Kathy wood is selling tesla to go all in on two sectors that she believes will outperform tesla by a huge proportion. She still believes tesla will increase by at least three times in value, but she has found an opportunity that could return 10 or even 25x returns. A lot of people call kathy crazy, but she never purchases stocks without proper research at arc, invest when she purchased tesla at forty dollars per share, post split, her conviction was backed by the clear transition to evs in an undervaluation. Kathy is now in a similar situation, where the entire backdrop is setting the stage for a massive rally in a few stocks.

This is backed by her anecdotal evidence that points towards massive short and long-term returns. The majority of investors criticized kathy for her recent performance, but short-term performance is not indicative of long-term gains. Tesla stock dropped over 50 over the course of several years before going up by over 20 times in value. Arc has undoubtedly performed horribly over the past year, but the fund is still outperforming every single index.

On a five-year time horizon cathy has been selling tesla, twitter, talenteer and many others to buy heavily into two sectors cryptocurrency and stay at home stocks. Ninety percent of you probably want to click off the video, but the remaining 10 will be set to make enormous returns. Contrarian views done right tend to make outsized returns. Let's start with crypto crypto currencies have been under regulatory scrutiny for years.

China and eight other countries have fully banned cryptocurrencies and 42. Other countries have implicitly banned cryptocurrencies. A lot of countries are missing out on the potential benefits of cryptocurrencies in the economic system. That is the complete opposite for the united states.

Recent statements and conversations from u.s regulators are showing that the u.s is set to fully adopt crypto. Cathy has noticed that plenty of politicians are changing their mind about crypto. Among these government employees are the chair of the sec, gary gensler, the secretary of treasury, janet yellen and president joe biden. Those are powerful politicians who can accelerate the advents of crypto with the snap of a finger scc chair gary gensler recently spoke about his new and upcoming initiatives to protect investors in crypto biden also signed an executive order telling government employees to examine crypto, but, more importantly, Kathy's anecdotal evidence is pointing towards an accelerated policy rollout on crypto kathy recently sat down with michael saylor to talk about the changing political dynamic with crypto.

Why don't we start with uh politics and regulation and economics? What do you see as we look forward and how do you think it's going to affect bitcoin? Well, i i think the most interesting thing that's happened and we met uh, someone from mississippi um, i think a congressman from mississippi and i'm seeing the politics around bitcoin. Changing radically because it has become, you know the the single issue that some people are voting on, and this is bipartisan and even where we've moved in saint pete, because people know that i'm very bitcoin focused uh. They, the politicians, have become come to me and said. I want to, i want to pull together a room of bitcoin enthusiasts uh, and i i really want to learn from them what they want from us.

Think about that think about that. That's! That is a radical shift over the last few years. The other thing that i see so a year ago, roughly when janet yellen was appointed treasury secretary um. I remember her first comments about bitcoin where money laundering you know nefarious characters environmentally damaging and then two weeks ago, someone's whispering in her ear, and we talked about this - you think it might be gary gensler uh.

There is someone whispering in the the ears of politicians. If you want to lose, if you want the u.s to lose out on this, the one of the most amazing innovation platforms of all times, you keep talking like that, so she has changed her tune. So i'm very positive here and, of course, we're meeting people from around the world just met from honduras, mexico. I think the movement is spreading pretty quickly now everyone knows that actions speak louder than words and kathy's money is where her mouth is.

She purchased almost a million shares of coinbase within the past month, making it arc's third largest position. Coinbase is down over 50 in the past year, so you might be confused as to what kathy sees here. As we talked about earlier, short-term movements don't always reflect long-term gains or losses, coinbase generally trades in line with crypto prices, but we've seen a bifurcation occur while coinbase is down over 50 percent in the past 12 months, bitcoin is only down 26 and ethereum is actually Up over 56, this is because of overwhelming concerns for increased regulation and competition for coinbase. However, we know that there has been a sudden change in regulation sentiment which allows for a price arbitrage opportunity.

Coinbase is currently trading at a trailing pde ratio of 13 and kathy. Clearly expects earnings to go up more from here, kathy expects bitcoin to reach over a million dollars by 2030, which is almost a 25 x from the current levels. If we assume coinbase is undervalued by 50 relative to the crypto market, this could equate to a 50x return. Plenty of people are still skeptical of cryptocurrencies, but this is starting to change dramatically, especially in regulatory bodies and institutions.

What we're seeing with bitcoin and traditional institutional investors is the same thing. Arc is seeing about all of our strategies associated with all of our strategies: they're, very volatile, that's scary! For institutional investors, there's no index they're, not in my index, so you know this would be very risky to get involved. This is a new asset class, you know and it ha - and we don't even know what the regulations are so we're seeing a lot of pushback. Still that way, but as many of you may know, uh in our big ideas - 2022, which is at arc dashinvest.com, we have a price target in 2030 for bitcoin of more than a million dollars per bitcoin and yeah see even you can't believe it.

I expected a big roaring, no, but we and if you go in and you'll see how we build that case, we see institutional investors. All we expect over the next eight years is um that two and a half percent, roughly two and a half percent of uh of assets. Institutional assets are allocated to bitcoin. So we don't need a lot and if it's more than that and that's how institutional investors work they tiptoe in in the 70s, it was real estate in the 80s.

It was emerging markets, 80s and 90s, and now i think it's going to be crypto starting with bitcoin and that's very important, starting with bitcoin, because uh they understand what it is and what it's not it's, not a securities. Investing in stock should never be emotional. 66 of investors report regarding making an emotionally charged investment decision. That's why over one trillion dollars is managed by institutions who use rules-based or quantitative investment strategies to remove human biases.

However, in order to build your own quantitative strategy, you need to know how to code, be a master at excel and pay for expensive trading software. That is until now composer is an automated trading platform that allows investors to seamlessly build a portfolio of rule-based strategies. Called symphonies. Take a look at this symphony that i created with 10 stocks that are purchased with inverse volatility, meaning that the less volatile stocks are weighted.

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That's right! You can gain access to a game-changing investment tool right now for free. I highly recommend trying composer out for your own portfolio, which you can access using the link in the description. Now, let's get back to the video, the other short and long catalyst for crypto is the transition to renewable energies. Kathy wood once stated that bitcoin is key to the acceleration of renewable energies because it incentivizes the purchase of solar panels.

She recently retweeted a tweet from arc analyst sam korres that cited an article saying. The mining facility is designed to be a proof of concept for 100 renewable energy bitcoin mining at scale. In reality, i think it will also prove 100. Renewable energy requires bitcoin mining at scale.

The reason why this is important for bitcoin's adoption is because of the growth flywheel. The adoption of renewable energy requires bitcoin in order for it to be profitable, but bitcoin also needs renewable energy to be eco-friendly and scalable. This mutual benefit will allow both bitcoin and renewable energies to accelerate one another, as time goes on, that growth has a flywheel effect, because the exponential adoption of bitcoin will help renewable energies grow, which causes bitcoin to be adopted, quicker, bitcoin, being adopted faster, will lead renewable Energies to grow more and the cycle continues. The second sector that kathy is extremely bullish on is stay at home stocks.

Kathy has been talking about stay at home stocks for a while, and her thesis has taken longer than expected to play out if you've seen. My other videos, you would know that inventories are starting to build up, and commodities are likely going to crash. That hasn't happened quite yet, and the opposite has actually played out. That being said, kathy is still concentrating her portfolio on stay-at-home stocks, which he still sees delivering phenomenal returns.

You'll see from that model that uh our price expectation at that time was three thousand dollars. So, there's still a lot of running room ahead for tesla, but relative to the other names in our portfolio. Even though that's a you know a triple or nearly a triple other names in our portfolio, we believe will deliver much more than that over the next five years because they have been hit so hard they're, not in indexes, and so when there are risk-off periods. Traditional investors really diversify and sell our stocks as they move closer to their benchmarks, the benchmarks against which they are measured.

So it's a great buying opportunity for us. I will say i can't believe how long that buying opportunity lasted from february of a year ago, due to a few weeks ago, but we think the concentration of our portfolios towards our highest conviction names will pay off. The stay at home sector encompasses a wide variety of companies, but kathy is mainly bullish on a few of them. Those stocks are teledog, roku, zoom, twilio and uipath, all of which have crashed substantially over the past 12 months.

Back in december of 2021, kathy stated that teledoc stock would increase by 7.5 times in value over 5 years. Teledoc has, since dropped 30 in value, increasing expected returns to over 10x. If fundamentals remained intact, even though teledoc is arc's second largest position, kathy recently became even more bullish on another stock uipath, not many people know about uipath, but the company has a b2b model or a business-to-business model. The company ipo'd in late april of 2021 and has since dropped over 70 percent.

That's right. The stock has dropped over 70 percent in less than a year. The reason behind this is because of uipath's slowdown in revenue growth. However, analysts are still expecting revenue to increase by 20 this year and 30 next year.

She believes that the massive drop in uipath's stock price is simply offering a fantastic buying opportunity. We can see this with their buying activity, as she recently purchased. Almost 4 million shares of uipath within one week. Uipath is a robotics process, automation company, which means that it automates repetitive online tasks like sending emails or filling out spreadsheets.

I covered uipath's business model in depth in a previous video that is linked in the description. Some investors believe that stay-at-home stocks were a thing of the past in that the world is recovering from kovid. Kathy obviously disagrees with that statement. She sees stay-at-home solutions as more efficient for consumers.

This is evident from the fact that stay at home stocks were already growing before the pandemic even started. Stay-At-Home companies are silent disruptors because nobody sees them as particularly innovative. For instance, zoom is disrupting in-person communication, but most people just see it as facetime on a computer. A unique perspective is where the unparalleled returns may come from.

Let me know what you think about kathy's thesis down below. Are you buying in the crypto and stay at home stocks? If you enjoyed this video, please hit the like button and subscribe and i'll see you in the next one.