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Let’s Discuss Averaging In Using the ARK Innovation ETF as an Example

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13 comments on Let’s Discuss Averaging In Using the ARK Innovation ETF as an Example

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ARKK Innovation ETF weekly chart courtesy of StockCharts.Com

The blue dotted lines in my chart are technical support lines. 

ARKK Milestone 

I do not think Cathie Wood is a fraud. But yes, the bear market will sink a lot of guru’s before its done.

Doubling Down on Dumb

ARKK Innovation Holdings

Question of the Day

How many of those companies will not survive?

Averaging In 

If you started averaging in at 40 or even 30, adding every month you have not exactly done very well. 

Where’s Monthly Support? 

ARKK Innovation ETF weekly chart courtesy of StockCharts.Com

ARKK is close to support at 37 right now. 

Beneath that there is technical support at 32 then 17 or so. If that fails, there’s always a complete round trip to 13.69.

ARKK Top 10 Holdings

ARKK Holdings Courtesy of MarketWatch

The fate of ARK rests with the the stocks 

Ark Open Source Model Predicts Tesla Shares Will Hit $4,600 by 2026

Not to worry, Cathie Wood says Ark Open Source Model Predicts Tesla Shares Will Hit $4,600 by 2026

Looking even further ahead to 2030, Wood predicts a share price of about $22,500 equating to a market cap of roughly $22.5 trillion.

US Real GDP in 2021 was $19.8 Trillion.

ARK is predicting the valuation of Tesla will exceed the entire US real GDP by the early 2030s.

Yes, this is more than ridiculous. It also says something about guru price models.

This post originated at MishTalk.Com.

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Mike Shedlock

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13 Comments
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Tony Bennett
Tony Bennett
4 years ago
The story is ETFs … not ARK.
Most have not a clue what is contained in the ETFs they own. Someone investing “conservatively” by buying an ETF that mimics S&P500 probably assumes underlying assets are shares of constituent stock (weighted). Think again. Derivatives galore.
“The Fund invests in financial instruments that the Advisor believes, in combination, should track the performance of the Index”
ETFs are a MUCH greater portion of the landscape since the GFC … and when things get “wonky” (they will) … liquidity dries up for derivatives … ETFs will lose much more than the index they track (when TSHTF). Buyer BEWARE.
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Mish
Mish
4 years ago
Tesla did far better than I expected, but even Musk admitted he was one or two quarters from oblivion.
What saved Tesla was tax credits.
BTW I do think Musk is a genius.
But looking ahead, EV competition will be stiff. Tesla has had no real competition yet.
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FooFooFed
FooFooFed
4 years ago
Woods Wins Big and those who thought she was right and are still in loose. Must be good to run a charade and convince others that your a new world concept person. Even last week flows were still going into her fund strongly. Its a reflection on society and greed.
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Mish
Mish
4 years ago
Reply to  FooFooFed
Record inflows two days ago.
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Nuddernoitall
Nuddernoitall
4 years ago
Was a former client of Wood, and have followed her buying and selling choices for a couple of years. The concept of “transformative” stocks is a wonderful concept. But to execute properly, she needed to actually buy transformative securities (beyond TSLA her one-hit wonder) AND she needed to be nimble in her daily, weekly and monthly trading strategies. On both those counts, she has failed miserably. In a nutshell, her buys are often the wrong companies (is DKNG or COIN for example really transformative) and then she fails to make necessary adjustments. She has also hired a group of young book-smart analysts, but they too are quickly programmed to drink the ARK special Kool-Aid. Wood’s past employers must be rolling their eyes and saying, “I told you so.”
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Mish
Mish
4 years ago
Reply to  Nuddernoitall
Except in hindsight it is amazingly difficult to pick transformative stocks.
Look back at the 2000 tech wreck. How many did not even survive?
Worldcom, JDSU, Global Crossing, Eneron etc. Hundreds of little names went under.
Then there were hundreds that survived but did nothing.
Amazon and Apple were transformative but also transformed.
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Nuddernoitall
Nuddernoitall
4 years ago
Reply to  Mish
Concept of picking transformative is good. Agree with you that actually picking correct transformative companies is wildly difficult. But she maximized her failures by doubling and tripling down on mistakes, and yet as has been pointed out, money flows still headed into her various funds. Why? Honestly, if I wanted to lose more money in these markets, I could just buy TDOC, PTON and ZOOM myself and I wouldn’t even have to pay for her fund fees.
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Mish
Mish
4 years ago
Reply to  Nuddernoitall
Will PTON survive? TDOC? EXAS? U?
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kiers
kiers
4 years ago
Reply to  Mish
you guys are giving her marketing shtick too much credence. it’s all BS. she’s just a momentum and volatility chaser.
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randocalrissian
randocalrissian
4 years ago
Not sure we have seen Mish right on something more so than he has been right on ARKK. Yikes. Great calls from WAY higher levels. Also the shared underlying reasoning was a bullseye.
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Bam_Man
Bam_Man
4 years ago
Her “model’” share price estimates for TSLA could come to fruition in a full-blown hyperinflation scenario – so they are theoretically possible.
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Fish1
Fish1
4 years ago
Reply to  Bam_Man
I see several potential pathways for TESLA. One more battery iteration and they will not only own the exploding E-Car business but also electrical storeage opportunities. Both commercial and homeowner. Second, Tesla is very involved in photovoltaics. Another 20% price drop over the next few years would mean that the shoe shine boy will be installing them on his stand. This is massively disruptive. Goodbye oil hegemony in the same time frame.
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MIFE
MIFE
4 years ago
Reply to  Fish1
LOL – when I read this, I thought you were referring to the fact that e-batteries do tend to ignite once in a while and are almost impossible to put out once they do – you really meant that volumes are increasing at a fast clip.
e-cars sales will likely level out and go to minimal if governments drop subsidies – especially once all of the commodity price pressures flow through. I believe e-car is less complex than an ICE but has more expensive raw materials – has to be priced into the product eventually, no?
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