Kathy Wood: Now’s Not the Time to Abandon Your Stock

The stock market has been in tears this year, especially over the past week, with the S&P 500 falling into a bear market.

Renowned investor Kathy Wood has seen her Arc Investment Management exchange-traded funds fall, as her disruptive technology stocks have been hit by rising inflation and rising interest rates.

He is committed to his strategy.

If Wood had known about the impending war in Ukraine a year ago and the ongoing supply-chain turmoil caused by China’s COVID lockdown, she would have acted differently, she said in a June 14 webinar.

It may have invested money in “cash-like tools” of the technology sector, such as Alphabet (Google) – Alphabet Inc. Receive reports and Apple (AAPL) – Apple Inc. Get the report stock, Wood said. “We probably would have avoided some carnage, but it would still have been difficult.”

‘Names of top culprits’

Instead, “we’ve focused on the names with the most convictions over the past 18 months,” she said. “Historically, it’s been a good strategy, and I think it will play out again.

“Innovation gains traction during tough times because it solves problems.”

The largest holding of Wood’s flagship $7.1 billion Arc Innovation ETF (arkk) – ARK Innovations ETF Get Reports Videoconferencing service Zoom Video Communications (ZM) – Zoom Video Communications Inc. Get the report, electric-car giant Tesla (TSLA) – Get reports from Tesla Inc., the video-streaming platform Roku (stop) – Roku Inc. Report and get biotechnology company Crisp Therapeutics (CRSP) – Get CRISPR Therapeutics Ag Report.

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Wood said the market crash in March 2020, at the start of the COVID pandemic, lasted only a month and could be a “warm for this period”. The pandemic showed that “real innovation solves problems,” she said.

Innovation strategies have been hit particularly hard over the past year, Wood said, but “with crisis comes opportunity.”

There is talk that we are heading towards a tech bust like 2000. But this time is different, Wood said.

Technology fields such as artificial intelligence and cryptocurrencies were not mature then. “The technologies were not ready and were too expensive,” she said.

‘Dreams are coming true’

But now, “the dreams of the late 1990s are coming true,” Wood said. He said tech companies are seeing strong growth in revenue and gross margin.

Turning to the economy, Wood reiterated that she views deflation as a greater risk than inflation. He said that price indicators like Consumer Price Index are backward indicators. The CPI rose 8.6% in the 12 months to May, a 40-year high.

Wood prefers indicators such as the price of gold, which has changed little from a year ago, and the dollar, which has risen sharply.

Costs are coming down for his technologies, such as artificial intelligence training, genomic sequencing and battery prices for electric cars. Those technologies will have a huge impact on the economy, he said.

Arch Innovation ETF (arkk) – Get the ARK Innovation ETF Report is down 61% year over year and is down 77% from its February 2021 peak.

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