Ark is one of the best-known investment funds in the world. Indeed, the ETF performed extremely well over the course of the last few years, taking the number one ranking for a time. Unfortunately, 2022 wasn’t so hot for the ETF. Indeed, the drag in confidence in the ETF was brutal, attracting attention from the financial media and those who were invested into the ETF. Earlier this month, the ETF saw somewhat of a rebound, with its flagship Innovation ETF gaining near 20 percent (outpacing the meager 5 percent gain from the S&P 500) at the same time. Overall, ARK’s high growth companies are still grossly overvalued through the lens of value investing and in comparison, to the overall market as per financial metrics. Moreover, short sellers are continuing to increase their positions in some of the businesses. Even so, CIO of ARK Invest, Cathie Wood, has stood her ground and hooked willing investors on a ride or die journey; time will tell if one of the most ambitious investment strategies comes to fruition. Overall, ARKs flagship active fund Innovation ETF (ARKK) is down a massive 52% year to date, falling 66% from its 52-week high.
Maybe it’s just the negative performance of the firm, but Cathie Wood also seems to believe that we are already in a recession and that she had underestimated the power and severity of recent inflation. Specifically, Wood said: “We think we are in a recession” and “We think a big problem out there is inventories… the increase of which I’ve never seen this large in my career. I’ve been around for 45 years”.
What do you think about this view on the economy and are we in a recession yet?
I am not a financial advisor and my comments should never be taken as financial advice. Investments come with risk, so always do your research and analysis beforehand.