A major investor is seeking an opportunity in yesterday’s stock market dip.
Key Details
- Ark Investment Management CEO Cathie Wood is seeking to capitalize on Tuesday’s stock market collapse.
- “The firm bought 27 stocks across its eight exchange-traded funds on Tuesday, according to data compiled by Bloomberg. The largest buy was Roku Inc., which is already the third biggest holding in the firm’s flagship $8 billion ARK Innovation ETF,” says Bloomberg.
- Wood’s purchase came on the day when technology-heavy Nasdaq 100 dropped 5%, its largest decline since March 2020.
- The market experienced yesterday one of its worst days since March 16, 2020, when the COVID pandemic caused a 2,997-point drop in the Dow Jones.
- As we reported yesterday, the August inflation report from the Bureau of Labor Statistics caused a mass selloff on Wall Street and a 1,200-point (4%) dip in the Dow Jones.
Why it’s news
Wood and her firm are taking the opportunity to “buy into the dip,” purchasing disruptive tech stocks at a moment when the majority of them are actively being sold off.
“Wood has stuck to her strategy of doubling down on losers and offloading winners. Roku is nearly 71% lower this year, while Butterfly Network Inc and Zoom Video Communications Inc., Tuesday’s second and third largest buys, have dropped about 14% and 58% in 2022, respectively,” says Fortune.
Wood has a major responsibility to turn Ark’s downturn in the past year around, but she seems to be seeing the market headed in a non-inflationary direction.
Responding to a tweet from SpaceX founder Elon Musk saying that “A major Fed rate hike risks deflation,” she agreed with the assertion that deflation was imminent.
“Deflation in the pipeline, heading for the PPI, CPI, PCE Deflator: from post-COVID price peaks, lumber -60%, copper -35%, oil -35%, iron ore -60%, DRAM -46%, corn -17%, Baltic freight rates -79%, gold -17%, and silver -39%,” says Wood.