Ark Investment Management's chief executive Cathie Wood is upbeat about her strategy of investing in young technology companies.
After her exchange-traded funds dropped 60% to 80% last year from highs in 2021, Woods talked about the current stock market environment in a year-end commentary Dec. 29, 2022.
"We’re getting a lot of deflationary signals, but the Fed isn’t buying in yet,” Wood said, referring to the Federal Reserve’s continuing interest-rate increases.
"But the bond market will start to convince the Fed," Wood said. “The bond market is telegraphing much lower-than-expected inflation and/or recession."
That prediction seemed to be validated Feb. 1 when the Federal Open Market Committee (FOMC) raised interest rates by only 25 basis points. That was smaller than the 50 basis points it had raised them by in December and the 75 basis points it had increased the rates by in each of its previous four meetings.
The Fed seemed to have been recognizing the deflationary signs.
"The bond market always leads the Fed, and the bond market is speaking loudly," Wood had said.
“We are seeing a lot of deflation in the pipeline,” she had said, referring to lower commodity prices and discounts at retailers.
"Normally, the market would have responded already, but it’s waiting for the Fed," she continued. "First the Fed’s rhetoric will change and then its actions in 2023."
Wood's Leading ETF is Off to Great 2023 Start
Wood's ARK Innovation ETF(ARKK) is up about 40% to begin 2023, which is more than twice as much as the Nasdaq 100 (^NDX) . And she is optimistic about its future.
"We are the new Nasdaq," Wood said in an interview Feb. 3 on Bloomberg TV.
The Nasdaq 100 consists of major technology stocks such as Microsoft(MSFT), Apple(AAPL) and Amazon(AMZN).
"While ARK Innovation ETF's largest holding -- Tesla Inc. -- is also a top stock in the Nasdaq, the fund’s other big positions are concentrated in smaller, newer companies like Zoom Video Communications (ZM) and cancer-test maker Exact Sciences (EXAS)," Bloomberg wrote.
"Cathie Wood says ARKK is 'the new Nasdaq,'" tweeted author Holger Zschaepitz (@Schuldensuehner). "Looking at the recent crash, she is right, may she also be right about the rebound."
Wood also said she still believes the value of a bitcoin will reach $1 million during the next ten years.
