Ark Invest’s Cathie Wood stated Tuesday expertise shares will hit the underside earlier than the broader market, repeating a historic pattern from previous crises. In the wakes of the dot-com bubble and 2008 monetary disaster, the tech-heavy Nasdaq Composite hit its trough months earlier than the S & P 500 did and subsequently recovered first. The innovation-focused investor believes the historical past will repeat itself this time round. During an investor webcast on Tuesday, Wood recounted her expertise managing an analogous disruptive tech fund at her final agency. She stated her relative efficiency bottomed round Thanksgiving in 2008, whereas the market did not attain its trough till March 2009. “This is an example of the new leadership taking hold and it does show itself in a bear market,” Wood stated. “One of the reasons for that is superior growth. Our revenue growth rate especially is still very strong and that is becoming less and less true for the other parts of the economy.” “When inflation comes down, these companies hiding behind nominal growth rates … we will see how much of that is pulling from inflation and not truly organic growth,” Wood stated. Wood has had a troublesome 2022 as her disruptive expertise darlings have been among the many greatest losers this yr within the face of rising charges. Teladoc Health and Zoom have dropped 68% and 42% this yr, respectively. Roku has slid roughly 67% this yr. Her flagship energetic fund Ark Innovation ETF (ARKK) is down a whopping 61% yr up to now, falling 72% from its document excessive. Further, buyers pulled a complete of $309 million this month. The S & P 500 has dropped 22% in 2022, tumbling right into a bear market formally this week. The Nasdaq has been hit even tougher, down 31% yr up to now and off almost 34% from its document excessive, reached final November. Wood stated she believes the market is “pretty close” to a backside, however she acknowledged that she’s been incorrect this yr with lingering provide chain constraints. Despite a troublesome yr, Wood stays a believer in modern expertise that may in the end unlock large worth. She beforehand stated her funds ought to quadruple over the following 5 years. “Innovation tends to gain traction during very difficult times. Innovation solves problems,” Wood stated. “Covid has been a warm-up for this period.”
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