My last blog on Cathie Wood went viral.

So here I am with a follow-up.

A few of you thought I was a bit soft in my appraisal of her fund’s performance and, in general, some of her outlandish predictions.

Her predictions you might even describe as far-fetched.

I’m now writing about the one thing I think Wood gets completely wrong.

Timing.

In the original viral article, I wrote about how I reverse-engineered the misogynistic comments about Cathie Wood and concluded that she probably receives some unfair criticism.

As a lone female voice in a male-dominated world of modern finance, she often gets thrown under the bus when almost every investment is down by a significant amount. And there are signs things could get worse.

It doesn’t excuse the lacklustre performance of her Fund Ark Innovation, down 78% from all-time highs.

There’s no pity party here for Wood. She’s a multi-millionaire who enjoys plenty of airtime to drive attention to herself and Ark Invest.

To say her Fund is getting crushed would be an understatement, but the recent recovery taking the price to just under 40 dollars a share brings it above pre-pandemic lows.

She is so much under the cosh at the moment. Famous investors like Michael Burry, depicted in the 2015 film “The Big Short”, have decided to short her stock and appear to have profited handsomely.

Something about betting against someone else’s performance and making a sizeable profit doesn’t sit well with me. Burry famously did the same in 2008, when his investors were screaming to get their money out after they had caught wind he was shorting the housing market.

Shorting the housing market or betting against it amid a housing boom was the most bizarre play anyone could have imagined. Burry made $100 million in personal earnings and about $700 million for his investors.

Wood is quite the opposite. Her Fund is getting nuked, and she’s marching on a podcast tour like she’s ready to release an album.

It’s no secret that her strategy is based on investing in emerging technologies which is a high-risk, high-reward approach.

Wood targets themes she believes will be significant to us all and that all five technologies she’s investing in will submerge at once.

Wood is saying that we’re currently in the midst of an explosion in innovation, with five major innovation platforms evolving simultaneously.

• Blockchain
• AI
• Biotech
• Energy storage
• Autonomous vehicles

Wood believes these technologies will converge, creating exponential growth and new investment opportunities. She says you must be on the right side of change and do your research to find the best growth opportunities.

Wood is exceptionally bullish for 2023 and beyond and believes that investors who are not afraid to go against the traditional status quo and benchmarks will be rewarded handsomely.

Problem Solvers Earn Exponentially More When Times Are Tough.

Wood is bullish on technology and believes innovation solves problems, and the issues that need solving become more important during economic downturns.

The long and short of it is people who solve problems earn more money.

While AI training costs are dropping by 60% per year, you’ll be astonished at the breakthroughs it makes. She also believes that blockchain technology is providing what the internet lacks.

Cathy Wood — Source

“Innovation solves problems and becomes more critical during times of recession.

The earnings and revenue growth rate of problem solvers far outshine in the economy.

We focus on understanding how technology learning curves will translate into cost declines and when they will become accessible.

These platforms will bring about cures for diseases and increase productivity.

Wright’s law says cost declines consistently with each cumulative doubling of units produced.

AI training costs are dropping by 60% per year with astonishing breakthroughs. A shift towards technology has characterised the last 20 years.”

As someone who is very much pro-technology, I agree with what Wood says. But I’ve also heard this song before, and I find it fascinating that even though she completely misread the market between 2020 and 2022, she doesn’t shy away from time-stamping her view, saying that we could see the emergence of this technology and the subsequent impact on asset prices increasing as early as 2023.

Cathie Wood — Source

“The key is to understand that we are in a technology-driven world and that technology will continue to drive the future.

The companies leading in the future technologies will be the most valuable.

And so, when we look at things like Blockchain, AI, biotech, energy storage, and autonomous vehicles, we see that these technologies will drive the future.

And so, we’re focused on investing in the leading companies in those areas. These companies will be the most valuable.”

You may agree with her stance, I believe in Blockchain technology, and after having my first taste of AI taking ChatGPT for a spin, I don’t see a world where either doesn’t exist in our everyday lives.

AI is mind-blowing.

It’s the first time it’s worked well, but we’re in the dawn of both technologies I’ve mentioned.

Innovation Will Change the World, but It’s Still Far Away.

One of Wood’s most famous predictions is that Bitcoin will reach $1 Million by 2030, which implies that by 2030 Bitcoin’s market capitalisation will get to $21 trillion.

It’s why I question her timing.

As a comparison, the global money supply is around $40 Trillion, so she’s saying Bitcoin will make up 50%. She’s also suggesting that Bitcoin will double the current market cap of Gold, which has been around for 5000 years and is currently at $12 trillion.

As much as I appreciate Wood putting her neck on the line making predictions, vocally, using a crystal ball in an unforgiving industry opens you up for more criticism than good.

It also brings her other views and credibility under the spotlight.

Let’s use one use case of Blockchain and AI technology — the Metaverse. It’s a shared digital space where we’ll spend more time increasingly.

But here’s the thing, Bitcoin has been around for 14 years, and people talk about it as if it’s still early. I believe we are.

Facebook has been working on VR for the best part of the decade, and I can’t name anyone who uses it for more than an hour a day.

Serial investor Gary Vaynerchuk specialises in investing in start-ups which are as risky as it gets as a VC. Still, he has a knack for finding companies and people who deliver results.

His first three investments ever were in Twitter, Tumblr and then Facebook. (Source)

He also invested in the Angel rounds of Uber and Coinbase. This guy can see around corners and is incredible at understanding consumer behaviour.

One of the main things Vaynerchuck talks about is collaborating on what consumers are trying to do and then figuring out the timing around his investment.

What stands out to me in almost everything Wood says is right. It’s just that she’s entirely off with her timing and underestimates how long this will take. Even a five-year window is too soon for some of this stuff.

Garyvee, in a Youtube interview, spoke about investing in technology, one being the Metaverse, which falls under Cathie Wood’s Blockchain thesis.

Garyvee — Source

“I think the most interesting conversation is how many people are investing in the Metaverse when the Metaverse is very far away.

When people are buying up land in many places, I caution them, not that it’s a bad idea. Sandbox and Decentraland are great operators, and a lot of good stuff is happening.

But for me, it’s timing.

I’ve got to see 100,000 or a million people spending at least three hours daily in VR before considering it an investment.

Betting the farm on it to get consumer money from it will be dangerous.

Is a ‘Ready Player One life possible?

I sure do, but we have a long way to go.”

He explains his point about consumer behaviour and says that you need time for the market and where the consumer attention is.

He says pets.com was too early. They went out of business because they were too early — there are many online pet food retailers now, which is why timing is essential.

GaryVee — Source

“I spend most of my time calibrating what I know people are going to do but trying to figure out the timing.

It’s predicting behaviour and predicting its timing and hitting that cross-section.

That’s extremely difficult, and that’s why the people that do it tremendously win and get movies made about them and make lots of money.

So many people have ideas but cannot understand consumer behaviour, macro trends, and what’s happening in society.

Timing is everything.”

Final Thoughts.

It’s interesting to compare Gary Vaynerchuk’s practical views on investing with Cathie Wood’s short-term time horizon regarding technology impacting society.

Wood doesn’t ever talk about where consumer attention is and focuses more on technology development.

I never hear her talk about people. Investing in a company that uses one of her five emerging technologies will take real skill and dedication to build, which takes people.

Instead, Wood talks about S curves and historical markers that may not bear any relevance in the future.

I believe in everything Wood is saying, and sometimes you can’t help short-term trends in the market that are out of your control, like record inflation, supply chain issues, a pandemic hangover and War in Europe.

Her idea that this innovation will take over our lives is accurate, but to think that the problem-solving capacity of the technology will help us out of a recession in 2023 is off the mark.

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