After another day of bludgeoning in the streets, the S P 500 is down 1.34 the Nasdaq down 2.11 and the Dow down 1.11 We also have Titans of 2020 and early 2021 like Tesla down, just huge dramatic drops. Then we also have funds like Kathy Woods Arkan Vest erasing all of 2021's gains. In fact, the flagship Arc fund is having its worst downturn since the Covid Crash. Yet, Kathy Wood is saying that she likes this.

I actually like the fear that we have experienced. I I I like it. mostly because I don't think it'll last. And yesterday she went on to say that she actually has a plan for this When uh, investors and speculators are selling our stocks, creaming them our highest conviction stocks.

We won't be buying them when they are hyperventilating about our stocks. We will be selling them. We will be taking profits because we know there will be another source of controversy. We'll get another bout of volatility.

Pretty powerful statement because a lot of bears are coming out from hibernation and they're saying that you should expect all growth stocks to go down 90. But at the same time, you have Arc adding more and more capital, some of the same place that it was before. Pltr, they bought 2.6 million more shares just yesterday. Tesla.

They are more bullish on than ever. They're talking about raising the price target for Tesla. They went ahead and Dip bought Zoom and if you look at their trades for the last few days, they've been buying a lot of these so-called bubble stocks like crazy. Well, in this video we're going to be talking about why Kathy Wood is still buying what her thought process is on the overall market, how long she expects the sell-off to continue, and the only thing that I ask in return is that you hit that ravishing like button and also don't forget to subscribe.

So first off, in talking about why she isn't terribly worried about a short-term sell-off in Innovation stocks and a push towards more value stocks. This is what she said. I think it's great because the Bull Market is broadening out to other sectors. Uh, and that can only be a good thing for us.

That's interesting. So she's framing this as a broadening of the market instead of a permanent shift of the market, because she's taking the perspective that this isn't necessarily this huge bubble popping that's never going to come back. She actually sees this as just a healthy shifting of capital and is framing it as a healthy progression of the market. What would be very negative for innovation-based strategies is if the market continued to narrow so that only Innovation Strategies worked.

Because that's what happened during the tech and Telecom bubble, and we all know how that ended. There was too much capital chasing too few opportunities back then too soon. So I guess what she's inferring here is that what we were seeing in 2020 and 2021 was the market narrowing, but that if it was allowed to go on too fast and for too long without some broadening, then you'd have a much bigger problem similar to what we had in the dot-com bubble. And then overall she sees this as a good thing for innovative strategies because if we get that broadening out now, we get a more broad bull market that then can lift up innovative plays later on.

She goes on to say too much capital chasing too many opportunities too soon is a big problem and that's what causes huge bubbles. There was too much capital chasing too few opportunities back then, too soon. Now some people are going to say, well, yeah, but wasn't that happening a couple weeks ago and that's the bubble popping When you say too much capital too soon, where do you draw the line of that? Because truth be told, a lot of Ark's growth stocks are factoring in 10 15 years of technology improvements and most of them have no profitability right now and most are up hundreds of percentage points. So a critic could say, well, that's exactly what happened with Arcs Fund, But that's also based on your argument for what these are worth because some people would say like, okay, well, if it's factoring in 10 15 years of growth, but it's only trading at two percent of the value that it can get to in 10 15 years, then maybe it's not so over factored in.

And given the exponential growth rates we're talking about say 82 growth on average per year in the electric vehicle market If you give us that we are managing value portfolios. I truly believe that if you look at the dot-com bubble and some of the players here, Amazon was one of the big bubbles that popped. You saw it get cut into a tenth of its valuation at the time. Obviously, Amazon ended up being a huge winner over the next 10 20 years.

But at the time, if you were an investor in Amazon, you just lost 90 of that value. So I think that if you're listening to Kathy Wood, what she's saying here is that if you had gotten more of a broadening out of a lot of these dot-com bubble stops, then maybe they wouldn't have gone up as fast or as high as they did. Maybe it would have broadened out halfway up the trend and then you would have saw some cooling off. But overall, it would have converged to the true value Anyways, if this was more of a slow steady uptrend and you allowed the rest of the market to broaden, then maybe instead of this huge up and down movement, you'd see like an up and then a slow down and then you'd see it go up slowly.

That way you don't get these total blowouts where the bubble pops and everybody gets burnt, because if you allow the rest of the market to broaden, that basically allows the stock to grow at a more steady pace. Instead of all that capital, just focus on one market and then overdo it and then everything else falls and then that goes and pops. So my take is that what she's saying is that a broadening of the stock market overall is a good thing. It's bad for innovative tech stocks in the short term, but over the long run over the next, you know, five, six months, the next couple years it's going to be better for the long-term price appreciation, So taking some heat now may give us more opportunities based on Kathy Wood at least.

Then She goes on to say that the last time we got broadneed out was in 2017 and that her funds and a lot of the tech stocks and innovative sectors had been hit huge during that time. but that after the broad Indian out and after all this happened started picking up rapidly and they did very well and she sees that happening again. And let's let's put that on. After the market had broadened out, was 2017 was a fantastic year for the for the equity market generally both uh, cyclical value, uh, and and growth.

Okay, so hopping over to the stream she did yesterday on Benzinga, she's asked basically if we are in a bubble and she's wrong and this isn't a short-term correction, then should we be panicked about overvalued innovative stocks, this is something that I want you to see because a lot of people are sort of panicking about their higher conviction plays. A lot of people are looking at their stocks and like, hey, well, maybe this is up too much. Maybe they're overvalued based on the potential. Maybe the market factored in 10 years of growth and we won't get there again until 10 years.

Maybe you believe in the stock, but you're like, well, what if that takes 10 years to get there And given the exponential growth rates we're talking about, say, 82 growth on average per year in the electric vehicle market, If you give us that we are managing value portfolios, Arc targets plays that are in exponential growth sectors and in exponential growth sectors. Even when you have the market recognizing a decent amount of these, they're still looking pretty cheap, at least according to Kathy Wood. However, this is another thing that's very important if Cathy Wood is actually wrong and we're in for a broader correction. Well, what is the strategy that Arc is going to be following? What we will do in an extended correction is we will concentrate the portfolio once again to the top 30 35 stocks.

Um, because those are the ones in which we have the highest conviction. So she's going to be holding her higher conviction plates. When it comes to short-term trading, you want to keep Short-term plays short-term and long-term plays long-term What does that mean? Well, if you're trading, off entry-day price action, you're trading off a couple day price action or a quick beat down. Well, that's a short term play.

If you actually believe in the play long term, well, you can buy it at a price that you believe is undervalued and then just hold it through the volatility because eventually you think it's going to go there. Obviously, Arc is long term minded, but the way that they trade is very similar to this, and she's been saying that, Okay, so for you, Bitcoin and Mara and Riot Traders, this is what she says about Bitcoin. Meaning, if we go into an inflationary period, cash will lose its purchasing power. Bitcoin will not.

In fact, Bitcoin, as you can see recently, is gaining purchasing power pretty dramatically. It's it's what's called a deflationary currency. All that means is your purchasing power goes up over time. She's basically saying that if we indeed have high inflation, that she expects Bitcoin to break out.

sort of what we were saying yesterday that you're going to start seeing a break of the stock market With Bitcoin. We haven't seen that yet, but I think that if you look over the next couple of months, you're going to start seeing Bitcoin start a break correlation with the overall market. There's a decent amount of speculative money that's being propped up by cheap, cheap interest rates, and there's also some little money that's going to be scared by the overall market. Once that goes through, you're going to start seeing that inflation come in, and then when that happens, I think you're going to start seeing Bitcoin start taking off again.

So what does she see as causing this overall market volatility? If you look at, uh, short-term traders there, there are measurements of their activity record shorts placed on the bond market. So this, they've been playing the momentum here. Uh, as interest rates go down. I mean, go up.

Prices go down. So traders have been shorting the bond market at record rates and and I looked back as far as 20 years. So we probably are in for a little bit of a pause here in the movement of rates. Uh, going up.

So she's saying that because so many traders are shorting the bond market at record paces, you're seeing bond yields go very, very high. And of course, as bonds get shorted and brought down, their yields go up. And this seems especially relevant as you saw the Fed. Talk about inflation today and bond yields go up even higher.

But as these yields go up, a lot of these growth sectors get spooked because it makes less sense to take on that extra risk of growth sectors that could be a little bit farther out. But I think the interesting thing about this is that she's basically saying that there's too much bearishness in the bond markets right now that this is a total overreaction. But going back to what she said earlier about the broader trend here, she says that the broadening of the market is actually a good thing instead of just being focused on innovation because most of 2020 and early 2021, we saw it mostly focused in innovation and started rotating a little bit in the last couple of months, but the innovative sectors really started picking up. She goes on to say that what the market is really doing is leading the Fed, instead of lagging behind the Fed.

What it's doing is saying Okay, well, in the next couple years, you're going to see Fed be forced to increase interest rates, and thus the stock market is factoring in that. Now investors see an economic comeback that's coming in Very, very strong, and they're worried we're going to have huge inflation and that the Fed's going to have to raise interest rates. so they're factoring in that ahead of time and the stock market is starting to sell off in order to prepare for that. But she actually goes on to say that she's not so worried about inflation.

She thinks that technology is going to outpace inflation. What she means by that is that technological improvements can be a deflationary pressure because creating new technologies makes things more efficient, cheaper, and more accessible. With inflation, of course, you're getting less value per dollar, but with Innovation, you get more value per dollar because things get more Efficient, Now, I don't know if I'm completely on board with this argument. I think that a lot of the technology that Arc is really a big fan of.

A lot of that technology I don't think is going to be a huge thing for the next five to ten years. It seems like she might be talking more in the longer term sense, like the decade since, but who knows. I think the big takeaway for us as traders is that hey, we should make sure that we're keeping long-term plays long-term and short-term plays short-term If it's a longer-term play, you have to be willing to stomach the instability. If it's a shorter term play, you could play it confirmation to validation like we've always talked about.

But if it's going to be a longer term play, you're going to be holding it for a couple months or a couple of years. I would say let's make sure that you have the conviction to hold it. Let's make sure that you believe in it because you're going to sell out in a panic if it goes too cheap. Anyways, folks, this was a video that a lot of you guys have requested me to make, so I went ahead and made it.

Go ahead and comment below If you have another video that you'd like me to cover, or some anxieties that you'd like me to cover about the market, anything you'd like me to break down, I'll be happy to take on the challenge. Of course a lot of people always ask me Charlie what broker should we trade these stocks on and I always like to tell them Weeble Weeble is a great platform. They offer pre-market and after hours trading. A lot of the biggest moves like Cciv workhorse.

All of that good stuff. A lot of those big moves happened in the pre-market and the after hours, so if you didn't have a broker that allows you to trade during that period, well, you'd be scruggled. I'll put the link below, but they are a great platform and I think they're worth checking out. And if you'd like to learn how to trade, would like access to our private chat and daily morning briefings as well as our price target updates.

When we do update our price targets, well, I will go ahead and put the link to Ziptrader you below. You can learn all about it on the website see if it's a good fit or not. Take some time to think about it. We want to make sure that you're a good fit and you feel confident and ready to put in the work.

So anyways, folks have a great day and I'll see you in the next video.