A few days ago, Cathie Wood did an interview with CNBC where she talked about the bear market that technology stocks are currently facing.
Specifically, Wood responded to the launch of the Short Innovation ETF, an ETF created by Tuttle Capital Management that seeks to produce the inverse daily returns of Ark Invest's flagship Disruptive Innovation ETF.
Since its launch late last year, the SARK ETF has soared 55% while the ARKK ETF has declined by 42% over the same time period.
“They're [Tuttle Capital] shorting innovation and that seems to me, over time, that's not going to be a business if you ask me. But they're also not doing any research. They're simply shorting innovation. If they were doing research and could point us to reasons why what we [own] is not going to participate in the new world order, then we might have a conversation about it. But the idea of shorting innovation is, in America, ridiculous I think,” Wood said.
In my view, she does have a legitimate point. Of course, I understand first that many technology stocks that achieved sky-high valuations during the pandemic did so only because of cheap money, low-interest rates, and behavioral and societal changes; and that the high valuations achieved are not sustainable nor are they justified.
But, looking at the long term, shouldn't technology be in a bull market? The pandemic seems/feels like an inflection point for technology and advancements that those who fail to foresee and capture will be left behind. Things are only ever going to become more digitized, the way we live will change, so shorting innovative technology stocks in the long term seems foolish.
This is just my two cents. Of course, I understand the idea of waiting out the bear market to get a better entry point for most of these stocks, as the volatility due to the Russian-Ukraine tensions, Inflation, and interest rates make it difficult to enter currently.
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