued even if you assumed they would double or triple in revenue. Now we have entered a bear market and all of her gains have been erased. Just a few months ago prominent investors were on the record saying Warren Buffett style value investing is outdated and dead. They were and are wrong. Value Investing might not realize huge one year gains, but it also won’t see all of those gains erased at the hint of an economic downturn.

hamiltonians 4y ago
qqq held up much better . it's not that tech was too overvalued but that her fund was just terrible.
- gitfan86 4y ago
  Yes, her high level thesis is correct. Which is that technology is transforming the world and is incredibly valuable. But anyone following the stock market at all could have told you that companies like MSFT, AAPL, GOOG, have huge returns and that there may be more companies like that in the future. The key is to invest in those and not into COIN.
- etempleton 4y ago
  The stocks she bet on were valued too high. Betting on growth stocks has some inherent risks, but I agree, there is a way to do it successfully. She also put a lot of money in companies that were just not good companies and that should have been clear to anyone.
- donthellbanme 4y ago
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actionablefiber 4y ago
Honestly though, I'm not sure what she should have done differently. Her funds are pretty transparently about making wild speculative bets and that's the branding she's known for. People piled in on the hopes that her speculative bets would continue to pan out as they did before. Like, sure, if she'd been able to, she could have saved her investors a lot of money if she sold everything last year and held cash, with each of her ETFs remaining frozen near the top. But that would defeat the purpose of having ETFs open to public investors. And maybe so would buying instruments that hedge against declines in her picks. Yeah investors who piled into her fund near the top got burned but it's not like they got bait-and-switched.
- etempleton 4y ago
  If people knew what they were doing they wouldn't need hedge funds. I don't think anyone got bait-and-switched. caveat emptor I suppose.
  - ajasmin 4y ago
    Major nitpick: ARK is not a hedge fund but an ETF. My understanding is that it tracks an actively managed list of public stocks. I'm sure it's not much consolation, but "actual" hedge funds are for the sophisticated investor. These funds have access to more sophisticated ways of wiping out investor money.
- ajasmin 4y ago
  You're right. Cathie Wood's ARK is all about "disruptive innovation". It's no surprise to see the fund falling after tech. stocks were so grossly inflated. As an investment strategy, it's a long-term play. Whether the holdings make sense is a whole other question. But don't expect a huge change in strategy just because the markets are down.
- xiphias2 4y ago
  She got captured by her own success: after she got successful, CEOs of crappy companies, like Teladoc (number 1 position in their genetics ETF) started to approach her team directly and the days of using open data for evaluating stocks was over. At this point ARK invest is looked upon as an exit strategy for startups instead of making profit. Any sane person knows that Teladoc has no experience in genetic therapeutics (unlike BEAM for example, which has a chance of fixing genetic mutations without a double stranded break...I call that disruptive innovation).

hamiltonians 4y ago

qqq held up much better . it's not that tech was too overvalued but that her fund was just terrible.

gitfan86 4y ago
Yes, her high level thesis is correct. Which is that technology is transforming the world and is incredibly valuable. But anyone following the stock market at all could have told you that companies like MSFT, AAPL, GOOG, have huge returns and that there may be more companies like that in the future. The key is to invest in those and not into COIN.
etempleton 4y ago
The stocks she bet on were valued too high. Betting on growth stocks has some inherent risks, but I agree, there is a way to do it successfully. She also put a lot of money in companies that were just not good companies and that should have been clear to anyone.
donthellbanme 4y ago

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actionablefiber 4y ago

Honestly though, I'm not sure what she should have done differently. Her funds are pretty transparently about making wild speculative bets and that's the branding she's known for. People piled in on the hopes that her speculative bets would continue to pan out as they did before. Like, sure, if she'd been able to, she could have saved her investors a lot of money if she sold everything last year and held cash, with each of her ETFs remaining frozen near the top. But that would defeat the purpose of having ETFs open to public investors. And maybe so would buying instruments that hedge against declines in her picks. Yeah investors who piled into her fund near the top got burned but it's not like they got bait-and-switched.

etempleton 4y ago
If people knew what they were doing they wouldn't need hedge funds. I don't think anyone got bait-and-switched. caveat emptor I suppose.
- ajasmin 4y ago
  Major nitpick: ARK is not a hedge fund but an ETF. My understanding is that it tracks an actively managed list of public stocks. I'm sure it's not much consolation, but "actual" hedge funds are for the sophisticated investor. These funds have access to more sophisticated ways of wiping out investor money.
ajasmin 4y ago
You're right. Cathie Wood's ARK is all about "disruptive innovation". It's no surprise to see the fund falling after tech. stocks were so grossly inflated. As an investment strategy, it's a long-term play. Whether the holdings make sense is a whole other question. But don't expect a huge change in strategy just because the markets are down.
xiphias2 4y ago
She got captured by her own success: after she got successful, CEOs of crappy companies, like Teladoc (number 1 position in their genetics ETF) started to approach her team directly and the days of using open data for evaluating stocks was over. At this point ARK invest is looked upon as an exit strategy for startups instead of making profit. Any sane person knows that Teladoc has no experience in genetic therapeutics (unlike BEAM for example, which has a chance of fixing genetic mutations without a double stranded break...I call that disruptive innovation).