It’s safe to say that the most popular thing in the stock market the last few years was ARK Invest, from their leader, Cathie Wood, to the ETFs themselves. Outpacing the market by nearly 4 times, their flagship ARK Innovation ETF took the market by storm and became one of the highest traded tickers. This hype started to die down in 2021, and it really died in 2022 as the ETF is back to pandemic lows.
The rapid increase and decrease in price show the type of stocks Wood is dealing with. Her high growth, disruptive strategy contained stocks that ended up rising uncontrollably while the market was rallying, but the market has cooled since due to economic and geopolitical concerns. Most importantly, the rise of interest rates, which is known to hurt rapid-growth companies the most, has had the greatest effect on the future of these companies as the Federal Reserve is planning large rate increases to combat inflation.
Regardless, the volume is still there, no matter what the market thinks. This year alone, more than $658 million has been funneled into the Innovation ETF, even though money has been taken out of tech names in the NASDAQ. Investors are looking to remove “stay-at-home” stocks, which ARK owns a lot of, yet investors are buying in what they feel is a great entry spot. After all, it hasn’t been this low in 2 years, right? We are yet to see the full effects of the war in Ukraine on the global economy, and it feels as if monetary policy hasn’t reached its peak yet as some economists believe a recession is incoming, but then again many have been fearing a crash for the past year and it’s yet to happen.
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.