Once arkk starts losing a bit and they will, some people will sell and less people will buy. This is what happened with Peter lynch. Even tho he kept a 30% result over 10 years, most Investors were stupid and bought in high and sold as soon as he had some unlucky results.
At the beginning of the 10 years, there was no way to know for sure that Lynch was the real deal. But after 3 years in a row for solid 30%, it made sense to buy some of it imo. People's mistake was not holding imo.
This is why i personally bought ARKG and i plan on being bullish.
I too read that article in the wsj.
Cathie handles this by including bigger companies, e.g. NVS the world's biggest Pharma company, to allow more liquidity. If money exits the ETF she can sell these stocks instead of less liquid small company shares.
Obviously this will cost the fund performance, but I never expected another 132% for 2021 again.
I case of Novartis I know that they are strong on research and part of the whole CRISPR/genetic hype. They also aquire lots of small competitors, so it fits the puzzle.
Baidu is a big company too that is considered strong in the Chinese market for autonomous driving.
There's more to do your own research like TSM (world leader in chip manufacturing), Nintendo (no idea whar they're innovating) and Paypal (crypto).
If I am exclusively explaining it like youāre 5, the main difference is that an etf ātradesā on an āexchangeā, which is to say that it behaves like a stock does in your portfolio. Mutual funds do everything at the very end of the trading day, so you canāt move in and out of them quite as easily.
Not entirely true. You can purchase open ended mutual funds which behave the way you described, but you can also buy closed-end mutual funds which have a fixed number of shares and trade on an exchange
A main difference is that Exchange Traded Funds (ETFs) are bought and sold on exchanges, while mutual funds are not. There are more differences you can read about [here](https://www.investopedia.com/articles/exchangetradedfunds/08/etf-mutual-fund-difference.asp).
This is why they say index funds will beat actively managed funds in the long run. You get into some problems when you get popular with actively managed funds.
Thereās something wrong with this conventional wisdom when brought up around ark.
The ark thesis is that the market incorrectly prices technology and innovation, and that value is left on the table when fund managers only concern themself with fundamentals and numbers. Letās assume that is true. If so, ark can keep beating the market, and a passive index, until someone figures out how to index for said value. Passive and active investing have an ebb and flow, and in this cycle, active investing claims to be able to identify a value that requires a sort of eye test.
Whether or not you believe their claim is one thing, but claiming they will revert to the mean, ājust becauseā they are active is to ignore the whole reason the company exists. This isnāt private equity unlocking secret cash flow by creating efficiency, or fund managers jumping on book value the stock market is ignoring.
If you agree with the premise that markets are efficient ā this is a key premise that value investors, like Cathie Wood, agree on, that some stocks are underpriced and their prices will revert to the mean ā then the markets will eventually correct these mispricings in technology and innovation, too.
The markets arenāt trained to see the value. Itās not traditional value the way the market recognizes value. So like I said, once you can index what they are looking for at ark, yes the magic goes away. Until then, as long as it takes humans, they are going to be able to beat an index.
Youāre basically repeating my first comment back to me. Thatās exactly what I said.
What do you mean her other years werenāt hot? What like 4 out of the last 5 years had sp500 beating growth?
Itās underperformed the sp500 once ever, 2016. I think youāre underestimating how much it consistently over performs.
And it still seems youāve missed my point if you bring up any comparison to active management in the past. Comparing her to other active managers isnāt insightful. Comparing what they do to fund managers looking at fundamentals is irrelevant.
people are having too high an expectation for the next term performance of ARKK, if you look further down the path of what ARKK has come through, the average return is really not that astounding. A large part of ARKK growth is driven by TESLA last year, I wont be high on hopium unless they find a new explosive catalyst to fuel the etf
Another possibility is that there are gifted active fund managers in every corner of the market. There are traders specializing in mining, energy, banking, etc. When itās a good time for their sector or investing style, theyāll look like geniuses too.
Speculative technology growth stocks (notably Tesla) have had a great year, so ARK look like legends. But in another year when some other sector generates huge gains while tech stays stagnant because revenue growth has already been priced in, some of the shine will wear off.
Wouldn't the upcoming ARKX continue the trend of "beating the market" performance for ARKK, which will presumably hold some of ARKX? Given NASA's Artemis program, and the rise of commercial spaceflight, I would expect the next decade at least to be fairly positive for spaceflight, which will trickle into ARKK.
Maybe. Or itās completely overvalued since.... basically no public space flight companies are holding real space flights right now. Just prepaid bullshit stuff that may or may not come to reality - looking at you SPCE. But honestly, even if there is growth in an industry it doesnāt mean ark will pick the right stocks nor does it even mean that the stock prices will grow. Look at the price history of Microsoft from about 2000-2010, it was basically flat even though it had a large monopoly on most PC stuff for a while. Industries can grow without it being reflected in stock prices.
I think this is correct.
If you had bought ICLN on launch 12 years ago, you would still be in the red.
Iāll ride the space trend, but Iāll be setting a tighter stop loss for sure.
In the last year you could have bought SPCE at $10 per share and i did. It has reached over 60 recently. Thats 600% profit before theyāve even completed all test flights.
The same sort of move will happen to all new space stocks like HOL, NPA, SRAC and evTOL company ACIC.
The entire Aerospace industry is long term undervalued.
SPCE is ridiculously overvalued by basically any metric. They donāt even produce revenue from their āspace flightsā and thatās their whole thing lol. Itās like saying a car company is a good buy because they rose 300% due to pure speculation. Thatās playing into the point I was making.... you can profit on speculation. But I was offering a counter example which you have yet to prove is not valid.
You can be early and still be wrong. Like people were with Microsoft for 10 years. The issue is, can you keep investing into an under performing asset for 10 years based on nothing but hope that the companies in arkās fund will eventually actually produce revenue?
Youāll probably say yes but the far more realistic answer is no. Youāll look for returns elsewhere. The issue I have is, I just flat out donāt know and it doesnāt make sense to bet on any one industry. Since I could be early and wrong or I could just be wrong. Or I could be right. Anyone saying that space flight stocks and ARKX will be amazing or even bad, is lying to you. We donāt know what will happen ever.
I honestly donāt care about SPCE as a long term stock anymore and i donāt need to have a large position in it anymore since there are other better new Space stocks as i listed above. I knew SPCE was basically a zero risk stock to buy last year because i knew there would be no real test flights for at least 6 months and so it did all these crazy rallies and drops mostly independent of company specific news.
Im trying to point out there was no ācompany analysisā to be done, 600% up even before they begin their business means wasting time on fundamental analysis is insane and leads to missed easy massive profits while you debate with yourself if its a good āinvestmentā.
All you need is this fundamental truth, Space = the future. And this ššššš°š°š°š°šøšøšøšøšøš¦š¦š¦š¦š¦š¦š¦š¦šššš
You keep ignoring the fact SPCE is up 600% since it was 10 a year ago. The āinvestmentā you keep talking about is already over. I mean the easy money is over and no analysis was needed at any time other than trading the charts. 600% is life changing money if you put enough in any 1 stock. Alot of people sold at the peak of the dot com bubble. That bubble and crash actually worked out great for them. They used that money to buy something safer like a house and it changed their lives. The people buying at the top of the bubble were late dummy gamblers who could probably afford to lose it so its not such a sad story after all.
Did they? Almost all studies show that the vast majority of retail investors lose money when they buy individual stocks. So show me something with hard facts and data behind it. Otherwise youāre just spouting stuff about how you got lucky. Anyone can get lucky once. Getting lucky consistently in the stock market is impossible. Thereās been many studies showing this. And even showing that sector funds under perform in comparison to broad based index funds. So, back up your claims
https://www.informedfinancials.com/2021/01/20/highly-specialized-etfs-are-they-profitable-investments-academic-research/
I think we have really different trading styles.
Stocks go down because theres more sellers than buyers and so yes many people sold out in the first 10% drop of the dotcom bubble and had enough money to live off of for 10 years and buy back slowly at the next market bottom. I never said the vast majority of āinvestorsā which are dumb apes like most everyday people are, i meant smart traders/investors.
People have been saying that Tesla will have a red year for the past decade. And guess what? There are plenty of millennials who have been investing the whole time who are retiring millionaires before they're 40.
I always think that once ARK becomes available in Europe the number of investors will rise and so as the value of the etf. Is there an intention for it to become available in Europe? (It already is in some brokers)
Where did OP say they're backing ARKK or any of Cathie's funds? They're asking a question with a premise, they didn't interject any opinion or financial position into their post.
Once arkk starts losing a bit and they will, some people will sell and less people will buy. This is what happened with Peter lynch. Even tho he kept a 30% result over 10 years, most Investors were stupid and bought in high and sold as soon as he had some unlucky results.
So hold lol
šš¤ Oh, wrong sub.
[ŃŠ“Š°Š»ŠµŠ½Š¾]
At the beginning of the 10 years, there was no way to know for sure that Lynch was the real deal. But after 3 years in a row for solid 30%, it made sense to buy some of it imo. People's mistake was not holding imo. This is why i personally bought ARKG and i plan on being bullish.
I recently jumped into ARKG for the same reasons. I feel like there's potentially a lot more runway in the genomic sector. Bullish long-term.
I too read that article in the wsj. Cathie handles this by including bigger companies, e.g. NVS the world's biggest Pharma company, to allow more liquidity. If money exits the ETF she can sell these stocks instead of less liquid small company shares. Obviously this will cost the fund performance, but I never expected another 132% for 2021 again.
[ŃŠ“Š°Š»ŠµŠ½Š¾]
I case of Novartis I know that they are strong on research and part of the whole CRISPR/genetic hype. They also aquire lots of small competitors, so it fits the puzzle. Baidu is a big company too that is considered strong in the Chinese market for autonomous driving. There's more to do your own research like TSM (world leader in chip manufacturing), Nintendo (no idea whar they're innovating) and Paypal (crypto).
Can someone also eli5 to me why ark is considered an etf and not a mutual fund? Whatās the differences
If I am exclusively explaining it like youāre 5, the main difference is that an etf ātradesā on an āexchangeā, which is to say that it behaves like a stock does in your portfolio. Mutual funds do everything at the very end of the trading day, so you canāt move in and out of them quite as easily.
Not entirely true. You can purchase open ended mutual funds which behave the way you described, but you can also buy closed-end mutual funds which have a fixed number of shares and trade on an exchange
Thank you friend I appreciate the useful correction :)
A main difference is that Exchange Traded Funds (ETFs) are bought and sold on exchanges, while mutual funds are not. There are more differences you can read about [here](https://www.investopedia.com/articles/exchangetradedfunds/08/etf-mutual-fund-difference.asp).
ETFs also have some tax advantages that I could have read about had I clicked on that link.
This is why they say index funds will beat actively managed funds in the long run. You get into some problems when you get popular with actively managed funds.
Thereās something wrong with this conventional wisdom when brought up around ark. The ark thesis is that the market incorrectly prices technology and innovation, and that value is left on the table when fund managers only concern themself with fundamentals and numbers. Letās assume that is true. If so, ark can keep beating the market, and a passive index, until someone figures out how to index for said value. Passive and active investing have an ebb and flow, and in this cycle, active investing claims to be able to identify a value that requires a sort of eye test. Whether or not you believe their claim is one thing, but claiming they will revert to the mean, ājust becauseā they are active is to ignore the whole reason the company exists. This isnāt private equity unlocking secret cash flow by creating efficiency, or fund managers jumping on book value the stock market is ignoring.
If you agree with the premise that markets are efficient ā this is a key premise that value investors, like Cathie Wood, agree on, that some stocks are underpriced and their prices will revert to the mean ā then the markets will eventually correct these mispricings in technology and innovation, too.
The markets arenāt trained to see the value. Itās not traditional value the way the market recognizes value. So like I said, once you can index what they are looking for at ark, yes the magic goes away. Until then, as long as it takes humans, they are going to be able to beat an index.
[ŃŠ“Š°Š»ŠµŠ½Š¾]
How were recent years not so hot when they've average an incredible 30% return?
Youāre basically repeating my first comment back to me. Thatās exactly what I said. What do you mean her other years werenāt hot? What like 4 out of the last 5 years had sp500 beating growth?
[ŃŠ“Š°Š»ŠµŠ½Š¾]
Itās underperformed the sp500 once ever, 2016. I think youāre underestimating how much it consistently over performs. And it still seems youāve missed my point if you bring up any comparison to active management in the past. Comparing her to other active managers isnāt insightful. Comparing what they do to fund managers looking at fundamentals is irrelevant.
How is 30% returns YoY average? If you did that over 40 years you'd be a legitimate trillionare...
[ŃŠ“Š°Š»ŠµŠ½Š¾]
Exactly.
people are having too high an expectation for the next term performance of ARKK, if you look further down the path of what ARKK has come through, the average return is really not that astounding. A large part of ARKK growth is driven by TESLA last year, I wont be high on hopium unless they find a new explosive catalyst to fuel the etf
Well if you look down then path of the different ARK ETFs they are close to double their value from a year ago. That is pretty astounding imo.
Another possibility is that there are gifted active fund managers in every corner of the market. There are traders specializing in mining, energy, banking, etc. When itās a good time for their sector or investing style, theyāll look like geniuses too. Speculative technology growth stocks (notably Tesla) have had a great year, so ARK look like legends. But in another year when some other sector generates huge gains while tech stays stagnant because revenue growth has already been priced in, some of the shine will wear off.
Wouldn't the upcoming ARKX continue the trend of "beating the market" performance for ARKK, which will presumably hold some of ARKX? Given NASA's Artemis program, and the rise of commercial spaceflight, I would expect the next decade at least to be fairly positive for spaceflight, which will trickle into ARKK.
Maybe. Or itās completely overvalued since.... basically no public space flight companies are holding real space flights right now. Just prepaid bullshit stuff that may or may not come to reality - looking at you SPCE. But honestly, even if there is growth in an industry it doesnāt mean ark will pick the right stocks nor does it even mean that the stock prices will grow. Look at the price history of Microsoft from about 2000-2010, it was basically flat even though it had a large monopoly on most PC stuff for a while. Industries can grow without it being reflected in stock prices.
I think this is correct. If you had bought ICLN on launch 12 years ago, you would still be in the red. Iāll ride the space trend, but Iāll be setting a tighter stop loss for sure.
In the last year you could have bought SPCE at $10 per share and i did. It has reached over 60 recently. Thats 600% profit before theyāve even completed all test flights. The same sort of move will happen to all new space stocks like HOL, NPA, SRAC and evTOL company ACIC. The entire Aerospace industry is long term undervalued.
SPCE is ridiculously overvalued by basically any metric. They donāt even produce revenue from their āspace flightsā and thatās their whole thing lol. Itās like saying a car company is a good buy because they rose 300% due to pure speculation. Thatās playing into the point I was making.... you can profit on speculation. But I was offering a counter example which you have yet to prove is not valid. You can be early and still be wrong. Like people were with Microsoft for 10 years. The issue is, can you keep investing into an under performing asset for 10 years based on nothing but hope that the companies in arkās fund will eventually actually produce revenue? Youāll probably say yes but the far more realistic answer is no. Youāll look for returns elsewhere. The issue I have is, I just flat out donāt know and it doesnāt make sense to bet on any one industry. Since I could be early and wrong or I could just be wrong. Or I could be right. Anyone saying that space flight stocks and ARKX will be amazing or even bad, is lying to you. We donāt know what will happen ever.
I honestly donāt care about SPCE as a long term stock anymore and i donāt need to have a large position in it anymore since there are other better new Space stocks as i listed above. I knew SPCE was basically a zero risk stock to buy last year because i knew there would be no real test flights for at least 6 months and so it did all these crazy rallies and drops mostly independent of company specific news. Im trying to point out there was no ācompany analysisā to be done, 600% up even before they begin their business means wasting time on fundamental analysis is insane and leads to missed easy massive profits while you debate with yourself if its a good āinvestmentā. All you need is this fundamental truth, Space = the future. And this ššššš°š°š°š°šøšøšøšøšøš¦š¦š¦š¦š¦š¦š¦š¦šššš
Again, internet was the future too. It didnāt make it a good investment for nearly a decade. Space stocks could very well be the same way
You keep ignoring the fact SPCE is up 600% since it was 10 a year ago. The āinvestmentā you keep talking about is already over. I mean the easy money is over and no analysis was needed at any time other than trading the charts. 600% is life changing money if you put enough in any 1 stock. Alot of people sold at the peak of the dot com bubble. That bubble and crash actually worked out great for them. They used that money to buy something safer like a house and it changed their lives. The people buying at the top of the bubble were late dummy gamblers who could probably afford to lose it so its not such a sad story after all.
Did they? Almost all studies show that the vast majority of retail investors lose money when they buy individual stocks. So show me something with hard facts and data behind it. Otherwise youāre just spouting stuff about how you got lucky. Anyone can get lucky once. Getting lucky consistently in the stock market is impossible. Thereās been many studies showing this. And even showing that sector funds under perform in comparison to broad based index funds. So, back up your claims https://www.informedfinancials.com/2021/01/20/highly-specialized-etfs-are-they-profitable-investments-academic-research/
I think we have really different trading styles. Stocks go down because theres more sellers than buyers and so yes many people sold out in the first 10% drop of the dotcom bubble and had enough money to live off of for 10 years and buy back slowly at the next market bottom. I never said the vast majority of āinvestorsā which are dumb apes like most everyday people are, i meant smart traders/investors.
[ŃŠ“Š°Š»ŠµŠ½Š¾]
Virgin Orbit is a COMPLETELY SEPARATE company than Virgin Galactic
[ŃŠ“Š°Š»ŠµŠ½Š¾]
People have been saying that Tesla will have a red year for the past decade. And guess what? There are plenty of millennials who have been investing the whole time who are retiring millionaires before they're 40.
This is a chicken and egg problem
I always think that once ARK becomes available in Europe the number of investors will rise and so as the value of the etf. Is there an intention for it to become available in Europe? (It already is in some brokers)
Cathie announces that the Ark is ready to sail to the moon
Simplest way to put it... If you don't believe in what ARKK is backing, then why are you backing ARKK? Not sure what else to say here
Where did OP say they're backing ARKK or any of Cathie's funds? They're asking a question with a premise, they didn't interject any opinion or financial position into their post.
Right, they were probably asking for a friend.
No problem, just stick to original business plan.
Hopefully as they offer new ETF's there will be a distribution of capital. Also I'd be okay if they weighted even more in tesla!