Cathie Wood stumbles yet again as it is revealed that her Ark fund sold 1.4 Million Shares Of Coinbase before it rallied 80%.
Cathie Wood Ark’s reason for unloading Coinbase was due to regulatory uncertainty.
The plot thickens, Cathie Wood stumbles with her Coinbase holding just days before the company announced a partnership with Blackrock and rallied more than 80%
So is Cathie Wood, the Queen of Wall Street being played, or is she just playing stupid?
Blackrock is the world’s largest investor and global landlord.
A wall street money manager should have their ear to the ground, particularly when it comes to Blackrock moves.
So was this some type of behind-the-stage back deal where all parties win?
In the first instance, the genuity of Cathie Wood’s stumbles is credible.
The technology has fallen, based on her poor decision this time on regulatory uncertainties in the crypto world, according to a new Bloomberg report.
“Cathie Wood stumbles yet again as it is revealed that her Ark fund sold 1.4 Million Shares Of Coinbase before it rallied 80%”
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Based on those uncertainties three of Wood’s funds collectively sold more than 1.4 million shares, which amounted to approximately $75 million worth of COIN – on July 26.
But only then to see the stock rally by as much over the last few weeks. It must feel like leaving a winning lottery ticket in a trouser pocket and then running it through a wash cycle.
But this is not what professional money managers do, sell a winner just days before a mammoth rally.
Cathie Wood said that she “swapped” some of her COIN shares for Shopify shares because Shopify had also plunged. The SEC brought insider trading charges against a former Coinbase employee last month.
Cathie Wood Ark still owns about 7.1 million shares of Coinbase, which is some consolation, bearing in mind the stock is up more than 80% since her large sale.
Cathie Wood stumbles have been a recurring theme in a turbulent 2022
As we wrote in an earlier piece Cathie Wood doubled down on her volatile technology growth stocks buying the dip, but only to get double-fisted. It is a rough game. In the first half of 2022, inflation took a moonshot, and central banks reacted with aggressive tightening rate hikes not seen in decades.
The bubble of everything then popped, wiping trillions of dollars off assets. The riskiest assets were cannibalized, with some down more than 60% from their highs. Cryptocurrencies lost more than two trillion from their peak market capitalization.
“Cathie Wood said that she “swapped” some of her COIN shares for Shopify shares because Shopify had also plunged”
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Regular readers will recall a piece in World Top Investers about Cathie Wood shutting down the latest ARk “Transparency” ETF.
Cathie Wood recently told business news that the ESG boom has gotten “way out of hand”, which most bubble watchers already know.
Cathie Wood believes the US is already in recession. Two negative quarters of GDP is the technical definition of a recession so indeed a US recession was confirmed in July’s GDP post.
Cathie Wood stumbles with her latest Coinbase sale and perhaps she is now deciding to hang on to losses
She reckons the Fed will have to pivot next year and she plans to remain fully invested in the downturn.
Peak inflation, and peak tightening are now insight and the great capital rotation to beat down high-risk assets along the risk curve is likely to gain momentum. Investors are grabbing their place on the central bank money teat. So Cathie Wood could find her mojo as the Fed pivots.
We believe the Fed pivot could play out in the fourth quarter of 2022 as the economic fallout from more than 150 basis points starts to weigh on the economy as the recession deepens.
“A lot of people have learned the hard way and she’s going to eventually learn the hard way too and she is by the eight-year underperformance of her fund so I’m using it as a teaching tool” – Dennis Dick, PreMarket Prep
Cathie Wood stumbles in 2022 making her the AOC of the investment world
“A lot of people have learned the hard way and she’s going to eventually learn the hard way too and she is by the eight-year underperformance of her fund so I’m using it as a teaching tool,” said PreMarket Prep co-host Dennis Dick.
Real success is the painful learning from many years of failures.
Luck is the one-shot lucky win.
Cathie Wood’s investment strategy deserves some attention
Not because it should be modelled, but because investors can learn from the Ark Invest CEO’s mistakes and hope to avoid falling into the same traps, according to Dick.
Average into a position pre-planning several buy interval prices is a good strategy when investors know where we are in the cycles.
Revenge buying, doubling down because you are angry with market moves against your investment is a bad idea.
True discounts feel like blood in the streets.
Understanding where we are in cycles, central bank liquidity cycles, investment psychology cycles, and world order cycles helps investors build an investment strategy.
“She wants to buy growth at any cost and she’s not going to stop with her strategy” – Dennis Dick, PreMarket Prep
Despite Cathie Wood stumbles, Dick acknowledged she could still be right and end up looking like a genius
“This is her mandate,” Dick said. “She wants to buy growth at any cost and she’s not going to stop with her strategy.”
Dick thinks that the young investors that Cathie Wood Ark attracts in her growth innovation fund need to learn from her mistakes.
1) Buying with disregard for valuation.
2) Constantly adding to losers.
3) Believing that you are right, and the market is wrong.
4) Unwillingness to change opinion.
He believes she may have just been lucky with her early investment in Tesla.
“She’s not seeing something that we’re not seeing. She simply got lucky that she put all of her eggs in one basket off the bat, and that basket hit, you know, she bet it all on red, and red came in,” Dick said.
“So stop giving her credit that she’s outperforming the market overall because she’s not. She’s massively underperformed the markets since her inception.”
