Cathie Wood: Confident about investment strategy despite recession

• Turnaround in interest rates scares investors away
• Short positions will take revenge
• Spectacular returns over the next five years

The recession in the global economy and recent volatility in stock markets show that investors perceive the Fed’s interest rate policy as too aggressive, said Cathie Wood. The Fed’s tighter monetary policy is primarily affecting the valuations of growth-oriented tech stocks, and the threat of inflation scared investors away. In her monthly webinar, the investor points to the US Federal Reserve’s interest rate hikes that are depressing growth stocks: “The markets are making themselves heard quite loudly at the moment and seem to be questioning the Fed’s strategy.” The Fed misjudges the situation, insolvencies are emerging.
There are enough indications of a bear market: The reference index S&P 500 came close to the 20 percent loss mark that is characteristic of a bear market. Cathie Wood’s flagship ARK Innovation ETF (ARKK) is down over 70 percent since its all-time high in February 2021. The market-beating return is now a thing of the past as the total return on their investments is now even below that of US indices. Even over the last five years, Wood’s investments are underperforming the S&P 500’s 67 percent at 55 percent.

Bottom formation in sight? Cathie Wood expects spectacular returns

She expects “spectacular returns” within the next five years, Cathie Wood reiterated her investment strategy to CNBC. Tech companies have become the target of “incredible shorting activities” that have led to significant price losses. “If we’re right, the short sellers will be forced to stock up and we look forward to that time,” Cathie Wood told short selling traders.
Positive signals would come from the consumer price index for April, here the tech investor sees signs of easing for inflation, commodity prices would slowly peak. She also referred to the falling used car prices.

How confident the investor is in her strategy was seen most recently in her follow-up purchases from Coinbase and Teladoc. After the massive price losses of the two titles, the ARK team made additional purchases worth millions. Along with Tesla, Coinbase and Teladoc are the largest holdings in the ARK Innovation ETF.

Despite the losses mentioned above, the ARK Innovation ETF remains in the focus of investors and has recently even recorded net inflows. Cathie Wood recently added a position to her ETF, General Motors, which she now rates as “serious” about getting into electric mobility.

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