Cathie Wood on AI, crypto, inflation and investment strategy • St Pete Catalyst


Cathie Wood has a large following of loyal followers in the world of investment and technology due to her shameless belief in disruptive innovation and a unique view of financial markets.

Wood’s distinctive visions were fully displayed during Thursday’s poweredUp Tampa Bay Tech Festival at the Mahaffey Theater when ARK Invest CEO sat down with Joe Hamilton, editor of the Catalyst of St. Peter and head of the Metacity network, for a light-hearted talk by the fire.

Before offering his thoughts on innovative technology, inflation, and cryptocurrency, Hamilton asked Wood to pass on a story he never tires of hearing: why he moved his investment firm from New York to St. Louis. Pete.

“After analyzing many tax-free states and low-tax states, we were drawn to Florida, specifically the Tampa Bay region, for its vitality and because we thought it was going to be the next Austin,” Wood said. “And I mean the Tampa Bay area because I don’t think St. Pete can do it all on its own.”

Artificial intelligence

Wood called the advances in artificial intelligence “amazing.” The investment icon said advances in technology are happening faster than she expected, despite ARK “pushing the envelope” on the potential of AI.

Wood said artificial intelligence training costs have dropped 60 percent, combining hardware and software. She then launched her first explosive idea, offering her latest version of the technology which she said was “hot from the research press”.

“That’s not even in our Big Ideas 2022,” Wood said. “We think we’re six to 13 years away from the Holy Grail: artificial general intelligence. At that point we’ll see a turning point in productivity, and it’s going to be pretty mind-blowing.”

An artificial general intelligence (AGI) is a machine capable of understanding the world like any human and with the same ability to perform a wide range of tasks.

Cryptocurrency

Hamilton asked Wood about last week’s $ 40 billion collapse of the popular cryptocurrency token Luna and its associated stable USUS (UST) currency. Earth was the first major attempt at a stable algorithmic currency designed to maintain a value of $ 1 at all times.

Wood responded that he participated in a podcast with Earth founder about 18 months ago, and after rehearsing the conversation, he realized that it was “a Ponzi scheme.”

Wood noted that the number of Luna tokens in circulation has gone from about 300 million to 6.5 trillion in just six weeks.

“They’ve adopted U.S. (monetary) policy on that,” Hamilton said, eliciting laughter from Wood and the audience. “Well, make a good point about it,” she replied.

Still, Wood remains very optimistic about Bitcoin. She called the apex token, designed to stop minting once 21 million units are in circulation, a good reserve of value. She said cryptocurrency has a unique and positive impact on emerging markets and offers an insurance policy against wealth confiscation in a number of ways, with inflation being the most widespread.

“So we’re out there saying, and you can find that in our Big Ideas 2022 on our website, a $ 1 million goal,” Wood said. “It’s actually $ 1.3 million.) So this is a money revolution, and we think it’s going to spread around the world …

Inflation

Hamilton noted that Wood previously stated that innovation is one of the strongest hedges for inflation due to its cost-cutting effects. Wood called the past year the most difficult moment of his career in terms of inflation and deflation, even worse than the 2008-09 Great Recession.

She blamed the main narrative of inflation and interest rates for increasing the discount factors used to present the value of future cash flows. As interest rates rise, the current value of future cash flows falls, which Wood said has disproportionately affected his investment strategy.

“We’ve been fighting this idea that inflation … has now reached a point where it’s integrated into the system and will move into wages,” Wood said. “I know wage rates here – we were talking behind the scenes – have skyrocketed, but I think this is a special situation.”

Wood said he is fighting the narrative that the United States is in a situation similar to that of the 1970s, where inflation is embedded in the system and people should “get used to it and operate around it.” She said the market has significant deflationary forces, which she believes is the biggest risk.

“The risk is that you stop innovating and reduce costs,” Wood said.

Investment strategy

Wood said that while many people have been expecting an apocalyptic scenario for their company over the past year, with nothing but outflows from their investment funds, ARK has earned $ 17 billion in 2021 and continues to receive strong revenue. She explained that her new team of analysts remains focused on a five-year outlook and recently focused ARK’s portfolios on their “highest condemnation names”.

Wood said his main strategy, the ARK Innovation ETF (ARKK), has gone from having 58 companies to 35. Unlike most investment strategies, he explained that concentration is a risk control measure for ARK. She said many of ARK’s shares have lost visionary managers willing to face short-term-oriented shareholders.

“It’s so interesting to see our portfolios almost correlate negatively with the stock market,” Wood said. “So that’s been the story of the last few years.”

Hamilton noted that the five-year outlook mimics the mindset of a venture capitalist, and Wood said he started his business by saying that ARK is “the closest thing you’ll find to a venture capital firm in the public stock markets.”

Wood added that ARK offers all its research to the public, feeding its customers with a transparency that is not found anywhere else. She said the investment firm will continue to publish its models because the traditional financial world does not serve investors in innovation.

Wood said he worries when a traditional company buys an innovator, claiming that NewsCorp bought the previously popular social networking platform MySpace and “killed it with advertising.”

Wood encourages companies in which to invest now to spend aggressively and capitalize on great growth opportunities. She believes ARK’s focus – “truly disruptive innovation” – is valued at about $ 7-8 trillion, less than 10% of global stock markets.

“By 2030, we believe that between $ 7 trillion and $ 8 trillion will be $ 210 trillion and that it will dominate the benchmarks,” Wood said. “In other words, there will be a lot of disruption.

“Tesla, we were playing the drum with that, and no one believed us. No one believed us, and boom, they climbed.”



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