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While the S&P 500 and private market are skyrocketing, almost all the Ark ETFs have been hit significantly in 2021. Cathie has never seen anything even remotely close to that and is pointing towards the indexes as a major bubble. She has even gone as far as to say that she is a deep value fund manager, because the prices in innovation are unbelievably cheap, while index funds are about to crash dramatically. This video will go in-depth on why Cathie believes index funds are undergoing one of the largest bubbles in history.
Almost everyone sees index funds as the holy grail of investing. The majority of active fund managers struggle to outperform the S&P 500 even though index funds charge a minuscule amount of fees. Warren Buffett has called index funds the best thing to own for the majority of people. This all sounds great, but the popularity of index funds may be fueling up a bubble. ETFs recently posted a record of inflows of $1 trillion in 2021. That is a substantial amount, but the fact that the inflows have been so immense could be a self-fulfilling prophecy. The S&P 500 is simply a bundle of stocks that investment companies like Vanguard closely track to create an ETF. When money flows into the S&P 500, this inflates the valuations of the companies within the S&P over time, therefore creating returns by itself. Essentially, perhaps one of the reasons why fund managers struggle to beat the S&P is because the increasing inflows are inflating the S&P’s returns. This is similar to Ark Invest, because if investors sell the Ark ETF, then the stocks inside the ETF will sell off. We can see this with ARKK’s assets under management, which decreased from $22 billion in November to just $16 billion today. There are certainly several factors that go into the valuations, but regardless of that analysis, it is quite clear that valuations are at all-time highs. I’m sure those of you following the market have seen the Buffett indicator over and over again. The Buffett indicator is a ratio that takes the total market value of the US stock market and divides it by the annualized US GDP. This ratio is currently at 213%, which is significantly higher than the average. Even when comparing the ratio to the long-term trend line shown on the screen, the Buffett indicator would still be considered overvalued. As you can see in this graph, the Buffett indicator is over 2 standard deviations above the trend line. This means that in this dataset, we are only at these valuations 2% of the time. Some may attribute these equity valuations to inflation, but a deeper analysis shows that the correlation is not positive and may actually be negative. Inflation soared in the late 1970s and early 1980s to rates above 10% at one point. This period is called the Great Inflation for obvious reasons. During this time, the Buffett indicator was actually at all-time lows. If we return back to the graph with standard deviations, you can see how the late 1970s and early 1980s were actually the low points within this graph. Therefore, it would be difficult to attribute rising valuations to inflation. The S&P 500’s PE ratio is also near historical highs at roughly 29, and the S&P Shiller PE Ratio, which adjusts the PE ratio for inflation, is at 39. It may be strange to see Cathie Wood say that index funds are in a bubble, especially because many see her as the poster child for the modern tech bubble. However, her argument makes sense given that so many investors and fund managers are blindly investing in the S&P for a quote-unquote “guaranteed 10% annual return over time.” Cathie believes that the S&P will be seen as much riskier than anticipated, especially as companies in the S&P get disrupted.
Speaking of innovation, instant coffee has not innovated much for decades. However, that is changing with the sponsor of this video, Cometeer, by providing a new solution to your morning coffee. Cometeer coffee uses a flash-frozen method to lock in its barista-quality flavor and freshness in the first 100% recyclable capsule.
Interested in seeing my full portfolio with explanations along with buy and sell alerts? Join my research platform here: https://www.patreon.com/casgains
Casgains's Recommended Investing/Business Books: https://docs.google.com/spreadsheets/d/1DI8ca5GLEfQXU34uplO3E3w6YHXbvMbK1JR-GxXBeUc/edit?usp=sharing
My Second Channel:
https://www.youtube.com/channel/UCPkDot_lMk7HB_c68HubbUg
Twitter: https://twitter.com/casgains
Instagram: https://www.instagram.com/casgainsacademy/
Contact for business inquiries only: casgainsacademy @gmail.com
While the S&P 500 and private market are skyrocketing, almost all the Ark ETFs have been hit significantly in 2021. Cathie has never seen anything even remotely close to that and is pointing towards the indexes as a major bubble. She has even gone as far as to say that she is a deep value fund manager, because the prices in innovation are unbelievably cheap, while index funds are about to crash dramatically. This video will go in-depth on why Cathie believes index funds are undergoing one of the largest bubbles in history.
Almost everyone sees index funds as the holy grail of investing. The majority of active fund managers struggle to outperform the S&P 500 even though index funds charge a minuscule amount of fees. Warren Buffett has called index funds the best thing to own for the majority of people. This all sounds great, but the popularity of index funds may be fueling up a bubble. ETFs recently posted a record of inflows of $1 trillion in 2021. That is a substantial amount, but the fact that the inflows have been so immense could be a self-fulfilling prophecy. The S&P 500 is simply a bundle of stocks that investment companies like Vanguard closely track to create an ETF. When money flows into the S&P 500, this inflates the valuations of the companies within the S&P over time, therefore creating returns by itself. Essentially, perhaps one of the reasons why fund managers struggle to beat the S&P is because the increasing inflows are inflating the S&P’s returns. This is similar to Ark Invest, because if investors sell the Ark ETF, then the stocks inside the ETF will sell off. We can see this with ARKK’s assets under management, which decreased from $22 billion in November to just $16 billion today. There are certainly several factors that go into the valuations, but regardless of that analysis, it is quite clear that valuations are at all-time highs. I’m sure those of you following the market have seen the Buffett indicator over and over again. The Buffett indicator is a ratio that takes the total market value of the US stock market and divides it by the annualized US GDP. This ratio is currently at 213%, which is significantly higher than the average. Even when comparing the ratio to the long-term trend line shown on the screen, the Buffett indicator would still be considered overvalued. As you can see in this graph, the Buffett indicator is over 2 standard deviations above the trend line. This means that in this dataset, we are only at these valuations 2% of the time. Some may attribute these equity valuations to inflation, but a deeper analysis shows that the correlation is not positive and may actually be negative. Inflation soared in the late 1970s and early 1980s to rates above 10% at one point. This period is called the Great Inflation for obvious reasons. During this time, the Buffett indicator was actually at all-time lows. If we return back to the graph with standard deviations, you can see how the late 1970s and early 1980s were actually the low points within this graph. Therefore, it would be difficult to attribute rising valuations to inflation. The S&P 500’s PE ratio is also near historical highs at roughly 29, and the S&P Shiller PE Ratio, which adjusts the PE ratio for inflation, is at 39. It may be strange to see Cathie Wood say that index funds are in a bubble, especially because many see her as the poster child for the modern tech bubble. However, her argument makes sense given that so many investors and fund managers are blindly investing in the S&P for a quote-unquote “guaranteed 10% annual return over time.” Cathie believes that the S&P will be seen as much riskier than anticipated, especially as companies in the S&P get disrupted.
Speaking of innovation, instant coffee has not innovated much for decades. However, that is changing with the sponsor of this video, Cometeer, by providing a new solution to your morning coffee. Cometeer coffee uses a flash-frozen method to lock in its barista-quality flavor and freshness in the first 100% recyclable capsule.
Well… she scored +350% in 5 years, that's an average of 70% per year. But youtube comments will always know better than any fund manager.
This all seems like a classic case of correlation without causation. But I’m stupid and have no idea what’s going on. 🤷🏾♂️
So according to her we weren’t in a bubble when her ark funds were at all time highs, and now that her funds are all beaten down we are suddenly in a bubble? Sounds like she’s upset that people aren’t buying her funds.
Seems like every video you put out has the same type of title like this one.
I believe every word out of this woman’s mouth. She just comes across so trust worthy and knowledgable. And I find her incredibly attractive which is a hell of a side bonus.
Just do the Taleb barbell i.e. put options on the market with a very small % of your overall portfolio.
The only reason she came up like she did, she was friends with archegos, while archegos pumped the market all she had to do was follow along and buy, otherwise she's a joke
TA is all well and good but I find it truly baffling that all major crypto youtubers just look at pure TA and completely ignore the bigger narrative of why BTC is pumping and why the future outlook might not be as rosy as it seems. It's kinda irresponsible to ignore the fact that each ETF launch so far has caused a major dump at the peaks of BTC. More emphasis should be put into day tradiing instead of HODLing, as it is less affected by the unpredictable nature of the market. I have made over 11 btc from day tradng with BRYAN ANTHONY DECKER, insights and signals in less than 2 Months, this is one of the best medium to backup your assets incase it goes bearish…
Of course she has to say that…. Ark has many risky companies. They can’t all go up. Better to invest in select stocks. Not index funds and not ark either
Thankyou Jesus for the crash so I can buy a cheap house 🏡 yay 😁
I like the content of your videos but could you please stop with the clickbait titles, it's really making me doubt your research credibility and am almost thinking of unsubscribing. The titles literally always imply a complete stock market collapse and it never seems the case at all in your videos.
Your analysis on large cap vs small/mid cap P/Es actually draws to the opposite conclusion, no? Large cap PE went from 11-21, not even a 2x, whereas small cap went from 4-14, more than a 3x!
Sometimes Cathie says we are in a bubble and sometimes, we are not in bubble.. So what now?
Being down 50% relative to the S&P in 2021, during an epic bull market makes her look pretty dumb.
Not Again…..The Stock Market Is About To Collapse….and see you all next year
The big indexes have way too much dead weight in fossil fuel companies, ICE manufacturers, and other dying businesses.
We are going through massive disruption across multiple sectors at once. Broad diversification is a way to get yourself anchored to many losing companies.
My strategy is to buy both individual stocks and ETFs focused on only certain sectors like AI, green tech, web services, biotech, etc.
Yeah we are in a huge bubble, but it will probably take until March until we get a 20% pullback probably
S&P 500 is obviously very attractive, and is going to continue to attract more and more investors, not just from US right country, but across the world. You get direct exposure to the USD and directly into the most valued companies in the world at the most valued market in the World. It may get corrections, be overboard sometimes, But the attractiveness for investors across the world is huge and in the digital age that is only increasing. A Dude from Romania with some broker account can easily by a few clicks get direct exposure in the SP 500 via ETFs, and what other macro investment is better out there on a global and long term risk scale? It will only grow as digitization make investing even easier.
Great analysis and prediction. I know it's going to crash, just when?!?! Should've already but maybe it'll start early January? Waiting to buy the lows and make up for some of my ARK investments which are way down.
People will be kicking themselves in few weeks if they miss the opportunity to buy and invest in Crypto as it's retracing….BE WISE
She’s a one trick pony, and if you invest with her you get what you deserve
Please fire that horrible narrator who clearly was raised in a tonal country
Fund manager is the coolest job.
1. You play with others money.
2. Whether fund goes up or down, your cut is fixed.
3. Job responsibility is essentially look confident and back your bets with some BS
Yeah yeah yeah yeah we are living the greatest market crash spanning 5 years.
Cathie Wood is the oracle of investing, she is the only "analyst" I agree with every single time. Everyone else is just a bunch of chart monkeys trying to predict future with some squiggly lines from the past!
She said Etherium would be $5 k by years end, and ARK funds the past six months have been way below market. If you're going to disrupt, disrupt already,
"My extremely overvalued funds came back to reality so the rest of the market must be in a bubble". Seems legit.
Where is this crash? Can't see it! SMI still climbing, so what??? 23.12.2021
Sorry but Cathy's arguments are illogical. There's a low correlation between ARK and the rest of industry because the bulk of ARK stocks are not good picks. These are generalizations. Just because small and mid caps are not tracking, does not mean that they are undervalued. They are just early on their maturity cycle and may NOT make it. Larger caps once ran that gauntlet and survived enough to be big, therefore they are a more sure bet and attract more investment. All of this talk is insurance against stupidity. If you pick good, productive businesses in the long run, you can ignore all of this bubble bs and trend chasing.
I think all of these types of derivatives and packaging of stocks just creates excessive overhead and leverage. Yes, temporarily, excessive index investing could artificially blow up a stock, but that's what fundamentals are for. If a company is trading way beyond reasonable value or falters on delivering performance, the stock will sell off and it may exit the S&P 500 index, replaced by the next big thing. It auto-balances itself – its not married to any individual stock, but the top 500 by market cap. Cathy just has sour grapes. She should stick to trends and macro outlook. I don't feel her team understands how to value individual businesses for her portfolio. Most are speculative garbage and they're being exposed for it now.
Imagine buying an ARK fund instead of SOXL. Just imagine for a second investing in a fund ran by a woman.
Equities too toppy. I like cash and crypto in the interim. I would take ethereum over a tech stock any day right now and bitcoin over a bond.
Investing in crypto now should be in every wise individuals list, in some months time you'll be ecstatic with the decision you made today.
“If inflation is a problem, why aren’t multiples coming down across the market”
…Cathy! That isn’t evidence for your fund, it is a prediction that since inflation is becoming a problem, multiples will have to come down. They have not come down yet bc margin debt is at all time highs.
She is getting desperate. The more ppl sell, the more she has to sell off her most liquid assets to prevent mass selling in her illiquid assets. Arkk has sprung a leak.