Congratulations to Cathie Wood for losing $14.3 billion over the past decade, more than any other fund manager according to Morningstar.
Cathie Wood Investors Jumping Ship
The Wall Street Journal reports Cathie Wood’s Popular ARK Funds Are Sinking Fast
Cathie Wood’s investors are jumping ship.
They rushed into her funds and won big during the pandemic, when the star fund manager became a social-media sensation by making bold bets on disruptive technology stocks such as Tesla (TSLA), Zoom Video Communications (ZM) and Roku (ROKU). They largely stuck with her when the funds’ fortunes reversed after the Federal Reserve raised interest rates. Now, after years of bruising losses, many of them have had enough.
Investors have pulled a net $2.2 billion from the six actively managed exchange-traded funds at her ARK Investment Management this year, a withdrawal that dwarfs the outflows in all of 2023. Total assets in those funds have dropped 30% in less than four months to $11.1 billion—after peaking at $59 billion in early 2021, when ARK was the world’s largest active ETF manager.
Shares of Tesla, the largest holding, are down almost 45% this year and trading around $142. Wood has been buying the dip and reiterated her moonshot five-year price target of $2,000 in a CNBC appearance earlier this month.
By the end of last year, ARK funds had destroyed more wealth than any other asset manager over the previous decade, losing investors a collective $14.3 billion, according to Morningstar. ARK’s biggest inflows came in the months surrounding the innovation fund’s February 2021 peak, unfortunate timing for many investors.
Skill Assessment
It takes skill to be the worst. Not anyone can do it.
First you have to make wildly speculative bets. Then you need to develop a cult following right at the top. Then you have to make mistake after mistake on the way down.
Tesla the Big Bet
Early invertors in Tesla are still spectacularly ahead. You are even extremely ahead if you got in as late a 2020.
Otherwise, unless you caught the late 2022 bottom, you are likely behind.
Tesla TSLA Weekly Chart
Tesla Technical Picture
The Tesla weekly chart looks ominous. There are a couple descending triangle patterns (bearish) one can spot depending on how wide you like to make your crayons.
Triangles or not, Tesla is right on support. There is no reason to expect support to hold and every reason fundamentally to expect that it won’t.
Next support is at 100, then 60 then the mid 20s.
Absurd Targets
ARK’s Monte Carlo Simulation Results posted at Ark Investments
$2,000 is an absurd target but she has placed far higher valuations before.
Please recall my April 19, 2022 post Cathie Wood’s Ark Open Source Model Predicts Tesla Shares Will Hit $4,600 by 2026
Assumptions
- Tesla sold 900,000 vehicles in 2021. ARK assumes the bear case scenario of 10 million cars in 2026 with the bullish case at 17 million.
- Tesla robotaxi delivery best case starts this year, worst case 2030, otherwise between 2023 and 2026 with a midpoint of 2024. Tesla will commercialize autonomous ride-hail in 2024.
- Tesla enters the insurance business and will sell 50% of its cars with insurance by 2026.
- Tesla will capture 50% of the autonomous market outside China and 10% in China.
That’s quite amusing vs current conditions.
Tesla’s Deliveries Drop for First Time Since 2020
Tesla’s (TSLA) quarterly deliveries in the first quarter of 2024, are down 8.5% from a year earlier. It’s the first quarterly decline since 2020.
Tesla blames production setbacks for the Decline in Quarterly Deliveries, but falling demand is the bigger issue.
On April 2, I commented Tesla’s Deliveries Drop for First Time Since 2020, It’s Demand Not Supply
Tesla’s heydays of surging demand growth is over. Competition is increasing and relative demand growth, if not absolute demand growth, is falling.
If Tesla can scale up semi production that would be a big boost. But Elon Musk has been promising 50,000 semis a year, every year for four years and has delivered a grand total of 100.
Only 35 Class 8 Truck EV Charging Stations
One of the things holding up use of electric semis is expense. A second is the number of charging stations.
Please note there are 4 Million Semis on the Road, Only 35 Class 8 Truck EV Charging Stations
And Electrek says Tesla’s giga factory is only about 30% complete and Tesla hasn’t expanded the facility for years.
Elon Musk Fires 10 Percent of Tesla Workforce
On April 15, I noted Elon Musk Fires 10 Percent of Tesla Workforce, Prepares for “Next Phase of Growth”
In preparation for more growth, Musk issues a memo announcing an workforce cut of 10 percent and two top Tesla (TSLA) executives resign.
One does not prepare for growth by firing staff, pausing construction of the giga semi factory, and repeating the same hollow lies every year since 1016.
Tesla is Dead Last in Autonomous Driving
More Elon Musk Vaporware
On April 8, I commented Tesla’s Robotaxi August Launch Will Be More Elon Musk Vaporware
On August 8, Elon Musk will make an announcement on robotaxis. Tesla lags Waymo so badly that Musk is not even near the ballpark.
Cathie Wood is married to a position in which she cannot and will not see the obvious.
You can’t destroy wealth. But you can loose it. If you follow how our Double Entry Bookkeeping system works there has to be a debt that offsets every credit. Just like there is a counterparty in every transaction with the initiating party. For every seller there must be a buyer. She just facilitated a massive and avoidable wealth transfer. The losers should have known better.
Here is an easy to follow example: Uncle Joe buys 23 million votes by “forgiving” $120 Billion in education loans. But who is the counterparty? The loans were an asset on the Treasury Dept balance sheet. Now the asset is uncollectable and the National Debt goes up by $120 Billion. Cathie Wood at least gave her victims a chance to say no. See how easy that is,
“It takes skill to be the worst. Not anyone can do it.”
Not when what you are doing is picking random numbers, That’s the definition of random. Everyone is equally good at it.
Also: Outside of silly marketing blurb and indoctrination efforts: Pretty much ALL “Asset managers” do nothing other than destroy value: They create NO value, yet incur costs. As well as interfere with the decision making of both those running companies otherwise capable of creating value, and those making up arbitrary laws aimed at nothing more than transferring value FROM productive people and enterprise, TO useless, deadweight leeches like Cathie Wood, and ALL her colleagues.
The ONLY difference between her and, say, Warren Buffet, is that, so far: Injections of loot stolen; by The Fed from productive people who don’t destroy value; into the equally value destroying silliness of the latter, have; at least nominally; outpaced the value destruction they have engaged in.
It’s not coincidental that Wood’s “funds” “created value” per the childish dreamt-up “metrics” of the dimwits falling for the economically illiterate financialized “ownership society” indoctrination drivel, for as long as The Fed was setting new records printing, debasing and facilitating government largesse. Exactly as The Fed has been doing almost continuously since Buffet got into the rackets. Then, once even just the pace of the printing slowed a bit, even that cardhouse fell over. Had she started out in the early 70s, she would still be far ahead of the game. Just as Buffet is.
Fed theft is ALL there is to the attempted-passed-off “performance” of all these exercises in economic rank illiteracy. NO additional insight, into ANY value creating process, is contributed by ANY of them. It has been, and is, ALL just theft(*). With just the tiniest veneer of randomness overlayed; which is obviously enough to fool the dimwitted indocrinati.
(*) Only possible exception being some extremely concentrated, gigantic, Hail Mary, oneway bets; of the sort Quantum/Soros made against the Pound. The world is a finite one, and while Quantum were just as blind as anyone else, there is such a thing as a reward for risk. Just as, conversely, there is NO systemic real reward for not-risk, which is what the “hedging” and “diversification” clowneries are involved in. For them; ANY of them, ALL of them; the only edge is Fed, and to a less systematic degree, political/legal mediated theft.
Casino Cathie
It is not wealth it is just numbers in an account ledger. Nothing new was created to call wealth. Talk to me after you pay taxes and account for dollar devaluation. Now take into account the person it was sold to, and what kind of bag they are holding.
So, what you are insinuating is that it isn’t worth it to invest? So YOU don’t invest? Is that what you tell your children?
Hey kids: Better to put your money in a bank account paying nothing and let inflation eat it away.
I invest all the time. What I am saying is that nothing was created. You boomers are just trading paper, like school kids traded pogs.some are making money and some are not, but trading paper and positions is not creating wealth, it is making some people money, and loosing some people money but that is not wealth. If all these boomers are just trading up the price of the same piece of paper, nothing has been created, and no wealth has been created. It only works if new buyers enter the market to hold the bag. Passive investors in the form of 401k are the primary source of new investment. As long as that holds up there will be new investors, otherwise kaput.
Garbage. When I invested and started companies from nothing, and grew them into successful businesses, something was “created”. Similarly, when I invest in an oil company and it drills, and produces oil and grows its production, I am also part of creating something.
I owned the Legg Mason Value Trust during Bill Miller’s entire 14-year run where he beat the S&P 500 each calendar year. Then his (i.e. my) results in that one came crashing down to reality like a meteor to the tarmac. At the end of all that he lost far more than he made for his investors because they come aboard at an increasing rate while his methods were working.
Someone has to be the worst. Today it’s Cathie. Tomorrow it will be someone else.
Like many here, I look after my own investments. I was heavily invested in tech and did quite well with it for many years. Still hold “some” tech shares (microsoft, google, and constellation software). But I sold a lot of tech when I first discovered this blog. A couple of folks in the comments section had a very convincing argument for oil and gas stocks. So I slowly switched my focus from tech to oil and gas stocks in 2019-2020. And I expect to continue this focus for the rest of this decade.
I still like to day trade and swing trade up to 25% of my portfolio. It is so much easier today than 30 years ago. You can even do it all on your phone from just about anywhere. Selling the rips, buying the dips, and locking in profits frequently. It’s a strategy that has served me well for decades.
I was selling into strength yesterday and today, raising more cash for the pullbacks later.
I appreciate those here who provide investment advice, though I take it all with a grain of salt and do my own due diligence. It’s one of the main reasons I frequent the site (in addition to the excellent posts from Mish).
I also follow a fair number of folks on Twitter (X) who provide investment ideas.
Unlike some of the cult morons here, I occasionally watch CNBC and Bloomberg (shocking isn’t it?); particularly their after hour feeds from Asia. There are lots of places to get investment data from.
I even watch some of the perpetual doom and gloom crowd from various online sources (Grantham, Faber, McGlone et al) to get a different perspective and see if I am missing anything.
Thanks again for the blog Mish.
who do you recommend on X/Twitter to follow?
So who on X do you find worth following? I enjoy reading other opinions as I consider myself to be isolated in my silo.
Shares of Tesla, the largest holding, are down almost 45% this year and trading around $142. Wood has been buying the dip and reiterated her moonshot five-year price target of $2,000 in a CNBC appearance earlier this month.
“We can evade reality, but we cannot evade the consequences of evading reality.”
Hey Jeff… have you unloaded your EV fleet yet? It’s trending towards zero so you best move now before it’s too late!!!
Did she invest in Webistics?
seems to me Tesla’s sales have dropped a couple times before but subsequently rebounded to higher levels. Let’s see what the future brings.
Ark is still up more than 100% in 10 years ….better than many individual stocks I bought in the same period , better than energy Etfs (yes Papa dave) and even PMs ….
ARKK is up about 100% in 10 years but compared to the overall market it’s way behind. S&P500 total return over the same time period is over 300%.
Ya but when the free money was flying … everything was up…. and mentally retarded child could have tossed darts at a stock chart to make picks… and been up 100%
By this logic, Cathie Wood’s is about aa skilled as a stock manager as a retarded child. Sounds about right.
In 10 years, ARKK is up 8.4% per year while the the S&P500 (VOO) is up 12.9% that’s a huge difference during one of the best decades.
Tesla’s real numbers would be far worse without a taxpayer-funded credit of up to $7,500 per vehicle. Another example of Democrats’ centrally-planned government failure, reminiscent of Soviet Russia.
I don’t recall the USSR offering tax credits on the purchases of consumer goods. /s
A Sucker is born every minute . . . it always sounds so good until it isn’t . . .
I guess that’s one money train I’m glad I didn’t board.
Wealth destruction? How? Maybe if ARK funded Tesla’s new offerings. But if ARK was just trading previously issued shares, then it was just shuffling wealth. Maybe it’s semantics, but just as there is no such thing as cash on the sidelines (which I learned here), there is no such thing as net wealth destruction or creation by the change of share prices per se.
You buy 100 shares of Tesla at 300 and it goes to 200, you’ve just experienced $10,000 of wealth destruction.
My $10K didn’t disappear. It still exists. I don’t have it but maybe it has been invested productively by someone else. No wealth has necessarily been destroyed because my shares went down. To see this, suppose I sold some stock today for a profit. Did I create wealth? No, I realized a gain. Or I advised my neighbor to buy stock X. It went down. Did I destroy wealth? I did not. I gave bad advice, resulting in a loss to one party.
My point was that the decline in ARK share price does not by itself prove wealth destruction by her. It proves only that over the relevant period her investments performed poorly.
If, however, Woods moved the market by her touts or the weight of her trades, then she would indeed bear some responsibility for the creation and destruction of wealth because the wealth represented by Tesla shares and her other holdings is not some sort of objective measure of the productive capacity of the companies. Rather, it is the perception of such capacity plus intangible tastes that determine the value of the shares. The share value in turn controls the the extent to which shareholders can exchange their shares for other assets. She could have changed the public perception of the value of shares.
The point is if Cathy buys those 100 shares from you before they go to 200 then her etf investors lose the $10000 not you. In either scenario the total sum of wealth to everyone is the same.
I will bet dollars-to-donuts that Cathie Wood’s net worth is many multiples
higher now than it was 10 years ago.
For a 8.4% annualized return, when any monkey was getting 12.9% from the S&P500.
She’s a shoo-in for Goldman, then. Luring all the “muppets” in at the top, so her “smart money” colleagues can cash out … is a valuable skill. Just not to her own investors.
TSLA is a perfect example of what happens to your stock when the man behind the company gets kicked out of “The Big Club”.
WAKE UP
ONE look at her puss should tell you she a pushed into top position shill .
None of you know what real genius looks like. Cathie knows, so does Donald Trump. That’s why I’ve split my portfolio between ARK and DJT.
You need to ingest more Ginko Biloba. 😉
Hahahahahahshahahahahahaha lolololololol
Engineering is virtually ignored by people who dismiss chances for Tesla dominance.
link to youtube.com
Can someone pull up that article that referenced the Tesla forum where they were complaining about the lack of decent engineering on the idiotic pick up truck they recently dumped on the suckers.
How about the Consumer Reports that show Tesla at the bottom for reliability — year after year after year after year.
Impressive, but just a drop in the bucket compared to the tsunami of losses barreling in now. You didn’t need it anyway.
“It takes skill to be the worst. Not anyone can do it.”
Cathie Wood is almost daily on the front page of Yahoo Finance. Even today she’s there, touting how holding Ethereum (ETH) could make you a millionaire.
Maybe she is simply a paid hustler.
Maybe she is just insane.
Maybe?
Congratulations to Cathie Wood!! WTG!!!
Cult followers have their notions reenforced every time they see a Tesla. People (perhaps 50%) are as emotional as they are logical. Math/logic does not work on the emotionally driven person.
Got news for you. Make it 95% and you’d be close. It’s brain anatomy. Nearly *every* decision you make, regardless how rational you think it is is routed through an emotional Center center-back in your brain. Needs to get approved there before it’s acted on.
Knowing about this cleared up a LOT of things for me about how humans work.
Women rarely create or accumulate wealth. Women are hard wired consumers of wealth. The exceptions are extraordinary remarkable creatures.
Studies have shown women are better investors, as men suffer from overconfidence and take on excessive risk.
I’ve always done my own investing. Anyone can do it. You need to put in the time to do the research. My husband jokes “my wife is a spender”. I’m lucky she spends it to the savings account.” It’s paid off. I retired in my mid 40s.
Same here. Congratulations to you for pulling it off.
What does her being a woman have to do with the return of her fund? There are bad male fund managers and bad female ones. Oh, and if we’re on the topic… women are better investors then men!
link to forbes.com
And why are the majority of fund managers and investors men?
Almost all female billionaires (with the exception of 1 or 2) got there via inheritance or divorce.
TSLA reports after hours and is hitting 4 year lows. Speaking of charts, Gold has a huge gap around $2,150. What you thinking?
That gap will undoubtedly fill fairly soon, and then the run higher will re-commence.
Up 6% after hours
Now up 9%, but it’s because Musk lied and said he would have cheaper models coming this year. He should be in jail by now with all the stock manipulation.
Actually, Tesla will be forced to keep lowering prices, so there will be cheaper models this year.
Yeah, gold has always underperformed stocks. Gold is a good way to diversify and guarantee you’ll reduce your gains as well.
She is bad. Why would folks invest with her?
I would think IEP down ~ 84% over the last decade, would be in the running for top spot.
“Otherwise, unless you caught the late 2022 bottom, you ate likely behind.”
Freudian slip as spoken by Yoda?
Thanks fixed
Yoda would have said: Likely behind you ate.
Meh… I’m not surprised… kinda saw it coming.
At least I got a few really cheap TVs out of it LOL
All can be redeemed, if:
A. FSD is the only functional navigation software that isn’t restrained to a certain set of city streets, graduates to unsupervised.
B. FSD is licensed to other automakers because they too must have self driving
C. The massive commercial Tesla battery storage ramps up strong
D. Optimus is able to work in the Tesla factories doing jobs once held by humans
E. Optimus is sold retail for $20,000
F. Tesla sells a car for $30,000 (Inflation for the $25,000 claimed years ago)
G. Tesla demonstrates the power of Boring at it’s Texas plant in removing transport bottlenecks
H. Tesla roofs & powerwalls come down in price
I. Tesla superchargers continue to dominate the travel charging business
J. Cybertruck becomes a rival to F150
K. Tesla Semi becomes a preferred enterprise purchase
L. Tesla robo taxi changes the model of car ownership – with tesla selling passenger miles
M. Some other things I can’t think of right now.
MusK has done some interesting things, but now he faces intense competition in the EV space. And it’s not clear what technology will power transportation over the next 30 years. It could be something other than lithium batteries.
I suspect over the long term it will be lithium batteries but not the type widely deployed today. Rather, a solid-state lithium battery with probably twice the energy density and less exotic materials. Possibly a lithium-sulfur battery.
Or possibly there is no solution to this problem … like a lot of problems
Possibly, but my gut feel is that a viable solid state battery that will contain around twice the energy density at half the cost of existing lithium-ion batteries will materialize within a decade or so. This is based on following the steady advancements (some of which are novel and unexpected) coming out of material science research. There are some really smart people working on this stuff.
My gut feel is that I will win the billion dollar lottery (even though I have never bought a ticket in my life).
Smart people are working on lots of stuff — but most of the time they fail
No. It’s not like the lottery. There are actual advancements happening in solid state battery research. Usually these are small steps but occasionally there are groundbreaking advancements. It’s getting there, albeit incrementally, but at the pace it’s moving it will very likely be there by the middle of the next decade.
The real headwind that Tesla is about to face is being pushed out of the Chinese market by a combination of the Chinese government (a tit for tat over the USA not allowing Chinese EV’s here) and cheaper Chinese EVs that do everything a Tesla does.
Then imagine that cascading into India and countless other countries where Chinese EV’s will be allowed to be sold and will be manufactured much cheaper than he can do it.
Did you know that most of China’s electricity is generated by burning filthy coal. Yep
So EVs are actually resulting in even more smog (I lived in HK China for many years and believe you me the smog is horrific enough without all these EVs)
Tesla – powered by coal, gas and uranium generated electricity. Saving the world!!!
I’m a buyer at $20.
exactly, that’s when the PE ratio makes sense to buy….