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ARKQ COIN ZM ARKX ARKK HOOD ^GSPC ARKG ^IXIC ARKW ARKF ^DJI Yahoo Finance Video ‘We couldn’t be further from’ a market bubble: Cathie Wood September 3, 2021, 11:16 PM In this article:
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ARK Invest’s Cathie Wood joined Yahoo Finance Live for an exclusive interview to discuss her market outlook, crypto, and the rise of the retail investor.
Video Transcript – Welcome back to Yahoo Finance Live.
Cathie Wood is still here, joining us, talking some stocks, on this weekend before Labor Day.Cathie, thank you again for joining us here.OK, so I got your thesis on Zoom.I’m on board with that one.Let’s talk some Robinhood.
You sent the market for Robinhood in a little bit of a tizzy in early August, out there buying Robinhood.Pushed the stock up to close to 85.
It has come back down to 46 or so.Are you buying any more and what is your thesis right now on Robinhood?
CATHIE WOOD: Well, as you know, Brian, we report our trades for the ETFs at the end of every day.And so we did, we picked our spots when Robinhood came public.It fell to Earth and we picked our spots at that time.
It’s roughly a 1% position and we’re watching it.We’re looking at the payment for order flow controversy.We know that Chairman Gensler at the SEC is looking at that.That’s a large percentage of Robinhood’s revenues.But we actually think that not much is going to change there because the system has been so good from an execution point of view for the end investor.
So we’d be surprised to see a lot change on that front.But again, we’re in a situation where we have to listen to what the SEC is saying.
– Sure.
And I think many would agree that Robinhood is in fact, an innovative company, so I’m not surprised to see you involved with that name, Cathie.But if, let’s just say– let’s just handicap it.If payment for order flow is banned, do you have confidence that a Robinhood could pivot its business model and still innovate and make money like it has been?
CATHIE WOOD: Yes, we do.Robinhood is all about the user experience and we’ve been very pleasantly surprised at how many young people it has invited into the world of equities and options and so forth.I remember when my children were in high school and college, very few of them or their friends had any interest in the markets.But I think Robinhood has introduced a whole new genre to investing and thinking about their future and learning the hard way.
Some have experimented with options and it doesn’t take long to lose a lot of money with options and they learn quickly.So I actually think Robinhood has done a great service to the investing community.
Story continues – Cathie, I remember– now you had me thinking back to high school.My teacher couldn’t even get me to get the free “Wall Street Journal” subscription.I just didn’t have any interest doing it.But it’s a different generation, to your point.
Now, saying on crypto a bit here, Coinbase is another name that you hold as well.
And some remarks this week by John Paulson I think got a lot of people up in arms, so to speak, in the crypto community, saying that he views it as– crypto, is worthless.What do investors like that who criticize crypto, what don’t they understand?
CATHIE WOOD: Well, first of all, let me just finish up on Robinhood.They have pivoted already to crypto in a magnificent way.So just wanted to finish that one up.John Paulson is– he made an incredible call during the mortgage crisis.He has been a gold bug, I would say, for most of his career.
And many investors who have spent their careers focused on gold, cannot understand the digital concept associated with gold.
What we think he’s missing is this is much more than just a store of value or digital gold.Bitcoin in particular, is a new global monetary system.It’s a rules based monetary policy, which is completely decentralized and therefore is not subject to the whims of policymakers.In fact, it’s a hedge against the whims of policy makers, especially in emerging markets.
And as far as other cryptocurrencies, Ether being the biggest, we’re seeing the DeFi movement, decentralized finance, again, Chairman Gensler is going to take a close look at it, which I think will be good.Let’s just get the regulators on board because at the end of the day, what we think decentralized finance is doing is making the finance– taking the friction out of a lot of financial services and taking a lot of the middlemen out of financial services.So that is also a good thing.
Other than that, there’s some– I don’t know how closely John Paulson and some of the other naysayers have looked at it, but I know there have been conversions.
Ray Dalio has been a conversion, Stanley Druckenmiller, and these are very thoughtful investors who at one point thought Bitcoin was a Ponzi scheme and in some cases, and have been converted.And I think one of the reasons they they have been converted is when you think about what blockchain technology is doing, it is putting into place via the internet, the payments ecosystem that was not put in place in the early days of the internet because it was never conceived with commerce in mind.
It was for Defense Department and intelligence.
It was for academics.It was for information exchange.Not commerce.When you fill in the picture with blockchain technology, all you’re doing is saying, yes, there’s a more efficient way of doing commerce.We just didn’t know commerce was going to be a part of the internet in the 80s and early 90s.
– Now a lot of the crypto bulls Cathie, they’ll say that regulation is good for crypto.Are you in that camp?
CATHIE WOOD: I think KYC, AML, so know your customer anti-money laundering is good for the ecosystem.
I do believe that is true.I think what’s confusing from a regulatory point of view is the different definitions of crypto, depending on the regulator.
So the SEC in terms of Bitcoin, has described it as not a security.The IRS says it’s property.The CFTC says it’s more like a commodity.And I think if regulators get together and agree on what exactly these cryptocurrencies are, how to define them, that will be a good thing.Just certainty will be a good thing for this ecosystem.
– And really underlying the move higher, in Robinhood’s shares, coin based crypto markets, it’s that rise of the retail investor Cathie, and very much you have a loyal following of those retail investors.
Looking out over the next few years, how important will the rise of the retail investor be in how and where the market goes from day to day?
CATHIE WOOD: Yeah, I’m going to give a shout out to Tom Lee from Fundstrat.He picked up on a study that Stan Salvigsen, who was the chief strategist of Merrill Lynch in the 80s, when I was just coming of age in this market, Stan had a hypothesis that the baby boomers would make for 15 to 20 years of a bull market in equities.And that’s what happened.
It was a very simple assumption and it played out beautifully.
Tom Lee, I don’t even think he referenced that study, but has taken the notion that millennials are the reason we’re in a bull market for equities and that this leg of the bull market won’t end until 2026.And I think he thinks that the bull market, with some fits and starts after that, could actually extend to 2038, I believe it is, which is the year that the number of millennials peak.
So this is the echo of the baby boom.
I lived through the baby boom years and that equity market move.It was magnificent.
It was a very simple assumption and it worked.And I do feel we are in the same place now.
– Cathie too, last thing before I let you go.Just given everything you’ve achieved in financial services, the following you do have, you how do you feel when you hear there are people or short sellers betting against your funds?
CATHIE WOOD: Well, I think two things.
That’s what makes a market and we’re all going to have different points of view based on our own research.So I like the fact that markets are being made around this controversy.We want the controversy to be out there.What I found for years is innovation was avoided and whether it was research or investing, there was less and less of it as our markets moved into more benchmark sensitive territories after the tech and telecom bust and then the ’08, ’09 meltdown.So much so that analysts and portfolio managers felt they were taking a huge risk investing in a stock that was not in the index.
Well, guess what? A lot of innovation, which is all about the future, is not captured by indices.
In fact, very little of it, we believe, is captured by the indices.And so I felt starting a business on that premise, to focus exclusively on disruptive innovation, would become productive.And it has because we have never been in a period ever in history, where we’ve had five major innovation platforms involving 14 different technologies, all moving into S curves.The S curves feeding one another.
We’re in a period of explosive innovation.And so I think that as more and more investors and analysts do the research that we’re doing, and we give our research away.
We’re happy for anyone–
– I’m a subscriber.
I’ve signed up.
CATHIE WOOD: There you go.There you go.
So thank you very much, Brian.But we feel one of our missions and values is to educate because we feel like there’s been a dearth of education in the financial markets around innovation because of this backwards looking benchmark sensitive style that evolved out of two crashes.So many people ask me, are we in a bubble? We couldn’t be further from it.I do not believe that investors, the average investor, shall I say, understands how provocative this these next five to 15 years are going to be as these S curves feed one another and enter exponential growth trajectories that we have never seen before.
– Well, I could talk to you about stocks for the next five hours, but we will let you go Cathie Wood.Start your long Labor Day weekend.We greatly appreciate you giving us some time here at Yahoo Finance.I can tell you, there are millions of people right now on our platform that are very excited to have seen you today on this Friday afternoon.Cathie Wood, ARK Invest CEO and CIO.
Good to see you.We’ll talk to you soon.
CATHIE WOOD: Good to see you, Brian.Thank you.Happy Labor Day weekend.
Bye.
– Thank you.
.
