Popular stock picker Cathie Wood, who runs Ark Investment Management, said on Monday the current bet against disruptive innovation will prove as ill-informed and ill-timed as the tech and telecom bubble in the late 1990s.
What Happened: Wood’s flagship innovation fund that owns Tesla Inc (NASDAQ: TSLA), Coinbase Global Inc (NASDAQ: COIN), and Teladoc Health Inc (NYSE: TDOC) has sunk to its lowest level since November.
Ark Innovation ETF (NYSE: ARKK) has plunged 73% since hitting a peak in February last year.
“We believe the dreams associated with the tech and telecom bubble more than 20 years ago are turning into reality today,” Wood said in a report.
ARKK and other disruptive innovation funds have been crushed by fears of another similar bust, she said, adding that the decline over the last 15 months has been more severe than the 15 months after the Nasdaq's March 2000 peak.
“In our view, the bet against disruptive innovation today will prove as ill-informed and ill-timed as purchases of tech and telecom stocks in the late 1990s," Wood said.
See Also: Cathie Wood Scoops Up $10M In Tesla As Stock Crashes 32% In A Month
Exponential Growth Ahead: Wood said she believes Ark’s research on sectors such as genomic revolution, adaptive robotics, energy storage, artificial intelligence, and blockchain technology, even if half-right, will result in exponential growth for such companies during the next five years.
Some investors seem to be doing little more than mimicking the behavior of the Nasdaq in 2000-2001 or “shorting ARKK based on near-term valuations and betting against innovation," Wood said.
The analyst also blamed recent inflation and rising interest rates for the recent selloff in stocks linked to disruptive innovation.
Price Action: ARKK has closed 0.64% lower at $42.1 on Monday and is down 56.5% YTD.
Photo courtesy: Ark Investment
