Ark Invest CEO Cathie Wood says investors are looking at the wrong historical period in comparison to the current high inflation environment.
If you go back to the 19 - teens, the period was very similar to the period we are in today, she said at the Finimize Modern Investor Summit, where she appeared by video on Tuesday. That period included World War I, a Pandemic Spanish flu and supply-chain problems. She said it was the most prolific period for innovation in history, as it was related to the impact of electricity, the telephone, and the automobile. She noted that in June 1920, inflation went from 24% to 15% in June 1921. She did not forecast an inflation of - 15%, but she did assert that inflation would turn negative on a year-over-year basis. The market will flip back to a preference for growth stocks and innovation strategy after what has happened during the last few years, according to Wood. Wood also elaborated on a tweet from earlier in the day about the depth of the inversion of the yield curve. That s the bond market saying, Hello, Fed, are you watching? She said that Federal Reserve Chair Jerome Powell is trying to be the reincarnation of Paul Volcker at a time when it is not appropriate. She said that is a mistake, because this is not a 15 year problem, it is a 15 month one. She said commodity prices are tumbling, supply chains are healing and companies are struggling with too much inventory. Wood pointed out that investors have not been pulling their money out, even though Ark's flagship fund has struggled this year - the ARK Innovation Fund ARKK has dropped 63% in 2022. According to FactSet, the innovation ETF has brought in $1.4 billion inflows this year. She says it is because it is a hedge and is different from other products. Most of Ark's investments are not in broad-based benchmarks, unlike Tesla TSLA and Nvidia NVDA. She said they are all about the future and are disrupting the way the world is going to work. She added that Ark has been concentrating its portfolios as it waits for inflation dynamics to be supportive to innovation. Wood said that the innovation fund has been narrowed to 32 companies from 58 because the firm has become less convinced that China is supportive of innovation.