I personally find it absolutely frightening the way the interview yesterday unfolded on CNBC with Cathie Woods. Valid counterpoints were made to her investment strategy that were basically undeniable, and she blew smoke and quoted statistics and tried to make it sounded like she was absolutely competent.
Cathie Woods getting into $HOOD has to be the ABSOLUTE bottom for her funds. That stock is an absolute dumpster fire, the worst stock I can think of owning (off the top of my head). $DKNG + $ROKU being the two latest dumpster fires she's hoarding. She's going on about her 5 year strategy (funds won't exist in 5 years I hope for everyone else's sake) while selling Twitter when she bought the position in Nov. '21.
I have five premises here:
1) Cathie Woods is NEVER wrong. Even when she's wrong, she's not actually wrong, the MARKET is wrong.
This reminds me of a person who buys a lottery ticket and claims it's the winning ticket, before the numbers come out. Well, the numbers finally do come out and not a single one match! Hah! You're wrong!! Well, the ticket holder digs in deeper, instead of acknowledging his failure, he instead says that the numbers are the winning numbers, however, the lottery draw was rigged. It will be investigated and the true winning numbers (on his ticket) will then be drawn, and he will be a millionaire. You have to understand there are people throughout history who will deny the truth until their death, creating their own alternate reality, and these people are the most dangerous people of all.
Cathie Woods reminds me of a near perfect mirror image of Elizabeth Holmes with Theranos. Elizabeth Holmes was extremely well spoken, and she absolutely never waivered publicly in regards to her thoughts on performance, the company, the future, etc. She had people believing against their better judgement because of how charismatic she was. Avoid these people!
2) She's a money grabber!! Look at that expense ratio!! .75!?! I could see that being justified if you took a yearly or monthly draw of .75 annualized based on total returns of the entire fund since the beginning, never taking draws when the funds are in a loss territory. You think she's going to do that?
She's also STARTING NEW FUNDS!!! Her flagship fund has nothing but bagholders, and she wants to start NEW FUNDS! The gall!!!! She's cashing out on her image before it blows up in smoke. She'll be relaxing on a hand-built super-yacht, rest assured, when it's all said and done.
3) This follows a bit of #2, but she has absolutely no personal risk, except for the future income stream if her funds shrink into nothing. Her management fees are locked in whether you lose 99.999% of your money with her. It's her money, forever. Car salesmen are compensated on sales. They are paid if they successfully sell a car (make the fund above-market gains). The callousness of getting paid regardless of fund performance is to me, ruthless.
4) I remember, after losing quite a bit on the buy-button-removal fiasco with $HOOD related to $BB calls / $BB stock price being in the WSB discord telling people my story. The ones who actually believed I could have lost that much money decided they would fix me. “Just invest in Cathie Woods $ARKK. She's the kingmaker! You just don't know what you're doing. She will carry you across the finish line.” Must have been 20 people in that chat room and all agreed.
However, I had a quick look at $ARKK's holdings and realized that at that time, February 2021, every stock she'd invested in had gone moon-shot and to make it worse, they all looked like pretty ridiculous stocks to me at the time. Well, after voicing my opinion, I was mocked heavily to the point I began to question my own decision making.
Point being is that someone who has so much charisma, is so well spoken and sounds knowledgeable (Elizabeth Holmes again) are ultimately the ones who convince others to drink the Cool-Aid. They stop thinking rationally about the investments; it becomes cult-like. Be extremely wary when people don't heed your counterpoints regarding stock trades; if they aren't open to obvious holes in their logic, they aren't thinking rationally.
5) Finally, she's a religious fanatic. Now, for full disclosure, I am a Christian as well (apologies for bringing up religion), however, she takes it to a dangerous level. I don't care how good my surgeon was, but if I was about to undergo surgery, and my surgeon said he's “fulfilling the will of God” by operating on me, I'd be off that table before he finished the sentence. She named her fund after the Ark of the Covenant. Have you guys read what happened to the priests who touched it to prevent it from falling to the ground?!
Money isn't created in a vacuum. In the stock market, there are winners and losers. If you win, someone else lost, for the most part. I don't necessarily want to get into M1 creation by FED pushing up money supply, etc, but basically, if your fund is beating inflation, you took the money from someone(s). How can that be the “will of God.” Chuck, I know you're my best friend and all, but you have to give me your house and sign over the deed. It's the “will of God.” God told me!
TL;DR: Be scared of Elizabeth Holmes #2, Cathie Woods. This won't end well.
Leave a Reply