Cathie Wood Explains Losses: Market Is 'Irrational'

By Dan Weil

Market-darling investor Cathie Wood of Ark Investment Management is reassuring investors who have suffered losses in her funds.

The flagship Ark Innovation ETF  (ARKK Get ARK Innovation ETF Report has slumped 42% over the past year, as its technology stocks got hammered.

“Sometimes the market can remain irrational and I’ll say what’s going on right now is irrational,” Wood said in a video posted on Ark’s website.

“We’ve been through a very difficult time since the significant rotation from growth into value started nearly a year ago in mid-February, and I want you to know that we’re in there with you.”

Looking at the biggest holdings in Ark Innovation, No. 1 Tesla  (TSLA Get Tesla Inc Report actually has gained 25% over the past year. But No. 2 Zoom Video Communications  (ZM Get Zoom Video Communications, Inc. Class A Report has dropped 53%, No. 3 Teladoc Health  (TDOC Get Teladoc Health, Inc. Report, has plunged 65% and No. 4 Roku  (ROKU Get Roku, Inc. Class A Report has given up 57%.

The stocks have suffered amid valuation concerns and rising interest rates, which make their earnings streams look less valuable compared with investments like Treasury bonds.

Wood says her companies are coming back. “Keep your eye on that prize,” she said. “If we’re right, the technologies around which we have focused our research, those technologies, we believe will compound in terms of revenues and earnings for the companies involved,” Wood said.

First-quarter-earnings reports could help, she said. “As we see these earnings reports coming in, and the guidance for the first quarter and this ’fessing up out there into what’s really going on with inventories, we’re going to see the turn sooner rather than later.”


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