Cathie Wood’s latest interview Investors changing Wall Street are betting on Bitcoin and artificial intelligence

Cathie Wood's latest interview Investors changing Wall Street bet on Bitcoin and AI

Author: Nicole Casperson, Forbes; Translation: Luffy, Foresight News

Cathie Wood, the iconic investor behind ARK Invest, was asked a question she had never been asked before. It was a Monday afternoon in July, and despite flying from Los Angeles to St. Petersburg, Florida the previous night, the 67-year-old woman was full of energy. She dashed from one meeting to another, demonstrating her strong drive.

During our recent Zoom conference call, I asked her who taught her the most about money. This was an extremely ordinary question, but in the high-risk investment world of media scrutiny and urgent market expectations, it was a refreshing inquiry that revealed a deeper truth about this highly anticipated fund manager—she is still a very human person.

“This is the first time I publicly answer this question, my mother,” Wood declared. “Although my father was proud that she never had to work, she still worked hard to take care of the family. He called her the best economist in the world.”

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Wood’s parents came from humble backgrounds, immigrating from Ireland to the United States and settling in Los Angeles. Her father had a military background and did not receive a formal university education, but he instilled in her an innovative spirit. Her mother was frugal, ensuring that they never lacked clothing or food.

Today, as the founder, CEO, CIO, and star stock picker of ARK Invest, Wood has made waves in the investment industry. ARK Invest is an investment management company with nearly $24 billion in assets under management. Her flagship Ark Innovation Fund has achieved an average annual return of nearly 45% over the past five years, demonstrating her strong financial management skills.

Cathie Wood speaking at the Milken Institute Global Conference in Beverly Hills, California on May 2, 2022

The Market Atmosphere in 2023

Wood took a moment to find some numbers on her desk before continuing to share. Because this is Cathie Wood, we couldn’t proceed with the interview without her handling the numbers first.

“The interesting thing about the current market performance is that if I had told you at the beginning of this year, or if you had told me, that large-cap tech stocks would take off and outperform the S&P 500, while healthcare stocks would be negatively affected and small and mid-cap stocks would underperform most indices, I would have thought we would perform poorly,” she began.

Her words carried the weight of experience, acknowledging that market conditions can be fickle and unpredictable. But her voice was filled with pride as she revealed, “On the contrary, our performance has even exceeded the Nasdaq 100 Index. This is an early sign of the resurgence of actively managed funds.”

In order to confirm her statement, Wood conducted in-depth research on the data and used it to illustrate the returns of her investment strategy. “As of last Friday (July 21st), our flagship product has grown by 53.4%, and our genomic strategy has grown by 31.5%,” she accurately stated.

“The S&P 500 index has risen by 19.2%, the Nasdaq index has risen by 34.7%, and the Nasdaq 100 index has risen by 41.5%. Despite the healthcare industry’s growth of only 1.1% this year, our fund has still risen strongly by 31.5%.”

As she further delved into their performance, her excitement grew. Emphasizing the success of their small-cap strategy, despite challenges in the field, the strategy has still soared by 12%. Her sense of pride was evident in her voice, as she knew their unique active management approach was paying off.

“We are very satisfied with this,” she asserted, “but we also want to convey this message: this is the best active management.”

As the conversation turned to market conditions and interest rate fluctuations, Wood’s analytical thinking began to accelerate. She weighed the impact of rate hikes on her long-term strategy, acknowledging the challenges brought about by increased uncertainty over the past two years.

“The market seems to be factoring in rate hikes,” she continued, “we believe that rate hikes are nearing their end, and the market seems to agree.”

In July, ARK Invest began to see new fund inflows, indicating that their unique strategy was attracting the attention and trust of investors. She likened market volatility to waves of truth, rising and falling with investor sentiment and interest rate fluctuations.

Having experienced prosperity and adversity, ARK Invest weathered the storm. As she reflected on this journey, she reiterated her commitment to the vision that led them to where they are today. “We know who we are,” Wood declared, her voice calm. “So, I won’t let any party influence me. We focus on what matters and continue to move forward.”

Research-supported optimism

Since the establishment of ARK Invest in 2014, offering stock portfolios in the form of ETFs, Wood’s business has consistently reflected her core philosophy.

Wood is not satisfied with being surrounded by “yes men”. Instead, she enjoys the challenge of intellectual games and curiosity, which guide her to seek different viewpoints and think beyond traditional norms. She knows that their success depends on a core principle – research.

“Our research is based on first principles,” she explained. “At the beginning, we knew nothing. Then we picked up a blank sheet of paper and delved into various possibilities. We questioned the prospects of self-driving cars in 2014. Is it true? Is it even possible? Existing benchmarks had no influence on us.”

She emphasized that the responsibility of ARK analysts is not divided by industry, but by technology. They span 14 different technologies and are industry generalists. People believe that these technologies will cross industry boundaries and expand into the mass market.

“With this belief in research, I am convinced of what we are doing,” Wood admitted. “I sincerely believe that we are doing the right thing, and our approach is unique. What surprises me is that there are not more companies emulating our approach.”

When she talked about their research principles, it was obvious that she saw the power of sharing their research results. But even Wood is still surprised by the company’s high level of attention on social media.

Their social strategy, including collaborating with financial technology platform Titan for social media and social distribution, allows them to engage with a wider audience and receive valuable feedback. ARK Invest’s YouTube channel has 545,000 subscribers, and viewers can regularly listen to the company’s insights.

“Many people say it’s crazy for us to publicly share our research findings,” Wood said with a smile, “but they haven’t seen the incredible value we have gained from it. Founders, venture capitalists, and professors contact us, and we benefit greatly from their perspectives and criticisms. It’s like having an ongoing conversation with innovators and critics.”

Placing ARK Invest’s research at the center stage has also opened doors for collaboration for the company. In September 2022, Titan announced a partnership with ARK Invest to launch ARK risk funds to retail investors on Titan.

She said that even during the regional banking crisis in March, ARK Invest’s capital inflow remained stable. “Our first major success came from MosaicML, one of the first companies we included in our venture capital portfolio, being acquired by Data Bricks at five times the price we paid in September of last year.”

Wood is not only interested in profits, but she also wants to help companies in ARK Invest’s portfolio attract talent and prepare for the next round of financing or IPO. She describes it as a “true win-win situation.”

In a world where short-term thinking often dominates the financial landscape, ARK Invest’s long-term vision sets them apart. For Wood and her team, it’s not just about chasing short-term gains, but about pursuing goals.

“We look at companies in a different way,” she asserts. “We want to see them actively invest in their own future, even if it means sacrificing short-term profitability. Opportunities in emerging technologies like artificial intelligence and autonomous taxi platforms require a different approach, and we are ready to embrace it.”

Her words are full of confidence and introspection, which is impressive. “The hope for a beautiful new world has become very short-term,” she shared, acknowledging that her pioneering investment approach will inevitably have ups and downs.

The CEO of eToro US, Lule Demmissie (another heavyweight woman in the financial industry), is attracted by the long-term commitment of blockchain technology to provide a fair competitive environment for global investors, which is similar to Wood’s.

“This does not mean that the road is without twists and turns, and the industry will continue to mature,” she said in an email. “Market cycles are inevitable, and any investment perspective should be carefully considered rather than blindly optimistic. But the differences in perspectives and prospects create the market, and Cathie brings a different perspective.”

Bitcoin Idol

Cathie Wood made gestures at the Bitcoin 2022 conference held at the Miami Beach Convention Center in Florida on April 7, 2022.

Although Wood has worked on Wall Street for 45 years and in portfolio management for over 30 years, she only achieved idol status in 2020. She made bold investments in innovative companies, believing that these companies will shape the future and create a fair competitive environment. These bets eventually paid off. With the spread of COVID-19 and the spiral collapse of the economy, her ARK Innovation Fund achieved a remarkable return of 150%, making Wood the focus of Wall Street.

Most importantly, Wood’s optimistic attitude towards Bitcoin has made her name frequently appear in headlines. She saw and told the world about the potential of public blockchain early on. She previously predicted that Bitcoin would rise in 2020, and now she predicts that Bitcoin will reach $500,000 by 2026 and $1 million by 2030.

Matt Hougan, Chief Investment Officer of Bitwise, said in an email: “She supported this view with high-quality research, and with this, she has widened the Overton window for professional investors to understand the future of Bitcoin.” “The best part is that other mainstream voices, including Fidelity and BlackRock, have now joined her team. This is the way disruptive fields make progress: first a few, then the majority.”

It is worth noting that despite the controversies, her views have been proven right. She confidently predicted the surge of Tesla, which became one of the best-performing stocks in the past five years. And Bitcoin is one of the best-performing assets of the past decade.

Wood stated that all these praises collapsed in 2022 when ARK Invest’s long-term strategy was “devastated” by rising interest rates. Critics called Wood’s fund too risky, and they labeled her as a trickster. Jim Cramer called her the “kiss of death,” and there was even a dedicated fund set up to oppose her.

Despite mockery of her beliefs, Wood remains unfazed. She is aware of the negative consequences of her contrarian decisions, which are documented in tweets and news reports. In the whirlwind of market ups and downs, Wood reflects on the seemingly invincible period of her company.

“I can tell you, by the end of 2020 and early 2021, ARK will not do anything wrong – Cathie Wood will not do anything wrong,” she said, recalling the endless negative publicity she and her company received. With the conviction of an experienced visionary, she spoke her words on those exciting days: “Today we are the greatest GOAT in history, and tomorrow we will also be the goat.”

Her trust in her team and their unique approach is evident as she emphasizes the difference between uppercase and lowercase letters in “GOAT,” illustrating the distinction between public perception and their enduring confidence.

At the same time, she is also known as a trailblazer. As a female representative who stands out in the industry dominated by Warren Buffett, her achievements, relentless pursuit of excellence, and steadfast dedication to her work have solidified her position as one of the most influential women in the financial world, opening the door for the next wave of female leaders to reach their peak.

Vik Sasi, Chief Strategy Officer of Manhattan West, said that while Wood’s investment approach is polarizing, no one can deny her significant contributions to cryptocurrencies.

Sasi stated in an email, “She brings the conviction of a forward-thinking venture capitalist into the public market and does not retreat at the first signs of volatility.” “She is a conviction-driven person – which, considering her portfolio predictions made in public, may be a mistake – but ultimately has had a positive impact on asset classes and will continue to be a faithful fighter for the wider acceptance and adoption of cryptocurrencies.”

In April, Wood and Ophelia Schneider, co-founders of 21Shares (Wood is a board member), jointly resubmitted an application for the ARK 21Shares Bitcoin ETF to the U.S. Securities and Exchange Commission. Schneider co-founded 21Shares with others in 2018, aiming to develop complex cryptocurrency investment technologies that ordinary people, like her mother, can use. The company is currently valued at $700 million.

Both Wood and Schneider believe that innovation will become a secure category for investment. “Contrary to people’s current thinking,” Wood said, “an example is when regional banks were crumbling in March, stocks were also facing collapse, but Bitcoin rose from $19,000 to $30,000 – that’s a safe haven when fleeing from risk.”

TaxBit’s Vice President of Brand and Communication, Michelle O’Connor, has worked in the cryptocurrency industry for nearly a decade, witnessing the rise and fall of numerous innovators and challengers.

In an email, she expressed high praise for Cathie’s unwavering commitment to the market, as she and her team continue to focus on the potential future of cryptocurrencies.

O’Connor stated that Wood’s critics seem to forget her position in the industry. “Being a public figure promoting cryptocurrencies is one thing,” she said, “but having an experienced thought leader is another. Not only is she very familiar with the recent and long-term potential of cryptocurrencies, but she also has a deep understanding of the underlying technology.”

A New Home for Innovation

In October 2021, Wood moved her investment firm’s headquarters from Midtown Manhattan, where most traditional financial institutions are located, to St. Petersburg, a city along the Gulf of Mexico coast in Florida, making headlines once again.

Today, she is rotating her team in the St. Petersburg office, embracing this sunny location that resonates with her optimistic outlook. On her new turf, she is ushering in a new era centered around education and community building.

St. Petersburg is ready for growth, and Wood is prepared to be the first to bet on the future. In order to help stimulate economic development within the city, ARK has invested $2 million to build the ARK Innovation Center, a 45,000 square foot space that will serve as an incubator for over 50 companies and encourage entrepreneurial spirit.

The ARK Innovation Center will also serve as the location for Wood’s Innovation Foundation, which she launched over three years ago with the aim of creating a new educational blueprint through an innovative perspective.

An influential study by ARK, for which Wood specifically hired educators, will become the sixth-grade science curriculum for all public schools in Pinellas County, a first in the northeastern region.

“There is no better way to bring about long-term change than by inspiring young children,” Wood said. “New technologies excite them, give them hope and dreams, and allow them to live better lives than their parents.”

About 60% of students in the Pinellas County school system come from lower socio-economic backgrounds. Wood firmly believes that innovation and technology can create a fair competitive environment. “The dream has come true, I didn’t even know it would,” she said.

The Next Five Years

Wood always looks ahead. In the next five years, she is considering how to make more people aware that we are entering a world of deflation, and “deflation is not necessarily a bad thing,” she said.

“The decrease in the price of new technology means that more people around the world can afford to use it,” she said. “Therefore, we believe that we are at a sweet spot in the ARK investment portfolio: genomics, robotics, energy storage, artificial intelligence, and blockchain technology.”

Wood believes that the convergence of these industries is experiencing exponential growth, and now they are starting to complement each other. She said, “We believe that this will lead to the market value of truly disruptive innovative technologies increasing from $15 trillion to over $200 trillion in the next 5 to 10 years.”

She went on to explain that it is still too early to compare the current situation to the dot-com bubble of the 1990s because the technology at that time was too expensive. She stated that ChatGBT greatly reduced the cost of developing artificial intelligence models, which cost $800 million in 2015 and now only costs $4.5 million in 2020, and it is still rapidly decreasing.

If today’s technology represents an environment full of vitality and innovation in our history, then in order to fully utilize it, we need to reach a consensus with everyone. She said that as Wood enters her new era, she is ready to dedicate herself to education in national schools and encourage people to invest in innovative fields to prepare for the “disruption of the traditional world order.”

“Giving more people the opportunity to stand on the right side of change is the best chance we have to improve their lives.”

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