ARKX; A Wax Poetic on making money on the Final Frontier
This is going to be an irregular post for me, as I cannot rightly do an analysis on ARKX, as it is an ETF and the holdings of it can change dramatically over time. But I can do an analysis on Cathie Wood's idea of ARKX, and what she is turning that into. For me, this is a retirement play. I can absolutely see ARKX trailing along for a couple of years, maybe spiking a bit in the short term due to the birth of the fund, and a new spotlight on its holdings.
This is also a love letter to a future un-realized; a possibility for the spread of humanity into the stars. And for this, there must be a general acceptance of a brand new ethos: We are scifi now.
It isn't a matter of dreams, but time that will bring us to the stars. If it isn't Elon Musk with his egomaniacal drive, then maybe Bezos with his cold Lex Luthor portrayal, or any number of other eccentric billionaires with a dream of conquering the stars. If not private, then perhaps it is a race between USA and China? Laughable, but there will no doubt be a role for Earth's politicians to rule over the future of Mars and Moon colonies, and that means there will be money to be made in contracts across a large swathe of sectors. While I am sure you could do some research to figure out which ones are the most likely to bathe in the green glow of hard core cash, why bother on this one? I don't think I could do as much research as ARK's team, and I couldn't diversify my investments in a safe manner across the field.
There needs to be transportation to Mars and space, there needs to be terraforming, construction, communication, there will need to be tools, and tools to make tools and novel tools for novel problems. There needs to be a company to fulfill every role of a new world base. Communication, both intra- and interplanetary. Every little thing is going to need to be built, redesigned, rebuilt, rinse and repeated until there exists 1 of 2 options:
We either can become a space-faring people, or we cannot. This is the drive that we have for ourselves. We are going to the stars, we have been going from before we knew what the stars were, and we are going to keep on going long after the brutal reminders of failure are spectres, stories of a foolish people meant to teach a lesson. Enough jokes, its here, its happening.
Cathie Wood's ARKX
Cathie Wood accepts this vision of the future, or at least in the progressive value of companies developing technology for this vision. If ARKK and every other ARK fund didn't do so damn well, would ARKX exist? Will there ever be something after ARKX? Who knows, but I do know that Cathie Wood likes to succeed, and as much as people hate her for doing it, she does it, a lot. She also seeks out companies who change the game, so when you look at an investment, you can't look at it like its the natural choice, otherwise everyone else would have done it, and there is no money there anymore. Furthermore, she has conviction. She isn't a new breed of billionaire investor, she's just open about it. She pulls out every page from Warren Buffets book, and while I have my own theories on what pages she will add in her own, she knows what she is doing, and it works. Cathie Wood is going to succeed because Cathie Wood refuses to let Cathie Wood do anything but. The same way Elon Musk succeeds, without ever letting something intelligent come out of his own mouth, he still seems to be pushing ahead. The same way Donald Trump just won't exit stage left, he refuses to let Donald Trump die. Not to say that there won't be some silver bullet wielding Sheriff that comes to town to put a stop to it, I just don't see it happening soon, and I don't see anything but glory for this new venture.
Cathie Wood is doing exactly what she says she does, she invests in industry disruptive technology, things that shake the whole field.
ARKX Holdings 4/2/2021
Let's review the top 10 holdings for ARKX as of 4/1/21, just to look for an insight into the strategy of the fund:
TRIMBLE: Agriculture/construction/geospatial/transportation --> Feels a little real-world world-building to me.
The 3D Printing ETF: Literally an ETF just for the general market of 3D printing
KRATOS: Space communication (military stuff too but how else do you make a buck)
L3HARRIS: General space contracting stuff
JD.com: No idea on this one
Komatsu: makes construction + mining equipment, lasers, thermoelectric generators
Iridium Communications: its a satellite-service company, they operate a constellation of satellites for worldwide communications
Thales Group: general military/space/defense company, builds electrical systems
Lockheed & Boeing: spacecraft need to be built
There are a bunch of random holdings that don't make sense, but nothing amounting to a significant weight of the ETF, and considering this is a nascent field, with most high profile IPOs coming up this year, the ETF should expand quite nicely.
The Play
Short term, I expect some explosive moves as the market is reminiscent of minesweeper right now. I am of the opinion that any real play at ARKX isn't a short term, but a long term one. I whole-heartedly believe in diversifying a portfolio, not just in fields, companies, asset types, but in risk and vision. The chances of ARKX poofing are pretty low compared to the chances of ARKX kabooming, at least in my mental gymnasium. While I have no idea how leveraged, or rather, over-leveraged Cathie's ARKs are, but I tend to agree with her movements. I agree that markets are going to become much more monopolistic than before. We are in a major brand consolidation, and have been for a while. ARKK doubling down on Tesla isn't fear, its conviction, or at a minimum, bravado. As long as Don Quixote's charge at the fearsome dragon is enough to stave it from tearing through TESLA's valuation anymore, then perhaps its a suit befitting.
I am not a financial analyst, I literally just started investing my money for real. I don't think you should believe anything I said, but I hope you will think about it, and maybe figure out the right strategy for yourself.
This is also a love letter to a future un-realized; a possibility for the spread of humanity into the stars. And for this, there must be a general acceptance of a brand new ethos: We are scifi now.
It isn't a matter of dreams, but time that will bring us to the stars. If it isn't Elon Musk with his egomaniacal drive, then maybe Bezos with his cold Lex Luthor portrayal, or any number of other eccentric billionaires with a dream of conquering the stars. If not private, then perhaps it is a race between USA and China? Laughable, but there will no doubt be a role for Earth's politicians to rule over the future of Mars and Moon colonies, and that means there will be money to be made in contracts across a large swathe of sectors. While I am sure you could do some research to figure out which ones are the most likely to bathe in the green glow of hard core cash, why bother on this one? I don't think I could do as much research as ARK's team, and I couldn't diversify my investments in a safe manner across the field.
There needs to be transportation to Mars and space, there needs to be terraforming, construction, communication, there will need to be tools, and tools to make tools and novel tools for novel problems. There needs to be a company to fulfill every role of a new world base. Communication, both intra- and interplanetary. Every little thing is going to need to be built, redesigned, rebuilt, rinse and repeated until there exists 1 of 2 options:
We either can become a space-faring people, or we cannot. This is the drive that we have for ourselves. We are going to the stars, we have been going from before we knew what the stars were, and we are going to keep on going long after the brutal reminders of failure are spectres, stories of a foolish people meant to teach a lesson. Enough jokes, its here, its happening.
Cathie Wood's ARKX
Cathie Wood accepts this vision of the future, or at least in the progressive value of companies developing technology for this vision. If ARKK and every other ARK fund didn't do so damn well, would ARKX exist? Will there ever be something after ARKX? Who knows, but I do know that Cathie Wood likes to succeed, and as much as people hate her for doing it, she does it, a lot. She also seeks out companies who change the game, so when you look at an investment, you can't look at it like its the natural choice, otherwise everyone else would have done it, and there is no money there anymore. Furthermore, she has conviction. She isn't a new breed of billionaire investor, she's just open about it. She pulls out every page from Warren Buffets book, and while I have my own theories on what pages she will add in her own, she knows what she is doing, and it works. Cathie Wood is going to succeed because Cathie Wood refuses to let Cathie Wood do anything but. The same way Elon Musk succeeds, without ever letting something intelligent come out of his own mouth, he still seems to be pushing ahead. The same way Donald Trump just won't exit stage left, he refuses to let Donald Trump die. Not to say that there won't be some silver bullet wielding Sheriff that comes to town to put a stop to it, I just don't see it happening soon, and I don't see anything but glory for this new venture.
Cathie Wood is doing exactly what she says she does, she invests in industry disruptive technology, things that shake the whole field.
ARKX Holdings 4/2/2021
Let's review the top 10 holdings for ARKX as of 4/1/21, just to look for an insight into the strategy of the fund:
TRIMBLE: Agriculture/construction/geospatial/transportation --> Feels a little real-world world-building to me.
The 3D Printing ETF: Literally an ETF just for the general market of 3D printing
KRATOS: Space communication (military stuff too but how else do you make a buck)
L3HARRIS: General space contracting stuff
JD.com: No idea on this one
Komatsu: makes construction + mining equipment, lasers, thermoelectric generators
Iridium Communications: its a satellite-service company, they operate a constellation of satellites for worldwide communications
Thales Group: general military/space/defense company, builds electrical systems
Lockheed & Boeing: spacecraft need to be built
There are a bunch of random holdings that don't make sense, but nothing amounting to a significant weight of the ETF, and considering this is a nascent field, with most high profile IPOs coming up this year, the ETF should expand quite nicely.
The Play
Short term, I expect some explosive moves as the market is reminiscent of minesweeper right now. I am of the opinion that any real play at ARKX isn't a short term, but a long term one. I whole-heartedly believe in diversifying a portfolio, not just in fields, companies, asset types, but in risk and vision. The chances of ARKX poofing are pretty low compared to the chances of ARKX kabooming, at least in my mental gymnasium. While I have no idea how leveraged, or rather, over-leveraged Cathie's ARKs are, but I tend to agree with her movements. I agree that markets are going to become much more monopolistic than before. We are in a major brand consolidation, and have been for a while. ARKK doubling down on Tesla isn't fear, its conviction, or at a minimum, bravado. As long as Don Quixote's charge at the fearsome dragon is enough to stave it from tearing through TESLA's valuation anymore, then perhaps its a suit befitting.
I am not a financial analyst, I literally just started investing my money for real. I don't think you should believe anything I said, but I hope you will think about it, and maybe figure out the right strategy for yourself.