WealthPress Senior Strategist Roger Scott and I talk a lot about what’s actually moving the stock market behind the scenes. And one of the major fundamentals that’s been driving the market of late are Cathie Wood’s stock picks.
Roger and I just can’t seem to figure out whether she’s just extremely ballsy, or if she’s one of the most brilliant investors ever . Either way, from what we’ve seen, there’s no inbetween with her.
She is essentially violating every rule that traders religiously follow every day. Cathie Wood’s stock picks aren’t diversified in the slightest, and the stocks carry far too much volatility and risk — in my opinion.
And this method of trading could either blow up in her face, or it could turn her into the next Warren Buffett.
There’s no denying that Wood has a brilliant mind and is one heck of a fundamental analyst. Her knack for identifying long-term trends makes her the perfect private equity manager or venture capitalist.
She’s a visionary…
However, she has also got to be one of the worst tactical stock trading fund managers I have ever seen in my life.
What Wood is currently doing with her ETFs could lead to a disaster. And not just for her Ark Investment Management company, but for the entire stock market — and no one’s talking about it.
How Cathie Wood’s Stock Picks Could Derail the Entire Market
The fact that Wood has shares in all of the high-growth and high-beta tech names — while the Nasdaq 100 is up 7% to 8% this year and her fund is down 6% in those names — shows me she’s trying to be a market timer.
And she’s doing a terrible job at it…
First off, it’s near impossible to time the market correctly. Market timing is a strategy in which a trader tries to beat the stock market by predicting where it’ll go, and buy and sell based on these predictions.
The way ETFs work is there is a continuous stream of money flowing into them every day. Smart investors will try to piggy-back off of those institutional flows throughout the month — like my Monthly Money Flows service.
But Cathie Wood’s stock picks violate the norm we’re used to seeing in the market. You’ll see her buying out entire blocks of shares from companies within hours — like buying $246 million worth of Coinbase Global Inc. (Nasdaq: COIN).
And her portfolio has been under performing even while her fund has had a nice flow of capital coming into it. The fund has grown from 140 million shares to around 190 million shares this year… and it’s still down…
So what’s going to happen when a mom-and-pop shop opens an account with diversified ETFs with Morgan Stanely, see they’re placed with Ark and notice their account is down 10% while the market is up 5%?
Check out my short video below to learn more about how Cathy Wood’s stock picks could crash the market, and how the Federal Reserve is lying to you about inflation. Be sure to share your thoughts in the comments section below.
And as always, send any trading questions to jeff@joyofthetrade.com and stay ahead of the markets, especially these choppy ones, by subscribing to our YouTube channel.
P.S. Massive hedge funds, institutions and banks are all gearing up to take over the market with algorithmic trading.
And they plan on leaving everyone in the dust!
According to CNBC, these algorithms are already dominating over 80% of today’s equity market, far outperforming traditional stock-picking strategies.
But there’s still hope left for the everyday investor.
WealthPress Senior Strategist Roger Scott developed an algorithmic trading machine that traders can use without needing to own millions of dollars in upfront capital.
And he’s about to reveal the details for it in this presentation.
