• In a deflationary phase, tech stocks are in demand
• Cathie Wood increases stakes in tech companies and Coinbase
• Technologies can develop enormously in a deflationary phase
Following the collapse of crypto exchange FTX, the ARK Innovation ETF fell over 6.5 percent to $32.57 on Nov. 9. It was thus approaching a loss of almost 80 percent compared to its February 2021 peak.
The very next day, however, the fund experienced the biggest price jump in its history – by 14 percent in just one day. Its largest holdings, Zoom Video Communications, as well as Roku and Teladoc, are each up over 14 percent, while Tesla is up 7 percent. Since the beginning of this year, the ARK Innovation ETF has fallen 58 percent to $40.05 (as of 11/14/2022). In particular, the growth stocks favored by Cathie Wood experienced severe setbacks in the face of rising interest rates and fears of inflation and recession. The Ark boss remains convinced that innovation stocks in particular will experience a massive upswing if the US Federal Reserve eases its monetary policy course.
Tech stocks in demand again soon
In a webinar, the star investor said the U.S. is facing a steady decline in CPI and within the next six to nine months it will become a “true deflationThen innovative technology stocks would be in demand again. On Twitter, she even goes a step further when she compares the current situation with that of the 1920s, when numerous technologies were developed at the same time. The structure is “remarkably similar”. .
If inflation is unwinding, as we believe, then we could be heading back to the future, the Roaring Twenties, the last time several general purpose technologies evolved at the same time: telephone, electricity, and the internal combustion engine. The setup is remarkably similar!
– Cathie Wood (@CathieDWood) November 12, 2022
Undeterred by recent share price falls, Cathie Wood has increased Ark’s holdings in six companies, including Zoom and Tesla. The innovation investor even bought 420,000 shares from Coinbase on two consecutive days after they had previously fallen by 11 percent. According to yahoo!finance, you follow the conviction that the insolvency of FTX strengthens the competitor Coinbase.
As has been observed several times in the past, Wood recently sold NVIDIA shares on a large scale shortly before the chip giant presented its balance sheet for the past quarter in order to forestall bad company figures.
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