Kathy, Cathy, Kathy Just what are you doing? From January 31st to February 22nd, Arc Invest has sold out of seemingly all of their various funds palantir shares. Worse yet, after earnings on the 17th, her funds started panic selling them, going from selling a few million a week at most to dumping 10 million plus on the 18th and then 9 million plus on the 22nd. The line in purple is how many shares Arc holds in the line in canis. yellow is the price, the green dot symbolized periods of time where she buys more or Arc buys more, and the red dot symbolizes periods of times where they sell.

You could see that Ark bought Palantir super heavy as the price was going up. Then it bought it when it took a dip to the 20s and bounced back and forth. And now that it's been on its way back down, well below most of their positions, they've been basically panic selling the entire position they've built over the last year. Plus, Twitter user, Unusual Whales did the math and found that she lost approximately 390 million on her Palantir trait.

I'm sorry, not lost, but disrupted 390 million dollars. And look, I'll be honest, I have a lot of respect for the research that Arc has put out over the last few years, and I know that people love to kick folks when they're down, and they love to hate on Ark specifically because it is down, but I don't even see that as the problem. If your focus is the growth sector and you're in a growth crash that is worse than anything that we've seen since basically the dot-com bubble. Obviously, your growth fund is going to be down.

we have unprecedented inflation right now, and that is hurting multiples on anything that is forward-looking unfair to criticize a long-term fund on short-term performance. But the problem that I have with Arc and why I kind of feel let down to be honest, is because they've preached the value of finding disruptive innovation through substantial research, buying it, taking advantage of the inefficiencies by buying low and selling high when things get euphoric, but overall, keeping to a long-term five-year time horizon so that that innovation and disruption can play out in a decent amount of time. The big thing that made people like Arc a few years ago was that they had conviction to hold a lot of these stocks during the massive, massive, massive downturn of 2020 and then had huge returns as a result of that. But now we're in a new downturn and it seems like all the conviction in a lot of these companies is just out the window.

You're seeing Orc invest basically swing trade very, very poorly. A lot of these conviction plays that were supposed to have like a five year time horizon oftentimes selling out of really good positions at very very low prices in order to buy companies like Zoom or Roku, which I struggled to see as disruptive in the first place. And really, it's not about the types of stocks that she likes. We can disagree on the power of Zoom.

Maybe that's going to be the biggest company in the next 10 years. Highly doubt it. but maybe. But the point is that she and this overall fund switch over and over again.

And it's not just Palantir look at skills same deal. They loved it when it was going up, they loved it on the way down and then it started accelerating downward in the growth crash and they decided, you know what, let's sell out of nearly everything. Twitter, same thing sold out of nearly everything as it was going down after building a position for many, many quarters. If you look in purple, you can see their cost average.

then look where they sold Jd. They really liked it. In 2020 and 2021, they've also emptied most of their position. As of now, Paypal was another super atrocious one.

Probably the most atrocious. These green dots show where Ark was buying. They bought huge huge into the 200s and then right to the very peak and then on its long downtrend. they started selling and selling.

and selling and selling. As it dropped into the very low 100s, they cleaned out almost all of their position. Another example of buying very, very strongly as it's going up at much higher values and then selling very strongly and very rapidly when it's going down to much lower values. And obviously a lot of people would say well yeah, Charlie, but they're just not innovating anymore? Okay, but still.

Doesn't That kind of add to the question of the value of research if they're buying into three times the valuation and then selling it at one third the valuation because they switched their analysis? What really changed in their analysis during that time period? Did they not see the rise in competition because they bought a lot of other companies that are in that rise of competition, many of which are also down dramatically. Etsy. Another example of a stock they bought while it was going up and then the minute it starts going down, they start selling. They still have some position in it.

It must not have lost them enough money yet to justify a complete sellout, but still 3d systems of course, one that I like. She's been selling huge as it's dropped docusign. She bought tons and tons of shares in 2020 and 2021 as it was going up, but then it tanks and Arc magically decides that it doesn't deserve any conviction anymore. Clls she bought at much higher valuations and then has been panic selling as it's dropped.

Snapchat. Oh, I really love this one. Buys the dip as snapchat gets beat down back at the end of the last year and then as it dips more, she starts selling and then prior to earnings, she basically closes the position entirely. and then Snapchat has a huge beat and the price bounces up after she's already out of it.

another one live person. She bought heavily last year and then reversed course and decided to close the entire position as it got cut in half. I have complete respect for Dip buying stocks that you have a lot of conviction in, even if you think the market condition's gonna get worse because you never really know when things are going to turn around. But what I don't have respect for is consistently flip-flopping on the very same companies that you bought the dips on with investor money.

I think quite frankly it's ridiculous and shows either one, you're incompetent with research or number two, you really just don't have the stomach for innovation. Now I am going to keep going through this and then talk about where she's rotating this capital into and my speculation on why she's doing this and kind of giving her the benefit of the doubt. But first, amidst the storm of uncertainty in stocks, real estate, and crypto, it's difficult for investors to know what to invest in, and the truth is, the cusp of every market pullback is an opportunity to re-evaluate how diversified you are. Now you may remember that I mentioned Masterworks in the past, but if you don't, I want to encourage you today to learn more about investing in art.

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You visit their website, create an account, browse their artwork, and you can instantly diversify your portfolio with one of the most stable and oldest asset classes around. Now back to Kathy and Arc. Because it is an Etf, she does have to sell parts of her positions if she has massive outflows. She has to consistently make reallocation decisions.

And obviously, that does give her some cover because some of her cells are going to be just because she has to rebalance or because of outflows. But still, when you see her completely close out of positions, that's when you know that she's completely flip-flopped on that position. and she's basically saying, yeah, the research we did, it was Bs. It was poopoo.

Now, we don't even want to be in the position anymore, despite the fact that we just bought it heavily at higher in our evaluations. I mean again, I hate to be super critical of Kathy Wood because I think that a lot of her macro predictions are going to come true and a lot of them have already come true. But when you look at this management style, it's atrocious. You look at how abrupt she sells out of position after position.

It's hard to have a lot of confidence in that kind of research and management style. If you really liked something a year ago, why are you abruptly panic selling it? And again, I'm sure some people say charlie. She's moving some of her positions around to less risky positions. But is she though? Look at what she's buying.

Heavy robinhood. She's been buying huge all the way up into the 40s and then all the way down into the low tens where it is now Zoom, which can't seem to stop going down either. Roku, which, if you listen to their latest earnings call, doesn't seem to know their rear end from their foot. My five-year-old cousin seems to have more ideas on how they can monetize their business model than Roku does.

and I mean, obviously, they are most known for their Tesla Play, which they've played somewhat decently. But I mean, they already started rebuying Dazzle Shares in the 8 and 900s despite just selling out in the low 800s like a year ago. It seems like there's very, very little price analysis when it comes down to these moves. It's just like if it's going down, buy if it's going up sell and then if it goes down dramatically, make sure to panic sell everything that you just bought at every single prior dip.

It's very, very frustrating because at least 50 percent of the stocks that she's in, I could see a lot of value in it, and a lot of people just buy and hold her funds thinking that they're investing in innovation when reality, she's just flipping on every single stock that she likes over and over again. Well, not every single one. that's not exactly fair, but a lot of them. And look, let's be completely real here.

If her fund was down 95 and she did not flip on any position, I wouldn't be criticizing her. I'd say yeah, she bought stocks that she had a lot of conviction. and we're in a market that is in a dramatic, dramatic growth crash, and so a growth sector fund is going to go down dramatically, just like Apple, Amazon, Alphabet went down dramatically in the dot-com bubble. If you look at those numbers, it looks a lot worse than Arcs Fun.

Let me tell you that. But the thing is, they're flip-flopping on so many different stocks after they've already gone down massively, and that's why it makes it really, really difficult for me to justify her action taking. Now, if we're going to speculate and give her the benefit of the doubt, it seems to me that they go through different stages during risk on periods where things are going very, very well. It seems that they go and try to expand out to more and more tickers, and then during risk off periods they start dip, buying everything unanimously.

But then if that risk off period gets deeper and deeper and they start losing a lot more money, they start closing out some of the outlier excess tickers and going and rotating all that capital into their highest conviction tickers. Which means maybe they're selling Palantir and all these other ones to rotate it into their top picks, which are like Zoom and Roku and Tesla. But it really starts raising questions when you look at stocks like Palantir, which were one of the top holdings in many of her funds. Just like four or five months ago, What has really changed in the company since? That original research that they did that convinced them to buy into the stock? I mean, in my view, they've only really gotten better in terms of the fundamentals.

Talenteer has grown out their commercial segment dramatically. They're getting very, very good in terms of margins. They're probably going to be profitable In a couple quarters, they've brought in some heavy hitting customers. Their margins are improving.

I know that there's some hubba Bubba about their S-pak investments, which make up like nothing of their overall revenue. People think that's a justification for the company to be worth like 99 less. And hey, you can like the company or not. But if you're looking at Pound here today and you looked at Pound here two years ago, there's nothing really fundamentally different that changed except for improvement of the business model.

It's not like they completely flipped on the type of business they are. Yet, Kathy Wood and their team completely flipped on them. If somebody was going and trying to sell out of all their growth stocks, trying to time when growth is going to go back up so they can buy at a much lower price, that would be one thing. Good luck doing that.

But still, that would be one thing. If on the other hand, you're doing what Ark Invest is doing which is going and panic, selling a lot of growth stocks to go and rotate into other growth stocks which are going down just as quickly. then. that really raises the question of what your intention is to me.

If I was going to summarize what frustrates me here: it's just this abrupt selling of stocks that they supposedly did a ton of research on a year or two ago and many of which they've bought the dips on over and over again with investors money, and now all of a sudden they're not worth any conviction whatsoever. Let's go ahead and panic: sell out of Paypal and Palantir and let's go buy more of the dips on Robin Hood which is just getting destroyed and whose numbers are likely going to be terrible for the upcoming quarters. It's very, very disappointing. I hope that Kathy Wood and Arkhan vest redeem themselves, but it's very frustrating to see the decisions they've been making as of late.

But anyways, aside from that, another bludgeon of a day, you've got the Dow down the S and P down, the Nasdaq down, the risky's down the S. P 500 is officially in correction mode at negative 10.78 10 is the threshold for being in a proverbial correction. and keep in mind that because of the back and forth, almost half of the drop in the broader market can be counted in the last five days. Andrew Slyman, a Portfolio manager at Morgan Stanley Investment Management, said about half of the time a 10 correction becomes a 15 correction and a quarter of the time a 10 correction becomes a 20 correction.

Now of course, the complicating factor or rather factors are the Fed is working against the market. Inflation has no signs of slowing down. As of late, Putin is continuing to cause a ripple of fear. There's no shortage of reasons to think that this time we may fall into that 20 plus correction, but keep in mind that it always feels like fear is never going to end, that the market is just going to keep going down to more and more and new and new lows.

The thing is that what you do when the market is in fear mode when that lovely vix is going up, determines what your returns are going to be over the long run. That's not saying go and buy everything, but it is saying make sure that you're not falling for the narrative, which is Stocks will never come back. I see a lot of analysts trying to factor in what Putin is going to do and putting Putin into an analysis formula for their stocks, but it's just not that simple. You can't put his whims into a formula.

My take is what my take has always been. I would focus on buying stocks that you see a lot of long-term value in regardless of what Putin does tomorrow, and regardless of what the market decides to do next week, I would focus on buying companies that aren't very, very cheap deals that you really believe in that you believe in almost as much as you believe in gravity and then don't flip-flop on them if you feel you've gotten a good deal. I really believe that more money is lost in the selling of stocks too early than it is in buying the stocks at the wrong time, so something to keep in mind. Anyways, folks that caps off this video, thank you to Masterworks for sponsoring us today.

If you have any questions, feel free to reach out to us below or join us on Ziptrader Circle. If you'd like to join us in Ziptraderu, I'll put the link below, have a good one and I'll see you in the next video.