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Cathie Wood Profile picture
@CathieDWood
Aug 17, 2021 • 8 tweets • 2 min read • Read on X
Most bears seem to believe that inflation will continue to accelerate, shortening investment time horizons and destroying valuations. Despite what we believe has been a supply-chain related/short term burst in inflation, both equities and bonds have appreciated since March➡️
Unlike the tech and telecom bubble, this equity bull market has broadened beyond the innovation strategies that boomed last year to value and other stocks that had trailed. The bull market has strengthened, setting the stage we believe for another leg up in innovation strategies.
The equity market is likely to reward disruptive innovation strategies once again when headline inflation breaks and/or fears of recession increase. If the bond market is correct, one or both will be obvious during the next 3-6 months.
Since mid May a number of commodity prices have been breaking down: lumber -65-70%, copper -10-15%, oil -10%. An unexpected increase in the dollar also is negative for commodity prices. Now the Mannheim used car index - a leading index for new car sales - is slipping.
The deflation in commodity prices is cyclical but is adding to the secular forces caused by technologically enabled disruptive innovation (“good deflation”) and creative destruction (“bad deflation”).
If we are correct, GDP and revenue growth will diminish until the opportunities in nascent technologies begin to move macro needles. In this environment, innovation based strategies should distinguish themselves.
In our view, the seeds for the innovation explosion that @ARKInvest is dedicated to researching were planted during the 20 years ending with the tech and telecom bust. Having gestated for more than 20 years, these technologies should transform the world during the next 10 years.
To his credit, Michael Burry made a great call based on fundamentals and recognized the calamity brewing in the housing/mortgage market. I do not believe that he understands the fundamentals that are creating explosive growth and investment opportunities in the innovation space.

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More from @CathieDWood

Cathie Wood Profile picture
Aug 6
After I recorded “ITK” on Friday, today the VIX (Equity Volatility Index) shot up to 65, the fourth highest level in the past 40 years: after “portfolio insurance” failed on Black Monday in October 1987, Lehman went under in 2008, and COVID hit in 2020. What does this move mean?
In 1987 and 2020, the panic/cathartic moves in the VIX created significant buying opportunities, particularly for stocks trounced during those downturns. In 2008, however, after the VIX spiked, the broad based equity markets did not bottom for another six months in March, 2009.
In our view, the spike in the VIX today stems from conditions resembling both 1987 and 2008. On Black Monday in 1987, portfolio insurance failed because those relying on it tried to cash out at the same time, much like those relying on the carry trade with Japan today.
Read 8 tweets
Cathie Wood Profile picture
Jun 6
I’d argue that no other executive is as aligned with shareholders as @elonmusk, who committed to no salary, no bonus, no stock comp FOR 10 YEARS, unless he created tremendous value for @Tesla shareholders.
Moreover, Musk will not be able to cash in on his options until 5 years after exercising them. Based on this pay package, Elon has worked without compensation since 2018, and IMPORTANTLY current shareholders will benefit from another 5+ years of Elon at the helm.
What were the odds that Musk would hit the goals in his comp package? Although @TashaARK and @skorusARK published our model in 2018 showing that, with brilliant execution, the targets were possible, most analysts, auto manufacturers, and media thought they were laughable.
Read 10 tweets
Cathie Wood Profile picture
Feb 5
I believe the Delaware court decision, forcing #Tesla to void the March 2018 vote on Elon Musk’s performance-based pay package, is un-American, an assault on investor rights, and an insult to the Board of Directors of one of the most stunningly successful companies in US history.
I have known Robyn Denholm, Chair of Tesla’s Board, professionally for 17 years since she was named Juniper Networks CFO in 2007. Robyn was and is an independent Director on Tesla’s Compensation Committee.
Robyn is a professional of unquestionable integrity with a no-nonsense, objective, truth-wins-out philosophy. In 2014, when Tesla named her to its Board, I remember thinking that she would add a fresh pair of eyes and enhanced rigor to every part of the process she touched.
Read 11 tweets
Cathie Wood Profile picture
Oct 26, 2023
Government statistics do not seem to be capturing how weak the economy is. Many companies are reporting shockingly weak revenues. UPS’s US delivery volume growth is worse today than in 2007-2009. After falling for nearly two years, it dropped another ~11% last quarter. Image
At first I thought that Amazon still was taking share and causing problems, but this chart suggests that market share has changed very little since 2020. Image
This week, another economic bellwether, 3M, reported that global organic sales dropped more than 3% year over year on a local currency basis last quarter. The services side of the economy is unlikely to escape the global monetary tightening that is gripping these companies.
Read 7 tweets
Cathie Wood Profile picture
Aug 15, 2023
China is exporting deflation in a more profound way than I believe many economists and strategists appreciate. All else equal, the 15% depreciation in the yuan relative to the dollar in the last year should have increased its PPI inflation rate by 15%. Instead it has dropped 4%.
In other words, the deflationary vortex emanating from China is approaching 20% (15%+4%), highlighted by the burgeoning defaults in Chinese real estate and trust companies.
After it entered the World Trade Organization in 2001, China’s real GDP grew at a double digit rate for nearly 20 years. Rapid growth can cover many economic sins, typically excessive debt and associated leverage. Those excesses are surfacing in China now.
Read 5 tweets
Cathie Wood Profile picture
Mar 23, 2023
Ironically, as crypto assets soared during the Silicon Valley Bank meltdown, this administration suggested that investors in regional banks - equity and bond holders - should prepare to be “wiped out” in the aftermath of an unprecedented 20-fold increase in the Fed funds rate.
Now we are hearing anecdotes not only that businesses and individuals are hedging their fiat assets with some crypto assets but that they also are lowering risk and increasing returns by shifting from low yielding bank deposits into higher yielding money market funds, a win-win.
As a result, now that they can borrow at will from a government facility at ~4.5%, regional banks seem to be moving from a liquidity crisis to a slower moving solvency crisis.
Read 7 tweets

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