Cathie Wood Open Letter

Cathie Wood openly shared with the financial community her extensive experience and insights accumulated over the years. In a letter recently released on the ARK Invest website, showed her experience trougt the years, Cathie Wood, the founder, CEO, and CIO of ARK Invest, discussed the market's overlooked innovations in 2022.

Wood noted that, in her 45 years on Wall Street and more than 30 years in portfolio management, she has never seen markets as dislocated as they were in 2022. Despite the challenges of the year, Wood believes that the market dislocation presents an opportunity for innovation strategies to thrive when equity markets recover.

The Next Generation Internet

In the letter Cathie Wood said that one of the key areas of innovation that Wood believes the market overlooked in 2022 is the next generation internet. Specifically, Wood highlighted the rapid advancement of artificial intelligence (AI) and the success of ChatGPT, a version of GPT-3 optimized for conversation.

ChatGPT signed up one million users in just five days, an impressive feat compared to the original GPT-3 which took 24 months to reach the same level. Wood believes that ChatGPT's potential to revolutionize the way we approach knowledge work is significant.

Connected TV: The Future of Advertising

Another area of innovation that Wood believes the market overlooked in 2022 is connected TV. Wood noted that in 2022, TV advertising in the US underwent significant changes as linear ad spend declined by 2% in real terms to around $70 billion, while connected TV (CTV) ad spend on the same terms increased by 14% to around $21 billion. Wood also highlighted the success of pure-play CTV operator Roku, whose advertising platform revenue increased 15% year-over-year.

Disruptive Innovation for Prudent Portfolio Management

In addition to these specific examples of innovation, Wood also emphasized the importance of disruptive innovation for portfolio management. According to Wood, an allocation to disruptive innovation is likely to balance a comprehensive wealth portfolio by providing access to potential exponential growth opportunities typically absent from broad-based indices and offering an opportunity to hedge against the increasing risk of incumbents being disrupted.

Robotics: Automation and Efficiency

Robotics is another area of innovation that the market overlooked in 2022. The increasing adoption of robotics in various industries, from manufacturing to healthcare, has led to greater automation and efficiency. In 2022, the global market for industrial robots reached $16.2 billion, with the automotive industry being the largest adopter of robotics technology.

The adoption of robotics is also increasing in the service sector, with the use of robots in retail, hospitality, and healthcare expected to grow in the coming years. Robotics technology has the potential to improve productivity, reduce costs, and increase safety in various industries.

Despite the challenges of 2022, there were a number of innovations that the market overlooked. From the next generation internet, to connected TV, energy storage, and robotics, these breakthroughs have the potential to change the way we live and work.

As an investor, it is important to stay ahead of these trends and invest in innovative companies that are shaping the future. At ARK Invest, we remain committed to identifying and investing in disruptive innovation that has the potential to generate long-term growth and returns for our investors.