Lessons from the Rise and Fall (And Rise Again?) of ARK
Two Quants and a Financial PlannerJanuary 08, 202400:37:49

Lessons from the Rise and Fall (And Rise Again?) of ARK

Technology booms can lead to massive change in our society. They can also lead to huge profits for investors who invest in them. But those huge gains can also be followed by major losses when they inevitably run their course. There is probably no better way to understand the lessons for investors from these periods than to look at the story of ARK Investments. ARK's flagship innovation ETF generated eye popping returns in the years leading up to 2021. Then it gave many of those returns back as investors questioned whether the prospects if the companies it owned justified their high valuations. And then it bounced back in a big way in 2023, although it still sits well below its highs. In this episode, we use the story of ARK to highlight some of the most important lessons we think investors can learn about investing in innovation and concentrated strategies.

00:00 - Intro
00:33 - The history of ARK
03:55 - The common path of focused investment funds
06:04 - Investors chase performance
08:41 - The flows in and out of ARK
10:59 - Active vs passive ETFs
15:07 - Process and conviction
20:08 - The path of innovation cycles and bubbles
24:28 - The importance of the outside view
28:39 - Valuation in growth and innovation investing
32:53 - Position sizing in volatile investments

#arkk #investing #stockmarket #technologyinvesting

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