One of the best performing hedge fund managers of 2020 and 2021 Cathie Wood of Ark Invest says that as of this moment there is a still a rotation happening where people are moving out of growth stocks and into value stocks.
She says that this has a large part to due with the recent fed announcement that they will be raising interest rates earlier than expected.
When asked if we are in a growth/crypto bubble and could experience an even more severe drop soon, Wood said the overvalued stocks are not “growth” or tech stocks, but rather stocks like auto manufacturers that have a negative Profit-to-Earnings ratio.
“That’s where the bubble is! And I think you’re going to see a lot more cases and point as this year as this year moves along.”– Cathie Wood
Wood states that we are in a period of outstanding and rapid innovation that we have not seen in many generations. Some innovations she listed:
- DNA sequencing transforming healthcare
- Robotics solving the labor shortage problem
- Energy storage (consumer preference towards EV)
- Artificial intelligence
- Blockchain technology
“We are in a period of innovation that was a dream in the late 90’s. These companies now have real revenues, real growth rates, and if we’re right and the economy has an inventory problem then our growth rates are going to look far superior to anything you’d find in the value space…and we are really looking forward to that.”– Cathie Wood