Katie Wood believes that the Ark fund's profitability will grow 4 times
For Katie Wood's Ark Invest fund, 2021 was a difficult year, as it has fallen by 19% since the beginning of the year, and by 36% from the record high reached in February, but these losses can turn into big gains over the next 5 years, writes Business Insider.
6 out of 8 Ark ETFs declined over the year.
Even after a sharp correction, many innovative stocks are still trading at inflated prices, which leads some investors to believe that Ark innovative stocks are in a "bubble".
Nevertheless, Wood remains optimistic and sticks to her strategy of investing in innovative stocks: "We cannot disagree with this," Wood said on Thursday, defending her strategy and claiming that her stocks are not in a bubble.
"We observed such a correction, mainly in the shares of innovative companies, when the market reached historical highs, that, based on our estimates, our 5-year expected cumulative annual profit margin increased from 15% at the peak in March to almost 40% today," she explained.
Wood expects that the shares of innovative companies in the Ark portfolio will increase by 4 times compared to the current level over the next 5 years. So far, Docusign, Twitter (NYSE:TWTR) and Teladoc have fallen the most recently in Ark's portfolio.
5 "core" innovation platforms, including 14 different high technologies, will bring the expected profit, since Wood believes that they are all starting to move along exponential growth trajectories.
"And they are already on this path. If we are right that autonomous taxi networks will develop over the next 5-10 years, then this includes the convergence of 3 main platforms: robotics, energy storage and artificial intelligence. And all this, they are growing sharply,"Wood said.
The fact is that the "seeds" that define today's technological innovations were planted during the dotcom bubble 20 years ago, and now they are finally beginning to bear fruit.
"Now they are about to bloom, and people are running away from them. They rushed to them too early during the bubble in the technology and telecommunications sector, and now we have fears, uncertainty and doubts. As a portfolio manager, I really like this background," she said.
Katie Wood believes that the Ark fund's profitability will grow 4 times
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