Spotlight: ARK Invest

Times are changing ever quicker. Industries are being over-hauled by technology and innovation. With the pace ramping up, its easy for investors to remain in their old habits. Those old traditional ways may just cause you pain. With a new digital age and technological advancements, one needs to be agile enough to move with the trends. ARK is an investment manager that is seeing the whole picture and the growth within it. They choose to focus their attention on the innovation within industries that are spurring disruption. As stated on their website, ARK recognizes, “that innovation demands a dynamic approach.” By viewing the big picture and how its unfolding, ARK is able to readily analyze industry and see the points at which the tech is communicating and building bridges between markets. Combining the traditional means that finance would deploy alongside their disruptive tech model. ARK’s approach brings greater perspective, as they don’t see industry as individual pieces, but more as pieces that are interlocking and working together. Cathie Wood founded ARK for two main reasons: to focus on disruptive innovation and for their research to be transparent. This positions them as an asset manager that leads the way in educating investors by sharing their thesis openly. Describing ARK, Cathie has said, “We’re all about finding the next big thing. Those hewing to the benchmarks, which are backwards looking, are not about the future. They are about what has worked. We’re all about what is going to work.” In a recent webinar titled, mARKet Update, the analysts at ARK spotlighted some industries and factors within the world economy that they are currently keeping an eye on. They began with the idea that an ability to save gives one the ability to invest. Investment then leads to growth and production. First taking a look at the current political atmosphere, ARK differentiated between what a Biden victory might look like vs. a Trump victory. They explained that a Biden victory could mean investment moves outside the United States and into foreign countries. Whereas, a Trump victory more than likely would leave most investments within the U.S. This would bolster the U.S. economy and make it more competitive on a global scale by diversifying industries within the country. Moving on from the election and into the debt crisis facing the globe, ARK analysts pointed towards the share buybacks that have become quite well known. This activity increases share price for the short term, but by not increasing the quality or innovation within their product, a company hollows or cannibalizes itself in this way. Without new competitive products on the market, a company begins losing market share. This behavior is happening all throughout the world, and the increasing advancement within technology is only devouring these companies quicker. Disruptive tech is not a new thing. We seen the tech unicorns like Uber, Lyft, AirBNB, and Door Dash all take over market share and they do it through software. No need for physical infrastructure or locations to be built. These businesses take advantage of the already existing structures and allows individuals to monetize them. Fusing the gig economy with the organization and resources of big business. Technology moves exponentially and those making it accessible have thrived in our current conditions. As remote work proved viable for many businesses, Slack has allowed employees to communicate, but also has connected companies together so they can work more cooperatively. More access to television has also been a trend. Amazon building a network within its Alexa, Fire TV, and Prime Video. Roku has also expanded their reach. By partnering with TV manufacturers they lowered costs by having the TV’s already loaded with the Roku software. No accompanying unit needed. The push in this digital direction only increases when you take into consideration companies like Square who are disrupting the financial world. No physical locations needed, users control, hold and manage their own funds through means like CashApp. Square aggregates data from their Square terminals which are used by many small businesses. This gives them a greater picture of the market and how to act within it. That then better informs their financial products. Competitors like WeChat and WhatsApp are pursuing much similar models. This begs the question, if the individual can control their own value, do we even need banks anymore? Finance also then is consumed by software. ARK foresees financial giants like JP Morgan to be the survivors of the banking world. Akin to what Wal-Mart did to retail stores, JP Morgan may be all that remains of brick and mortar banks in the coming years. Tech will eat finance and then soon after work itself. Automation is a quickly growing industry. Not only within manufacturing, but also within other services. Self-driving cars are the next to be put to work. If a car can drive itself, will one need to call a taxi or Uber driver in the future? No, you’ll call up the car itself to your location for pickup. TESLA has shown interest in that particular sector. If one makes and owns the cars, they not only have and own the cars, but also the software that is the secret sauce. With automatic updates over the air, this places TESLA at a high advantage. ARK has many more updates scheduled. You can catch the next one on November 10th. They are always at the forefront of what’s next. Not just that, but they explain the movements causing that trend to occur. It was great hearing their insight and I encourage everyone to follow them on social media and catch one of their mARKet Updates. This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit soul070.substack.com