Hello friends. We had previously posted in May about how the ARKK collapse shares a similar structure with the tech bubble collapse. Now we will give an update on the "Big Opportunity" that may be forming.
Investors will be drooling when they see a chance to buy shares of "innovation" within the wholesale price range of $30-$25. If you liked ARKK at $160, you will LOVE it at $30! As the clickbait thumbnail suggests, it is indeed a big opportunity for those who will be patient and press the big green "INVEST!" button. But it also carries some hidden risks that investors should not ignore.
Our plan is very simple. We will average into a medium sized investment on the ARKK index inside of the green Investment Zone box, and then ride it out for the next year.
In terms of the fundamentals of Cathy's index, they are not super amazing because she has purchased a lot of unprofitable or hardly profitable companies that don't really have any clear plans towards becoming profitable. Her largest holding at 10.1% weight is Zoom, which is an aweful business with no true moat and huge competition risks as well as a terrible P/E (TTM) of 27. Her second largest holding at 8.6% is Tesla, which is an even worse company run by a degenerate narcissist scammer with an unthinkably overpriced P/E (TTM) of 92. That's right, it would take you 92 years, or well over 1 average LIFETIME, to get your investment in Tesla back. And Cathy is still braindead enough to think it's a very good investment, based on her made up models that are not pulled out of thin air. Her third largest holding is Roku, which is yet another aweful business with no true moat and huge competition risks as well as a terrible P/E (TTM) of 89.
The bull case for "growth stocks" is that they don't need to produce much (or any) profit to be a good investment because they are expected to grow their profit margins exponentially into the future. However, this is not very sustainable, and it's not realistic for a company like Zoom for example to grow very much at all. In fact, Zoom would be more likely to shrink than to grow when you consider the fact that anyone could go ahead and make "another" Zoom, which would function the same or better, and rob revinue from the "real" Zoom.
It's interesting that Cathy claims to invest in the future of innovation when really she is investing in stocks that will be *destroyed* BY innovation. Tesla will be destroyed by water powered cars. Zoom will be destroyed by whatever the next greatest online video chat platform turns out to be. Roku will be destroyed by it's countless competitors within the streaming space such as Netflix. The fact is that she's not really investing in the future at all, she is investing in the past and crossing her fingers to hope newer and brighter innovations don't outshine the innovations she has already bet big on.
So then what will happen to cause ARKK to outperform over the following years if it's really so terrible?
Well, we can see that ARKK has also made small investments into many different highly speculative stocks which have the legitimate potential for massive growth if they end up getting lucky with regulatory structure and innovation. So most of the growth could end up coming from a few small slices of the pie that end up rising exponentially. We could also just see that more degenerates become willing to speculate on growth stocks once again, which can be ignited simply by the prices rising. Within a week, soft whispers of a "ShoRt SquEeZe" turn into screams from the rooftops about the DD on the ARKK MOASS.
Thanks for playing.
Investors will be drooling when they see a chance to buy shares of "innovation" within the wholesale price range of $30-$25. If you liked ARKK at $160, you will LOVE it at $30! As the clickbait thumbnail suggests, it is indeed a big opportunity for those who will be patient and press the big green "INVEST!" button. But it also carries some hidden risks that investors should not ignore.
Our plan is very simple. We will average into a medium sized investment on the ARKK index inside of the green Investment Zone box, and then ride it out for the next year.
In terms of the fundamentals of Cathy's index, they are not super amazing because she has purchased a lot of unprofitable or hardly profitable companies that don't really have any clear plans towards becoming profitable. Her largest holding at 10.1% weight is Zoom, which is an aweful business with no true moat and huge competition risks as well as a terrible P/E (TTM) of 27. Her second largest holding at 8.6% is Tesla, which is an even worse company run by a degenerate narcissist scammer with an unthinkably overpriced P/E (TTM) of 92. That's right, it would take you 92 years, or well over 1 average LIFETIME, to get your investment in Tesla back. And Cathy is still braindead enough to think it's a very good investment, based on her made up models that are not pulled out of thin air. Her third largest holding is Roku, which is yet another aweful business with no true moat and huge competition risks as well as a terrible P/E (TTM) of 89.
The bull case for "growth stocks" is that they don't need to produce much (or any) profit to be a good investment because they are expected to grow their profit margins exponentially into the future. However, this is not very sustainable, and it's not realistic for a company like Zoom for example to grow very much at all. In fact, Zoom would be more likely to shrink than to grow when you consider the fact that anyone could go ahead and make "another" Zoom, which would function the same or better, and rob revinue from the "real" Zoom.
It's interesting that Cathy claims to invest in the future of innovation when really she is investing in stocks that will be *destroyed* BY innovation. Tesla will be destroyed by water powered cars. Zoom will be destroyed by whatever the next greatest online video chat platform turns out to be. Roku will be destroyed by it's countless competitors within the streaming space such as Netflix. The fact is that she's not really investing in the future at all, she is investing in the past and crossing her fingers to hope newer and brighter innovations don't outshine the innovations she has already bet big on.
So then what will happen to cause ARKK to outperform over the following years if it's really so terrible?
Well, we can see that ARKK has also made small investments into many different highly speculative stocks which have the legitimate potential for massive growth if they end up getting lucky with regulatory structure and innovation. So most of the growth could end up coming from a few small slices of the pie that end up rising exponentially. We could also just see that more degenerates become willing to speculate on growth stocks once again, which can be ignited simply by the prices rising. Within a week, soft whispers of a "ShoRt SquEeZe" turn into screams from the rooftops about the DD on the ARKK MOASS.
Thanks for playing.
