Okay folks, so Kathy Wood just appeared today on Cnbc and Bloomberg and she's greatly escalated her tone and dropped some new details that I think you'd appreciate hearing. Keep in mind that I've been covering Kathy Wood a decent amount during the last couple of weeks. Why? Because I like to focus on winners. not when they're winning, but when they're being tested.

I want to see what they're doing and what they're saying when they're being tested. So we're going to be watching together her interview today. We're going to be digging into what it all means. And of course, at the end of the video, we're going to be recapping some of our plays.

and the only thing that I ask in return is that you hit that ravishing like button And also don't forget to subscribe Kathy Wood Kathy, Welcome back to the show! Good to have you! Great to be here Sarah, Thank you! It's been amazing to watch your rise and your funds rise over the last year and yet the past few weeks have been absolutely brutal. The Ark Innovation Etf down 31 from from the recent highs it took Such a massive hit folks. I mean, I know she's confident, but damn, look at this. This is Arc A R K K, their flagship.

Fun. Just massive, beat down. Oh, but I mean when you look at the context of how far it's up, if you were an early investor in this, I mean you probably are sweating because of the beat down. But still, overall, you're still up massively.

How concerned are you about these rising interest rates and what that's doing to a lot of your high growth companies And the questions about valuations? Uh, well. we've been struck that, uh, the market never priced in 0.5 one or 1.5 percent interest rates. Uh, we think the market never believed interest rates would stay down here. And so she's basically saying.

she thinks the market was smart enough to know that interest rates were never going to stay at record lows, that eventually as we left the crisis, you'd see interest rates start picking up, and I think that's pretty evident from the overall trajectory. It doesn't take a goose with two chickens to look at the interest rate chart from the lows in the summer of 2020 and see it heading up pretty consistently back up to pre-covered levels throughout the end of 2020 and early 2021.. Obviously, we're looking at bond yields, but the bond yields are what represents where they think interest rates are going to go. I agree with her.

the problem wasn't so much that interest rates are going up, but rather interest rates are going up a lot faster than people expected. And that's worrying folks. And that's what she goes on to say here. We do think the speed of the increase in interest rates is scaring people.

Uh, it became very comfortable in a low interest rate environment. Nothing much changing. The Fed has our back and so forth. Oh yeah, Papa Powell had our back last year, folks.

The Fed has our back and so forth. Uh, to to become involved with the market. And I think, uh, this has shaken, uh, a lot of investors up, maybe low interest rate environment set the stage for a lot of short term money to take out margin and invest that temporarily into Momentum stocks so they could ride the wave of 2020 in 2021. And that short term money probably factored in slow and steady interest rate increases.

But now that it's raising a lot faster, they're getting worried They're like, okay, let's pull that short-term money out of the market. Let's pull it out. keep it on the sidelines or put it into value plays that have more immediate returns. She goes on to say that bonds are in a bull market and have been for the last 40 years.

the bond market, in particular. We've been in a 40-year bull market in bonds, seemingly inferring that it's unlikely that interest rates are going to keep going up because remember, bond yields rise opposite of bond prices. So when you're insinuating that we're in a 40-year bull run with bonds, you're kind of saying that the trend is very, very clear. Interest rates still have a lot of downward pressure on them.

But then she goes on to talk about confusion and paralysis. There's a lot of, uh, confusion. and uh. I I think there's a little bit of paralysis here.

I also think that there is a very rapid rotation now into value stocks. We've seen energy up year-to-date uh, 39. financials up about 16 percent. Uh, those are traditional value sectors.

Uh, and so I think that's been part of the reason for Ark's uh, setback. So she's saying there's been a rotation into value plays. This is pretty obvious based on today's trading in the last couple of weeks. But one thing that I want to add to this is that if you think about it, if you have rising interest rates, that means that borrowing money is more expensive.

That means if you think that interest rates are going to go up substantially in the future, you want to find a place that's less risky because now money's more expensive. so it's costing more to take that risk. But you still want to get a return. You still want to make that moolah.

So you want to find a place that's actually going to be growing in the next couple of years so that you can get a good, quick return. Maybe you understand that you're going to have lower reward, but if you have less risk and you have more expensive moolah, then it makes sense to do that. And right now you're seeing a lot of people flock to those recovery plays. Value plays in the broader market plays that have a lot of immediate growth in the next couple of years as we leave.

The pandemic are also more stable and less likely to burn investors. Some of the surest bets over the next couple of years are going to be the recovery plays that were hurt by the pandemic. Because we'll no longer be in the pandemic. You combine the fact that money may be getting more expensive because of interest rates, with the fact that a lot of these tech growth sectors are out way above all-time highs, and the fact that the rest of the market hasn't really caught up even nearly as close to them.

And you get a perfect environment for people to say. Okay, well, why don't I put some of that capital into those recovery plans? Why don't I put them in and broaden out the overall market so that we can buy some of the sectors that are a little bit more obviously undervalued. And then when we're confident that we can't get the return there anymore, then we can go back and pile into the growth sectors. Okay, so here she talks about how growth sectors cooled off in 2016 and 2017 and broadened out the market.

Everything else kind of grew similar to what's happening right now. This isn't anything new we talked about this last week. This is kind of deja Vu. She's kind of reiterating herself here, and if I could add a little perspective to this.

This happened to us in the Fourth Quarter of 2016 as well. Uh, right after uh, President Trump was elected. Our strategies went negative and what I said at the time and what I believe now is that the bull market was broadening out. I think that would have much rather preferred a stable, stable, but very steady increase maybe 15 20 a year instead of something that goes up hundreds of percent and then has a huge blowout because it has to cool off and breathe.

Maybe she wouldn't have gotten as big of a praise or celebrity as she did in 2020 because of her success, but then she wouldn't have that same pressure when you have the huge downtrend. Now, I don't think she personally cares too much about the bad Pr. she's focused on the future. She does this as a game.

It's fun for her, but reasonably. What I think she's saying without saying is that if this had just been a steady run, nobody would be complaining and net in effect. She's kind of insinuating that over the long term, this is like nothing. It's a dip in a fund that she sees is going much, much, much, much higher and then basically going up 200 in a year and crashing 40 and then going up again.

You know, 30, 40 the next year. It all kind of averages out to the same thing as if you had that steady 20 uptrend in the interview. She goes on to be questioned about some of her big plays like Tesla, and I get the sense that while Kathy Wood is trying to frame this as the broadening of the market, the media or Cnbc in this case is trying to frame this as as equivalent to the dot-com bubble. To me, it seems like they're saying kathy, wait a second, You're saying that it's broadening out, the market is broadening out.

But are you sure this isn't the second dot-com bubble, How do you know that your plays aren't going to cool off 99? We're not in the tech and telecom bust we are. 20 years later, all of the seeds for what is happening were planted back then. Now they're coming to fruition. If you look at this Youtube video she uploaded a few days ago, she actually said this was a gift.

What these last two weeks have done is handed. Uh, those who are averaging in to these sorts of strategies. Any innovation strategies. A gift.

She seems to suggest that people who are averaging down will be rewarded. Which is contrary to a lot of analyst opinions who are saying oh no, these you will not be rewarded. Do Not buy the dip because these are going down 50, 60, 70 and will never come back. And some that do may come back 20 50 years from now.

But the idea that she's going out and saying hey, if you're averaging down, this is a gift to you. It's actually something that's a very, very bullish statement in terms of a bubble. Here's what she said in terms of accusations and worries about Ark being in a bubble. So this notion of a bubble I think is born once again out of the benchmark sensitivity and backwards looking nature of a lot of institutional investors out there.

By benchmark, she's basically comparing growth stocks her stocks to blue chip stocks in the S P and down talking about how Wall Street analysts tend to favor companies that have a very strong and long-term track record with many of the traditional metrics for analyzing growth and health. And because a lot of her companies are investing very, very heavily in themselves and not trying to reward shareholders with dividends or trying to cash out. Instead, they're basically investing all of their profits into themselves and also prioritizing a lot of business tactics that analysts hate, because that means delaying profits. A lot of people will say like, oh, if you can't make a profit this year, then I don't care how much money that stock that company can make five years from now.

The other thing I'll say about this is what they should be worried about. Uh is is not our strategies or innovation based strategies. They should be worried about their strategies. She's saying that Grove stocks are less of a risk than big mainstream blue chips that have been around for decades.

She's basically telling analysts, hey, you think that my stocks are risky bubbles? Well, your stocks are risky value traps. This is like a boxing match between Kathy Wood and the rest of Wall Street. She's arguing that a lot of the value plays that people are buying up right now are actually value traps over the long term. They may do well over the short term as we recover, but their value traps over the long term.

They should be worried about their strategies because the other side of disruptive innovation is creative destruction. And when we're talking about the S P 500, we think creative destruction is going to impact nearly 50 of the S P 500.. So she thinks mainstream stocks right now are doomed in the long run because they are focused on creating value over the short term for their shareholders and not so much caring about what happens 10 20 years down the line. At least that's her opinion.

Obviously, a company that is dedicating all of their resources and reinvesting back into their own company is going to be much, much better place to go and grow into the future and adopt new trends. So after watching her interviews today and over the last weekend, I think that my conclusion is that she does see a short-term sell-off in Growth Stocks, which isn't something new, a catching up with recovery plays and the rest of the S P 500, but that after the market has broadened out, you're going to start seeing the growth stocks pick up again. And that's what she saw happen in 2016 and 2017. and that's what she's projecting to see now and overall in the long term.

What she sees happening is that a lot of the S P 500 endow a lot. A lot of the big mainstream blue chip stocks are actually going to become value traps. He thinks that they're going to do well. in the short term they're going to have record profits, but then over the long term a lot of her plays are going to be big big disruptors and a lot of the sectors are going to be disrupted.

And that's going to hurt a lot of the big stocks that we know of today. Okay, I do want to do a quick recap on some of our plays. so Our Eyes Play Had another rally today. This was up on an Fda approval on Friday when we originally briefed on it that morning, and it continued its run this morning as well.

While I briefed on it both Friday and this morning, please keep in mind that this is a short term play. You're trading intraday fluctuations. You don't want to hold and hope with this, because eventually this trend will discontinue. The other one I want to talk about is workhorse.

So the Democrats introduced a bill to allow the Usps to procure an additional an additional six billion dollars worth of Evs, forcing 75 of vehicles being procured by the Post Office to replace its existing gas gas guzzling fleet with electric or zero emission cars. This caused Workhorse to rally a decent amount midday, and then they got halted by the Sec. As you know, of course, had a tantrum after losing the Usps contract to Oshkosh. It was widely expected that Workhorse would win at least some of the original contract, but Oshkosh took all of it.

So people are rallying this up now on. Perhaps the chance that Workhorse ends up getting the results overturned? Partially, we'll see what happens, But regardless, Workhorse is still pretty cheap at these prices Anyways, folks that caps off the video. If you have any questions, feel free to reach out to us below or join us on Zip Trader Circle. If you'd like to learn how to trade, which is very important in this risky market environment, go ahead and check out Ziptraderu.

We have a lesson by lesson guide on how to trade. We have daily morning briefings and of course our price targets. You can see everything that I'm thinking about all our main place. I'll put the link to that below.

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