Several of Wood’s firm Ark Invest’s ETFs bought into a variety of different tech stocks after falling along with the broader market. Ark Invest is an influential asset manager with $6.7 billion in assets under management, but its funds are in trouble. Reports earlier this year showed that investors withdrew a total of $2.2 billion from these funds due to poor performance.
Wood hopes to turn things around. This week, at least two Ark Invest ETFs bought shares of technology companies whose shares have plummeted over the past month. The actively managed Ark Innovation ETF bought about $45 million worth of shares in companies including Amazon, Advanced Micro Devices and Coinbase based on the opening prices on the day of purchase. The company’s Ark Next Generation Fund bought $9.5 million in Meta, Tesla and Robinhood shares, based on the same calculation. Both funds also bought other stocks.
All of these companies were caught up in a dramatic market-wide rout. However, it remains to be seen whether Woods bought the stock on the cheap or made the right purchase when the market started to fall.
“She could be right or she could be wrong,” said George Kailas, chief executive of fintech investment platform Prospero.ai. “She’s certainly been a little bit of both over the past few years. Of.”
Ark Investment declined to comment, instead directing wealth Watch a video of Wood discussing recent market moves.
Kailas was referring to Ark Invests’ bet on Tesla, which has generated significant wealth for the company as its shares rose in 2021. The Next Generation Internet Fund, which invests in cloud-related Internet companies, is down 2% so far this year. Meanwhile, Ark Invest’s flagship Innovation ETF is down nearly 20% this year. Neither ETF has reached the heights of its 2021 surge.
The plunge in tech stocks coincided with, or some might say caused, the sell-off in global stock markets. On Friday, both Japanese and U.S. stock market indexes experienced sharp single-day declines. Since then, both Japan’s Nikkei and S&P 500 have rebounded slightly, but not enough to ease some investors’ concerns that this may be just a short-lived recovery from falling stock prices. “I feel like this is a dead cat rally,” said Gene Goldman, chief investment officer at financial services firm Cetera.
Goldman Sachs predicts “peak-to-trough declines in the S&P 500 of 10% or more.”
Kelas agreed tentatively, but said if he had to pick a direction for the stock market, he would be “a little more pessimistic.”
There is a group of long-term growth investors like Wood who view current market conditions as an opportunity. UBS said in an analyst note published on Thursday that many technology companies have remained in good shape even with market turmoil, which makes their shares cheap.
“We believe tech fundamentals remain solid and valuations have now moved lower,” the analysts wrote.
UBS said it expects the second-quarter profit growth rate of the global technology industry to increase by 20% to 25% annually. The bank also expects profits to continue to grow by 15% to 20% over the next year and a half.
Still, even investors looking to take action are proceeding with caution. “I’m not buying yet,” said Paul Meeks, a prominent technology investor and former portfolio manager. “Although I like the price. I don’t like the timing.
In the United States, investors suffered an unexpected blow when the Federal Reserve chose to postpone its interest rate cut at its July meeting. The market currently believes that a rate cut in September is a certainty. UBS remains bullish on technology stocks, in part because so-called “technical factors” have more to do with the macroeconomic than individual companies themselves.
For Kailas, there are other big factors that worry him: the U.S. election. “Part of the reason it’s really difficult is that we’re seeing an economic downturn, and I think that has to do with politics and geopolitical issues,” he said.
Trying to predict the outcome of any election can cause headaches for investors. This time, however, a Republican and Democratic White House could lead to a rift over the future of the tech industry. Meeks said neither potential administration has made clear what kind of technology regulation it would pursue.
Democrats have shown a largely unprecedented commitment to regulating big tech companies. On the other hand, the party’s presidential candidate, Vice President Kamala Harris, has close ties to several key figures in Silicon Valley.
At the same time, the Republican vote brings its own uncertainty. Vice presidential candidate JD Vance is a former venture capitalist who has the support of influential technology figures such as Peter Thiel. However, former President Trump’s package of tariffs on Chinese imports will hit some technology companies and has caused some stocks to soar when he suggested that Taiwan pay protection money to the United States. “Especially with Trump, I’ve never really seen behavior like this,” Kellas said.
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