Quantum Wealth Summary

 

  • ARK Innovation ETF [NYSEARCA:ARKK] was once hailed as the hottest kid on the block
  • The fund posted a remarkable rise of over 300% between March 2020 and February 2021
  • However, since then, the stock price has slumped sharply, underperforming against all the American indexes
  • Is it time to look beyond speculative tech?
  • We explore 2 alternative investment options — one contrarian-based and the other value-based

 

 

Two sexy words.

‘Disruptive innovation’.

This was what catapulted Cathie Wood to hero status in 2020.

It happened because she was in the right place, at the right time.

She was able to cater to the Robinhood and Reddit crowd, which represented a rising tide of retail investors. These people were ready and willing to take on outsized risk in order to capture outsized return.

And why not?

 

Source: South China Morning Post

 

You have to remember: the world was shut down because of the global pandemic. Folks were stuck at home, anxious and uncertain. The extroverts among them were going stir-crazy. Especially the ones who were used to placing bets on live sporting events that were now cancelled.

You can imagine the flurry of their thoughts:

  • ‘Are we going to be imprisoned forever?’
  • ‘What’s going to happen next?’
  • ‘How will this end?’

The apocalypse — or at least the appearance of it — has a way of spurring people into doing things they otherwise wouldn’t.

Clearly, punters needed an outlet for their compulsions — and the easy availability of the stock market provided it.

Frontiers in Psychiatry have carried out a study that reveals a steep rise in gambling-like behaviour during the Covid pandemic.

In their words:

One type of stock market trading is the so-called “day trading,” characterized by a frequent and often continuous and rapid investment pattern aimed to gain money from very short-term market activities. Day trading has been reported to be associated with more intense and more problematic gambling habits with respect to traditional gambling types, compared to the general population. While day traders may share some characteristics with patients with problem gambling, they also may differ with respect to gambling characteristics, with a higher preference for skill-based games.

So…the stage for a stock-trading frenzy was set.

Cathie Wood emerged as an unlikely icon during this time. A voice in the wilderness, as it were. She very quickly captured the attention of millions of retail investors, turning them into her faithful acolytes.

How? Why?

Well, here’s where the plot thickens and gets saucy…