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Cathie Wood: The Most Successful Investor You Never Heard of

16 April 2021

You May Have Never Heard of Her Before, but Cathie Is Someone You Can Learn a Lot From. Here Are 10 Things About Her.

Cathie Wood is one of the most successful investors you never heard of. Reddit calls her Aunt Cathie, Wall Street calls her “brilliant” and she may become the new face of the stock market.

She’s the founder, CEO and CIO of Ark Invest, which last year was the fastest growing fund company in history. She’s also constantly present on social media and her Youtube videos gather millions of views.

So let’s dive in with 10 things you didn’t know about Cathie Wood.

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1

Quick Background

Cathie Wood grew up in Los Angeles, where she attended the all-girls Catholic school Notre Dame Academy. She went on to get her Bachelor of Science degree in finance and economics from University of Southern California.

It was at USC where she found her mentor, economist Arthur Laffer.

He remembers first meeting Cathie, saying:

“ [..] it was clear something was really driving this young lady.”

After her studies, she went to work as an economist at Jennison Associates for almost 2 decades. It was there where Cathie found her niche into investing.

2

Making Her Own Path

During her time at Jennison, she became frustrated over the fact that the analysts wouldn’t give her any good stocks to manage. She felt like she was a little dog, looking for scraps under the table.

So inevitable, she started looking where nowhere else was paying attention. She found companies that were sitting at the intersection of multiple industries and quickly realized that’s where the real innovation happens.

Cathie later moved on to join AllianceBernstein where she oversaw a multi-billion portfolio.

Still, her performance was compared to benchmark indexes and the idea of starting her own company fund came into her mind.

Interestingly, she turned to God for guidance.

“You cannot worship any idol”

The benchmarks were becoming an idol. So in 2014, Cathie left AllianceBernstein and started her own company, aptly named Ark Invest.

3

Going the Opposite Direction

Before Wood started Ark, the stock market was entering a passive management movement. Pretty much all the investors were moving their stocks into index funds, which were safe but provided little returns over long periods of time.

Cathie wanted something else and she believed the real value lied in disruptive technologies. This way of looking at innovation has been a pillar of her success.

The second reason she wanted her own company is to make more complex research. She wanted the liberty to harness the power of social media, to expand her network, to look into crowdsourcing and basically to be in the middle of the action.

She figured out that in order for a company to truly move ahead of the pack and become hugely profitable in the future, it needs to create its own industry and market.

And she had found the perfect candidate. Tesla.

4

The Tesla Call

This was probably the move that put Cathie on the map. In October 2018, she made a now famous prediction:

“We believe that Tesla should be priced in the marketplace today at $2,000. And we believe that’s conservative. Our bull case is a $4,000 price target in five years.”

She was wrong. Not with the price, but with the time. It happened just 2 years later when Tesla saw an astronomical rise.

For Cathie and her investors, that meant a cool 1200% profit increase.

She said that others failed to see the bigger picture. Electric cars are getting more popular, batteries are getting cheaper and better, that means production costs will be lower, prices in turn will be more accessible and demand will eventually surge.

And that’s pretty much what’s happening. The world of investing suddenly had a new stock market prophet.

5

Bold Predictions

One thing Cathie Wood is known for is her bold predictions.

She isn’t afraid to speak out publicly about her strategy and what she looks for in companies.

Skeptics were quick to argue her Telsa call but she came back with paperwork and excel sheets.

And this is hardly the first prediction she made. Ark Invest were buying and recommending crypto back when Bitcoin was $250. We know how that played out. It just hit a new all time high above $63,000.

She is still very bullish when it comes to bitcoin.

She claimed:

“If we add all the potential demand, relative to the limited supply, we come up with incredible numbers over the long term. We think $1tn market cap is nothing compared to where this ultimately will be”

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6

Net Worth

Being right all the time must pay back, right? In 2020, Forbes added Cathie Wood on their top America’s Self-Made Women, with an estimated net worth of $250 Million.

Her flagship innovation fund of $24.5billion saw an increase of 150% last year. Her Tesla and crypto calls have also made her a fortune.

All this gave her a cult-like following in the industry.

You can find her pretty much every day on Social Media where she loves to get conversations going about the state of economics, innovation and where the world is heading.

7

Her Advice on Investing

As mentioned before, for Cathie, “disruption” is the name of the game. Her company focuses on 5 platforms which they believe will make the biggest advancements in the following years.

These platforms are:

  • DNA sequencing
  • Artificial Intelligence
  • Energy storage
  • Blockchain
  • Robotics

Her company is also heavily invested in their research.

In a recent video on her Youtube channel, she said,

“We do believe we are on the right side of change, and disruptive innovation is going to deliver exponential growth trajectories for many of our companies. Most of them, the growth rates are enormous, and I think, some people find them unbelievable.”

8

Best Sectors to Invest

Cathie is also very vocal on what she believes are going to be the most disruptive sectors. In her view, electric vehicles, autonomous vehicles and digital wallets will be some of the most important markets to keep and eye on.

And when you think about it, the fintech industry has recently seen a big rise in popularity, with many calling 2021 the year of the connected consumer.

And on the other side, more and more companies are getting into the electric vehicles market, with Nio going after Tesla.

By the way, would you like us to make a dedicated video about this new player in the electric car market? Let us know in the comments!

In case you are thinking about making some investments, check out 15 Red Flags in Investments to avoid committing any mistakes. 

9

Her View On Retail Investors

After the Game Stop saga, where individual investors managed to bankrupt a whole hedge fund, people in the stock market world started to pay more attention to what’s going one with retail.

Cathie Wood mentioned that big institutions like hedge funds don’t have the luxury to play the long game, because they are benchmarked every year based on past performance. So investing in a company that has no profits for the first 5 years isn’t really a good plan for them, since that can get them fired.

With individual investors however, they don’t have an investment career to put at risk. They don’t really care about past performances and they have no problem going “yolo to the moon” on stocks they like.

10

What the Future Holds

The last couple of months saw a decline in Cathie Wood’s returns, with her famous Innovation fund crashing by 31%.

Some say the train ride can’t last forever but she remains confident in her ability to judge the future.

Her assumption is that people will constantly embrace new technologies that solve key problems in their life. And when you look back at what history told us, this was always a thing.

The phone disrupted the letter. TV killed the radio. Eventually, digital wallets will make cash useless.

If there’s something we can say for a fact, is that you can not stop technological progress. All you can do is make sure you’re on the right side of change.

Question:

And this leads us to our question of the day.

What do you think the future will look like 10 years from now? Let us know in the comments and let’s get a conversation going.