High-profile technology investor Cathie Wood said deflation, not inflation, is a much larger risk for investors and that the tide is turning.
Cathie Wood has hit back at equity market bears and warned the sharp burst of inflation that has weighed on tech valuations and lopped two thirds in value from her own fund will eventually turn.
She argued that investors are “running for the hills”, retreating to benchmarks and selling Ark’s stocks, which include Zoom Communications, the video chat company, Tesla, Roku and Block.“Our stocks are not in the benchmarks, and we’ve been concentrating our portfolios towards our highest conviction names during the last year,” she said, noting that Ark US flagship strategy has tightened from 58 to 35 names over the last year, with a focus on ‘pure-play’ companies.
Wood added that long-term bond market have “not believed this inflation narrative”, saying 3 per cent yields on 10-year US government bonds suggest nominal GDP growth will be in the 3 per cent 4 per cent range for the next 10 years. Wood’s comments come after a dramatic turn in fortunes for the Ark Innovation ETF after delivering gains of over 300 per cent to investors from the depths of the March 2020 market to a peak in February last year. Since then, the fund has been on a downward trajectory, taking with it investors who bought into the hype in its later stages of growth.
“For institutional investors to be dismissing Zoom when more than half of its revenues are now enterprise is just telling me they’re not doing their research,” she said. “They should know better.”
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