ARK Funds

[Newventurer]

I own ARKK & ARKG

These funds are growing so fast they are already having to move up from small caps to mid caps as they have to find a place to invest the money they are receiving without owning the companies. Can they continue the returns as they move up into the higher cap stock, don't know.

These funds have lots of risk, in December ARCT the #2 holding in ARKG (at 8.32%) saw a decrease of 57.3% in their price over the most recent 5 days due an issue with a trial I believe.

There are only 47 holding in ARKG and the Top 10 comprise 55.2% of the fund

I am aware of these risks and choose to hold a small (under 8% total) part of my portfolio in these for growth, balanced of course with some lower risk assets

ARKK just paid $2.0443 per share total, in both Long and Short Term Capital Gains, so probably good in your tax deferred or Roth accounts

 

[RetiredAtThirty-eight]

These funds have lots of risk, in December ARCT the #2 holding in ARKG (at 8.32%) saw a decrease of 57.3% in their price over the most recent 5 days due an issue with a trial I believe.

While it's true that the ARK funds are not low volatility, I think the actual risk they expose an investor to is nowhere near that of any single stock, even a boring one. As an investor, I'm not concerned with the performance of any one, cherry-picked stock in the fund so much as I am with the fund's total return.

There are only 47 holding in ARKG and the Top 10 comprise 55.2% of the fund

When you buy an ark fund you are getting a basket of stocks that have already been extensively researched by experts in their respective fields. The top holdings represent their highest conviction picks. So I don't see the risk as being that the top 10 comprise a bit over half of ARKG. That is actually spreading the risk over a fairly large number of companies within the focus of the fund which is genomics.

The real risk is the fund is essentially 100% in a single narrow sector, genomics. And this is why I like ARKG. Because genomics is a rapidly growing industry that is poised for major commercialization due to relatively recent advances in the technology that make many of these therapies ripe for successful commercialization.

 

[copyright1997reloaded]

When you buy an ark fund you are getting a basket of stocks that have already been extensively researched by experts in their respective fields. The top holdings represent their highest conviction picks. So I don't see the risk as being that the top 10 comprise a bit over half of ARKG. T

"experts"

Not new, and we've seen this before. Nifty 50 in early 70's, rinse and repeat.

Look, these funds may run run run from here, and I too am playing "disruptive" technologies (I own DM, VFF, OCUL, FIII, GIK, VUZI, XERS, ...), but don't kid yourself - all you have to do is look at twitter for discussions on the stocks in the ARKx funds to see we are in the midst of a speculative fever.

One of my past examples of a good stock in a disruptive industries that got way way overpriced: Cisco (CSCO). https://tos.mx/8f04lT7 Best of the best in a disruptive technology ("The Internet"). It STILL isn't back to its 2000 peak.

Another: Akamai (AKAM): http://tos.mx/VWFvX1c. Another disruptive technology stock, content caching which has become vastly popular. Still not at it's peak. I remember in 1999/2000 when the stock was over $300, I bought it at $2 a share a couple years later.

Note that both of these charts would look much worse if I didn't use log scale.

The point I am trying to make: In investing in these things, it isn't a question of whether the industry has promise. The real question is how much of that promise is already baked into the stock price.

Don't misread me. For the last 3+ years I've been on here essentially saying the bull run wasn't over. But I will say the more I watch the spac and other speculative action (like the ARKx funds), the more I believe we are getting close to the "all bull markets end badly" phase. However, let's keep the buying going on these so I can make more $ on my speculative positions.

 

[RetiredAtThirty-eight]

Don't misread me. For the last 3+ years I've been on here essentially saying the bull run wasn't over. But I will say the more I watch the spac and other speculative action (like the ARKx funds), the more I believe we are getting close to the "all bull markets end badly" phase. However, let's keep the buying going on these so I can make more $ on my speculative positions.

I don't try to time the market. Yes, it has it's ups and downs but you can wait a long time trying to get in at the bottom. And if you have to wait too long the "bottom" could be higher than the "high" prices you were trying to avoid.

I invest for the long-term so focus on the future prospects of the company, not whether current revenues can support the current valuation. ARK funds is somewhat unique in the investment world because they have 5-year time horizons on all of their holdings. They also have a 15% annual return requirement. That is to say that if a company that ARK is considering develops their business plan as ARK analysts have modelled the likely progression, it must return 15% each year on average, compounded annually, over the next 5 years to make it into the fund.

ARK re-appraises every company in their funds on a regular basis and drops the ones they figure can no longer deliver that 15% annual appreciation over 5 years.

This "speculative fever" you speak of is not even close to the dot-com bubble of 1999 as measured by commonly accepted valuation metrics. Not even close. We are in the very early stages of a genomics revolution. And I don't believe in trying to time the market which is probably why my returns are far higher than typical.

 

[Sunset]

I don't try to time the market. Yes, it has it's ups and downs but you can wait a long time trying to get in at the bottom. And if you have to wait too long the "bottom" could be higher than the "high" prices you were trying to avoid.

....

I'm reading the entire thread with interest.

This comment really struck a nerve, I distinctly recall thinking: Google at $70/sh is just too expensive.... so I never bought any...

 

[RetiredAtThirty-eight]

I'm reading the entire thread with interest.

This comment really struck a nerve, I distinctly recall thinking: Google at $70/sh is just too expensive.... so I never bought any...

I was fortunate that I learned that lesson at an early age (which is how I was able to retire at 38 years old).

In the late 1980's and early 1990's pretty much every analyst on Wall St. that covered Microsoft had a very similar take on the company. They said it was a great company with steadily growing revenues and profits but that it was wildly over-valued to the point it could not be taken seriously as an investment.

But I didn't listen to them and MSFT profits over the next decade just kept piling on. I finally sold it in the late 1990's when all the analysts were fawning over it. I used the profits to buy even more profitable companies (that many thought were over-valued).

In fact, in the last 30 years, my outsized returns have ALL come from companies that were widely considered to be overvalued when I purchased them while my value plays under-performed or even lost a small amount of money.

There's often good reasons why some companies command a premium and you have to pay the premium to take advantage of those reasons.

 

[maestro]

I like what Cathie Wood is doing with ARK funds. I have ARKW as I'm getting tired of Tesla going to the moon, and missing out, but she keeps it balanced with other movers. I know, I know...but that's how we all felt during the Dot com bubble, but this is another crazy time, and there will be survivors that flourish. She has them.

 

[RetiredAtThirty-eight]

I like what Cathie Wood is doing with ARK funds. I have ARKW as I'm getting tired of Tesla going to the moon, and missing out, but she keeps it balanced with other movers. I know, I know...but that's how we all felt during the Dot com bubble, but this is another crazy time, and there will be survivors that flourish. She has them.

I agree with that.

In a major market decline the family of ARK funds will probably take a bigger hit than the major indexes but they will bounce back much more quickly/strongly and greatly outperform the major indexes over time.

 

[Murf2]

I agree with that.



In a major market decline the family of ARK funds will probably take a bigger hit than the major indexes but they will bounce back much more quickly/strongly and greatly outperform the major indexes over time.

Does this constitute a written guarantee?

Thanks
Murf

 

[thefist]

In a major market decline the family of ARK funds will probably take a bigger hit than the major indexes but they will bounce back much more quickly/strongly and greatly outperform the major indexes over time.

+1

I’ll buy that. From a glance at their holdings, they would probably get walloped if broad market lost 20%.

For all the detractors, I’d like to see them look at the companies the ARK funds hold and say why they are not worthy of the investment. Or why genomics, fin tech, cloud software, AI and autonomy won’t be much bigger in the future than they are today. No argument from me on valuation, but that historically has been tough to gauge what premium is too high. That’s why you hold the basket rather than just a few stocks (just like indexing!). An indexer that takes 10% of their stock exposure in funds of this type should be happier in 5+ years than with 100% in broad market. It doesn’t have to be ARK funds. There are many. Check out XOUT and XT ETFs. Both are broad based and focus on disruptive technologies, but not as concentrated as ARK.

 

[RetiredAtThirty-eight]

Does this constitute a written guarantee?

Thanks
Murf

What do you think?

 

[GreenEggs]

What a morning!

My portfolio broke 5% for a few minutes earlier. The ARKs & TAN has been on fire.

I know we can't discuss the reasons here, but Wall Street sure seems pleased.

 

[RetiredAtThirty-eight]

What a morning!

My portfolio broke 5% for a few minutes earlier. The ARKs & TAN has been on fire.

I know we can't discuss the reasons here, but Wall Street sure seems pleased.

ARKG, ARKQ, ARKK, TSLA on a tear! I love it. Actually, the whole market is on fire but my portfolio is very concentrated in only 3 positions so it feels good to have had such a blowout 2020 and see it continue into 2021.

All of my financial goals have been blown away since I started investing around 30 years ago! At that time, I never dreamed I would have retired so young and gone on to make more than I would have had I continued working my way up in the working world.

 

[CincyDave]

ARKG, ARKQ, ARKK, TSLA on a tear! I love it. Actually, the whole market is on fire but my portfolio is very concentrated in only 3 positions so it feels good to have had such a blowout 2020 and see it continue into 2021.

All of my financial goals have been blown away since I started investing around 30 years ago! At that time, I never dreamed I would have retired so young and gone on to make more than I would have had I continued working my way up in the working world.

Good on you RetiredAtThirty-eight! No guts no glory as they say. I personally wouldn't be that comfortable in such a concentrated portfolio, but we're all have different risk tolerances. Market seems like it's getting overbought, but what do I know. Enjoying the ride for now.

 

[RetiredAtThirty-eight]

Good on you RetiredAtThirty-eight! No guts no glory as they say. I personally wouldn't be that comfortable in such a concentrated portfolio, but we're all have different risk tolerances. Market seems like it's getting overbought, but what do I know. Enjoying the ride for now.

I should have said "three positions comprise around 3/4 of my portfolio". And, yes, that's less diversified than is commonly recommended but I don't feel that attached to money. By being concentrated in fast growing companies I have built up a retirement portfolio I'll probably never have to worry about it running out. So I can sleep well with concentrated positions.

The big advantage is this allows me to spend a lot of time really understanding the companies I do have large positions in. And with the ARK funds, I don't worry about the companies in there, I let the ARK analysts and Cathie Wood pick them and sell them when necessary. Yes, the ARK funds will fluctuate more during market turmoil than the S&P 500 Index but Cathie Wood knows this doesn't matter, as long as the valuations come back with the economic and market cycles. Since I don't have to sell any within the next few years those fluctuations don't concern me. Not at all.

Cheers to 2021!

 

[Born2Fish]

I added some ARKG, ARKQ today.

Not a lot but enough to keep ARK on my radar.

Also added some TSLA. It is the stock that keeps on giving (so far). I am satisfied with flipping but wish I'd bought TSLA when Retired@38 first posted.

 

[RetiredAtThirty-eight]

I added some ARKG, ARKQ today.

Not a lot but enough to keep ARK on my radar.

Also added some TSLA. It is the stock that keeps on giving (so far). I am satisfied with flipping but wish I'd bought TSLA when Retired@38 first posted.

Better late than never! And "time in the market beats trying to time the market!". I know, these are old and over-used expressions but I think they are good principles to adopt when it comes to investing.

You are a step ahead of people who aren't flexible enough to change their mind once they have made it up. Too expensive at one point is too expensive forever. I recommend holding it at least 5 years unless you see fundamental changes in the company that go beyond the regular TSLA FUD that came on hot and heavy the last several years. Never sell a stock simply because it went up or down.

I'm a member of a TSLA stock discussion forum and the number of people who sold simply because it doubled, tripled or quadrupled is mind-boggling. Many of them left over a million dollars of gains for someone else to have simply because they wanted to "lock in" the early gains they had.

 

[nwsteve]

Interesting set of comments today from CNBC Cramer on ARK funds and Robinhood action.
https://www.cnbc.com/2021/01/22/cra...estors-mimicking-ark-invests-cathie-wood.html
Not sure who is the "greater fool" in this action.

 

[UnrealizedPotential]

Interesting set of comments today from CNBC Cramer on ARK funds and Robinhood action.
https://www.cnbc.com/2021/01/22/cra...estors-mimicking-ark-invests-cathie-wood.html
Not sure who is the "greater fool" in this action.

All I know is that I do not know where this market is . A lot of professional investors are sounding the alarm and I would rather play it safe than try to pretend I know something I don't and get burned.

 

[unclemick]

I have one of the ARK funds in my mad money -aka - a few good stocks.

At age 77 (ER'd age 50) retirement is ballpark 40/60 in contrast to 60/40 up to ER.

Heh heh heh - index funds . Bought the Haystack and waited cause the needles are in there. ARK funds are play money and should I get lucky I will BS you with my investment wisdom NOT!

 

[RetiredAtThirty-eight]

All I know is that I do not know where this market is . A lot of professional investors are sounding the alarm and I would rather play it safe than try to pretend I know something I don't and get burned.

You are right - the most common way for investors to get burned is to think they know where the market is headed. That's why it's a fools game to try to time you. You get burned when when not invested and it walks away from you.

Because now you have to decide whether to buy in for more or not. If you wait for the next correction, the risk is that the bottom of the correction might be higher than the current price. The old adage has some serious wisdom:

Time in the market beats trying to time the market.

 

[RetiredAtThirty-eight]

Interesting set of comments today from CNBC Cramer on ARK funds and Robinhood action.
https://www.cnbc.com/2021/01/22/cra...estors-mimicking-ark-invests-cathie-wood.html
Not sure who is the "greater fool" in this action.

Well Cramer is certainly a grizzled older investor who is not new to the game. But he's really more of a follower than a leader. He was really late to the Tesla and ARK Invest outperformance. He follows the market.

Investors with vision and targeted knowledge lead the market. Kathy Wood is the latter.

Now, momentum investors are trying to mimic Kathy's trades. But they don't have the fundamental understanding and constant research that back up her positions. They are trying to piggy-back on her teams work. This may help them beat the overall market but it is not a good way to beat her. In fact, they would almost certainly do better simply by buying her ETF's. Less risk, more reward.

The net effect of all this will be to make ARK funds more volatile than they otherwise would have been. But, from a fundamental perspective, for the long term investor in ARK funds, it won't matter - it will just be a blip on the charts.

 

[MRG]

Well Cramer is certainly a grizzled older investor who is not new to the game. But he's really more of a follower than a leader. He was really late to the Tesla and ARK Invest outperformance. He follows the market.

Investors with vision and targeted knowledge lead the market. Kathy Wood is the latter.

Now, momentum investors are trying to mimic Kathy's trades. But they don't have the fundamental understanding and constant research that back up her positions. They are trying to piggy-back on her teams work. This may help them beat the overall market but it is not a good way to beat her. In fact, they would almost certainly do better simply by buying her ETF's. Less risk, more reward.

The net effect of all this will be to make ARK funds more volatile than they otherwise would have been. But, from a fundamental perspective, for the long term investor in ARK funds, it won't matter - it will just be a blip on the charts.

Saw a post of his on WSB asking for names besides GME, and BB. He's saying WSB is causing these short squeezes.

 

[RetiredAtThirty-eight]

Saw a post of his on WSB asking for names besides GME, and BB. He's saying WSB is causing these short squeezes.

Can you explain what you are saying here?

 

[r3saving]

Can you explain what you are saying here?

I did a few searches out of curiosity. MRG may be referring to this strange mess:

https://www.bloomberg.com/news/arti...streetbets-pushed-gamestop-shares-to-the-moon

Why on an ARK thread? It seems that someone apparently dragged Cathie Wood's name into it. Here's a satire but if you search, it's all over the place and I wonder if some were taking it seriously thus driving up the price even further, not sure.

https://hard-money.net/cathie-wood-my-gamestop-price-target-is-4000/

It's the wild west out there, it seems. Geeze.