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as a trader, as an investor, but I also understand as a trader that when you build a base like that, one of two things will happen . It will either collapse, and this is what many "bears" were betting on, throwing all their strength into it , or it will make a leap upward. Obviously, we believe she will make a breakthrough .
And the longer the base, let's say 5 years, you know, the more powerful this surge will be . So we're really looking forward to it. Hi, I'm Stephen and this is "Solving Money Problems." If this is your first time here, welcome. If not, welcome back. So, this was Katie Wood of Arc Invest, a woman who I believe will go down in history as one of the most outstanding investors of our generation.
I know it's too early to tell, but I believe that because of her mindset and the way she has built the Ark funds, they will outperform, almost destroy, the broader market. Only time will tell. The clip you just saw came out in April 2019 , a little over a year ago, when Tesla shares were around $200, and since then they have almost quintupledโ5x in a year or so.
This is a real breakthrough. How did Katie know? Why was she so confident? Why was she able to predict the future with such accuracy? Because she understands breakthrough innovations and technologies. The truth is that most of the financial media, most Wall Street analysts, etc., simply do not understand this new world.
Disruptive technologies, exponential growth, cost curvesโthey just don't get it. This is a foreign world for them. These things are not intuitive . So if you don't take the time to dig into it and really learn, not just superficially: "oh yeah, cool." What is this exponential thing? Okay, cool. Computers continue to get better and cheaper.
Yes, cool. I understand, dude. Unless you really dive into it deeply, because these things are not intuitive. You need to intellectually understand these concepts, as you cannot rely solely on feeling. Your intuition will not point you in the right direction. A great example: if you ask someone if they will walk one meter , and then take another step of 1 meter.
So, you go linearly: 1 meter, 1 meter, 1 meter. By doing this 30 times, you will cover 30 meters. If you take exponential steps: 1 meter, then 2 meters, then 4 meters, and so on 30 times. You will take over 1 billion steps, enough to circle the Earth many times. Most people would n't intuitively predict this.
They can name a number that is, of course, more than 30, but to reach billionsโ no. Unlikely. And that's the point. You have to look at these things and the underlying technologies and understand where this will lead. If this constant cost reduction or technology improvement continues, as it has for 10, 20, 30...100-plus years, it's predictable, if it continuesโwhat's going to happen to this technology, what's going to happen to cost efficiency, etc.?
So, ARK Invest knew what was coming because they had done the work and understood this new world, and I think that's the point I want to emphasize in this video. People who still didn't understand what Tesla was doing, or believed all the rumors and nonsense from skeptics who said they had cash flow problems.
No, they managed their cash flow very well and invested as aggressively as they could in scaling because they wanted to win, and we're seeing that happening now. Okay, there was logic in their madness . But some just heard, "Oh yeah, Tesla , they're going bankrupt." And they looked and said, "Oh yes, I believe, " without doing their homework.
They didn't understand how big the opportunity was or why it was so important to invest so heavily and aggressively in scaling. This is why Tesla looked like a terrible business: people who didn't dig deep took a quick glance and thought, "Yeah, their financials are terrible." "I won't even come close to that.
" ARK Invest, Katie Wood and others. People who truly understand disruptive innovation looked at trends, technologies, not quarterly reports. Oh, cool. No, no, no. They look at the big picture. They saw Tesla moving toward this inevitable future. And that's why they won. That's why they were able to predict it.
Clearly, the market is starting to see how far ahead Tesla is. But I still don't truly believe that the broader market understands what changes are actually happening. It's like, "Oh, that's cool." Tesla is winning in electric cars, but electric cars are very few. They are not like that . No, no, no, no.
Electric cars will virtually take up 100% of the new car market before you know it. People still don't see this fact. So, even though Tesla stock has been skyrocketing recently, I still believe it has significant upside potential in the coming years as more people realize this imminent breakthrough.
Hi everyone, if you want to support the channel and get up to two free shares, check out the links in the description for Weeble and Stake. Let 's get back to business. You lean towards disruptive technologies. What exactly does this mean? How exactly do you choose the stocks that go into these actively managed exchange-traded funds?
Of course. Well, our selection is not a standard. Our selection is our research. Our starting point is a top-down approach, we look for learning curves or cost reductions associated with technologies, and they are fairly stable over time, depending on the technology, and in terms of timing, we want to make sure we are ready to go into the broad arena.
So, having identified cost reduction, we ask questions. So, for every percentage point decrease in price, how much does demand increase? Are we ready to enter the broad arena? So in the late 90s, if we had asked that question about most of these technologies, the answer would have been "no." And yet investors chased them and valued them based on the number of views and other things like that.
Today they are becoming a reality. We are ready to enter the broad arena. And the fear I see around when it comes to volatility, breakouts, or anything that's not in the index is palpable. That's where the real opportunity lies. The dream turned out to be premature. Everyone who chased her got burned.
Today they are afraid, even though they should invest in it. I think Katie nailed it very well. Essentially, the resistance she sees when people don't even consider exploring these breakthrough technologies is an emotional reaction. A lot of people got burned in the early 2000s and 2010s because they rushed and got too excited.
And now, instead of approaching it logically, they're left with these emotional scars. They simply don't see the clear picture. You at ArcInvest have become very closely associated with one particular stock, and that is Tesla. Because you made a lot of noise by setting a target price of $4,000 per share.
Yes. This means that you are obviously very bullish on Tesla and hold these stocks in your funds. Is this true? And if so, is it simply a buy-and- hold strategy, hoping for success in the next 20-25 years, or is your approach to owning a stake in Tesla different? Well, this is our biggest position. But before we get to that, we, and I, uh, our confidence has grown over the last year or so .
This is our biggest position. It's down about 29% this year, and it's always been our biggest position this year. And yet, our fund grew by 28%. How is that? How does this happen ? Yes. How does this happen? This is because last year, when genomics was under pressure due to concerns about reimbursements, pricing, etc., we invested heavily in it.
Eh, so you're buying low, right? We have actively invested in these assets. And so our second largest position, Invite, which we consider one of the most important companies in molecular diagnostics, taking advantage of the declining cost curve of DNA sequencing, is up 125%. Last year it fell to $5.
Today it is $18 . So such investments really paid off. And this applies to the entire genome sector. We're doing the same thing this year with Tesla, but our confidence level there is so high that it has never left our top spot. And why do they have such strong confidence? Again, they did their homework.
They understand the trends that are occurring and reduce technology costs , allowing them to do more with less . We learned about their artificial intelligence chip. We saw the specs, and our analyst James Wan came in from Nvidia. This is what they're replacing, and he said, "Oh my god." And he's going to write about it this Wednesday.
You know, it's ahead of the competition, and they're at least three, if not four years ahead, and a few months later, the execution improved when they not only didn't lose $700 million in the third quarter, but they made $1.4 billion in cash flow. So that was a gap of about $2 billion from consensus estimates.
This is what happens with exponential growth. Once again, Katie hits the mark. The next time you see an expert on CNBC or another channel and they're confused about a company or its valuation , like Tesla, everyone's just scratching the back of their head for the last 6 months and saying, "I don't get it.
" Why are stocks so expensive? I don't understand. I don't understand. Ford has such a multiplier . I don't understand. I don't understand. "It's just a car company." You probably see people who are confused about a disruptive technology , a form of innovation that they don't quite grasp and haven't been able to properly understand yet.
So it's just incomprehensible to them . Arc set a target price of $4,000 over a year ago for a reason . Now that Tesla has suddenly made a leap, people are saying, "Come to your senses, let's take another look." What did I miss? They missed the inevitable market crash. Again , this is why it's important to understand trends and technologies over time.
Don't look at financial statements to understand whether this company is a good investment. Look at the technologies and the industries they are entering, changing, and innovating. What does this lead to? Can a company not raise funds? Of course. Oh, she can raise funds. I don't think Elon wants to do it at that valuation.
I think he believed, and the company believed, that their Autonomy Day last week would give them a great opportunity, that once analysts understood how far ahead they were of their competitors, whether it was Waymo or Cruise, in terms of autonomy and how quickly it was going to evolve, they would be able to raise capital.
What happened last week made me realize that the analysts who follow this stock don't know how to analyze it because it's not a technology stock. That's because it's not a car company. Yes, these are batteries. These are public services. It's something for everyone, and no one can put it all together.
Another fantastic argument from Katie. Why are analysts consistently wrong about Tesla, and why have they been wrong for half a decade or more? That's because they don't understand this company at all. They don't understand. And I'm not belittling analysts who have been in the auto industry for 10-20 years and then are handed Tesla to analyze.
It's not their fault that they do n't understand anything about Tesla, because it's not a car company. We have formed our research teams . We have divided them not by sectors, but by innovation platforms. So we have robotics, autonomous vehicles or robots. Energy storage, they will be electric. Artificial intelligence, they will work on artificial intelligence.
Transport as a service. We have four analysts working on this . I don't think research departments are ready to analyze this campaign. There is incredible inefficiency, incredible inefficiency in this action. This is our most promising idea for a reason. But I look at a stock like Tesla, and over a 5- year period it has shown nothing, remaining one of the most volatile stocks in the world.
At least among mega-cap stocks. So, I look at this and I could pick and choose convenient numbers, but I can say, you know, actually from the high of 2014, uh , you lose 20% holding Tesla stock for 5 years when they supposedly had a huge competitive advantage . There were no competitors in their niche .
The company was assessed as technological. Uh, and stocks are really at a point now where it looks like there are some balance sheet issues. Competition has never been so fierce. Although, I think you will deny this. I think I understand your argument about them not being a car company. They are not a technology company.
like this. But even more, let's take an electric car, the Model S. It was released in 2012. None of those competitors even came close to him. Seven years have passed. Now let me take your other argument. This trading range. You as a trader, an investor, but as a trader also understand that when you build a base like that, one of two things will happen .
It will either decline, and many โ bearsโ were betting on this, using everything possible, or it will make a breakthrough. Of course, we believe that there will be a breakthrough, and the longer the base, you say five years, the longer the base, you know, the bigger the breakthrough will be. So, we're really looking forward to it.
And with the advantage of time, a little over a year later, Tesla stock is now worth around $1,400 per share, baffling most of the mainstream media. Most Wall Street analysts are still confused, not understanding what is happening. They chase the stock with price targets week after week because it is rising.
They did n't even get close to her . The average Wall Street price target is currently about half of Tesla's current price. Yet analysts simply don't understand this. And this is where, in my personal opinion, lies a great opportunity. Until I see mainstream financial media and Wall Street analysts consistently talking about the same topics, technologies, and issues.
Cost reduction, exponential improvement in technology, robotics, artificial intelligence, big data. In my personal opinion, they have nothing useful to say about Tesla. I'm Steven Mark Ryan. This is " Solving the Money Problem" and I love you all. Oh, by the way, guys, if any of you are interested in learning more about disruptive technologies, exponential growth, etc., I have only one book to recommend.
It was written many years ago, and it is extremely interesting to reread it today, because it contains many predictions about future technologies; The book is called The Singularity is Near by Ray Kurzweil. I'll leave the link in the description. Love you, and don't forget about your free shares from Weeble and Stake.
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