With a relatively secure job in millions of dollars, kathy would have everything to lose. However, with a conviction stronger than you can imagine, she quit her job to start her own fund arc, invest a small company that did not even have its own office at the time. No outside investors believed in kathy's vision and even her friends ridiculed her for her decision. Just seven years later, kathy crushed the s p 500 became a celebrity within the financial space and proved all of her doubters wrong.

This is the story of cathy wood's rise to fame. Kathy wood was born in los angeles, california, on november 26 1955, which was where she set her footing for her financial career, her parents immigrated from ireland and were open to letting her pursue any career. She wanted, as the oldest sibling and a first generation citizen kathy, had a mission to blaze the trail for the future of her family after graduating from an all-girls catholic high school in 1974, she attended the university of southern california with a double major in finance and Economics, because kathy was the first person in her family to attend college. Her family was dependent on her future having been born the child of immigrants in the united states.

I was very fearful, as i went into college, that you know i was the oldest and i had to carry the mantle for the family one day, while still a student at usc. She took a class where she met someone who would change her life forever. Arthur laffer laffer is a renowned economist who specialized in supply-side economics and invented a famous economic theory named the laffer curve in her sophomore year, arthur laffer helped kathy lend her first job as an assistant economist at capital group where she worked for three years after graduating. Summa laude from usc she began searching for a job, an asset management firm named janice and associates hired kathy as a chief economist, an outstanding role for a recently graduated college student.

This was a miracle, as jenison was trusting a 25 year old to crunch complicated economic data. In the early 1980s, the inflation rate was in a double digits and productivity was at record lows, two of the greatest economists of all time, henry kaufman and milton friedman. Both thought that inflation was here to stay for years to come, however, kathy wood, a relatively new economist, thought that inflation was peaking. Not surprisingly, nobody believed her kathy explained how, for four years, nobody believed us.

I would have to go up against henry coffin one on one. I knew my numbers, i knew what i was talking about, but i had to convince them. I did because of my youth. This was obviously a bold claim to make at the time, especially since kathy was so young.

Her boss, spiro segeles, the co-founder of janison, explained how kathy had unbelievable, unwavering conviction. Of course, in the end, kathy was right. By 1983, the inflation rate dropped from 13.5 in 1980 to 3.2 percent in 1983.. Sigeles had kathy in the nearby office so that he could constantly give her tasks.

In retrospect, he said that she was by far the sharpest she always made me look good. The decline in interest rates following a decline in the inflation rate set the stage for massive innovation ahead. New products were coming out, left and right. Disposable cameras, personal computers and dna fingerprinting were all invented in the 1980s.

It was during this time that kathy decided that she wanted to switch from her job in economics to enter portfolio research. In 1985 she became an equity research analyst and by 1990 she was a portfolio manager. Her strategy was extremely unconventional. She looked at places where no other analysts were looking at in her own words.

I was like a little dog looking for scraps under the table, while looking through stocks that nobody wanted. She realized that something big was coming. That was the start of the internet. I was at a wonderful, firm, janice and associates at the time who gave me the opportunity to do just that, except i had to find my own universe, so i had to scrap around.

I was i often say i was like a little dog under the table. Just picking up scraps, so what were those scraps? Well, database publishing came along, so that's reuters and tellerate, and no analyst thought that that would be worthy of their attention. So i said i'll: do it i'll do it and what do you know it evolved and evolved into the internet in 1998, amid the dot-com bubble, she co-founded her own hedge fund tupelo capital, with one of her co-workers. Three years later, in 2001, she joined alliance bernstein as a chief investment officer and thematic research strategist at alliance bernstein.

She was managing over 5 billion dollars. Her investment strategy consisted of finding high growth small cap stocks that had promising potential. This was called the satellite strategy. Instead of diversifying into the same stocks that everyone else was investing in, she invested in disruptive opportunities and did not diversify much.

That way, her portfolios were uncorrelated with the funds that everyone else invested in this allowed her clients to increase their returns, while lowering their overall risk. Historically, we did a study at alliance bernstein showing this. If you slot a strategy in like that to a core portfolio. Folio, what you will do is increase returns and lower risk over time.

That sounds counterintuitive, but it's true because the correlation of our relative returns to traditional growth is very low. We're not in the indexes for the most part, and our correlation of relative returns to traditional value is negative. Success did not come easy for kathy, just like many other successful ceos. She was constantly working her boss, lisa chalet, who is now the cio of morgan stanley said this about her.

She was tireless she works 24 7. To make sure the team has the most thorough research and differentiated view, while kathy always had high conviction, her clients did not, as her portfolio was incredibly volatile, which was upsetting for several of her clients. Other institutions wanted kathy to add some index funds in order to lower this volatility, but she strongly disagreed. She thought that innovation was overlooked by investors and wanted to invest heavily into it in the private market.

These high-growth businesses were selling at huge premiums compared to the public market. Kathy saw an opportunity to capitalize on the massive price discounts in the public market. She explained how companies in the public market were sometimes selling for just 10 percent of what private markets were willing to pay. I thought there was a huge opportunity there in 2006 kathy saw that there was a major housing bubble and she thought it was about to collapse.

As a result, she suddenly reduced the risk in her portfolios dramatically leading her to underperform the market by over 10. In 2006, it was clear to us that something was very wrong and so uh we polled and mike you will remember this. We pulled all the risk out of our portfolios in 2006 and the market went straight up on us, not surprisingly, kathy thought that her returns were embarrassing. Usually she beat the market by taking on more risk, but now all her clients were extremely disappointed for once in a bull market she had underperformed the market.

I can tell you: i was in a completely chaotic place in terms of faith. I thought i had faith, but the kinds of prayers. The panic that i had was i'd never been there before. As a result of this, she quickly reversed her portfolio to make back her gains in 2007, where she outperformed the market by 9.

However, in 2008 the housing bubble collapsed as she predicted earlier, but this time she wasn't ready for it. In a span of 12 months, her portfolio crashed 45 and 46.72 net of fees. This was upsetting for kathy and her clients, as the s p, 500. Only crashed 37 in comparison, nevertheless, kathy quickly rebounded and ended up crushing the s p in the following two years: overall, from 2001 to 2011, kathy out performed the market by 17 percent gross of fees, which was not the best, but definitely not the worst.

Nevertheless, while her returns were not subpar, many investors were moving away from her fund. As a result, her assets under management fell from over 4.4 billion in 2001 to under 1 billion in 2011. Kathy knew that she needed to change things up and innovate under the financial system. If she didn't, then institutions would just continue.

Moving over to index funds in 2012 kathy had an idea to transform the actively managed investment space by shifting the portfolios over to an etf system. However, when proposing her idea at alliance bernstein, everyone doubted the viability of her idea. This prompted her to start her own business. Many of my friends thought i was going to fail and they told me that, because they wanted to protect me, but i never thought i was going to fail.

There was a huge unmet need and that's the best way to start a business. Despite many doubters kathy started, arkhan vest, which was named after the ark of the covenant, a jewish and christian tradition. As a result, kathy decided that she wanted to start her own fund using this idea. This was the start of arkhan vest for the first three years of arkhanvest.

There were no outside investors, which forced kathy to pay for all the expenses. Additionally, there was no office and everyone was working in public working spaces. Starting such an unconventional fund was a bold move at the time the ceo of arkhan, one of the first employees tom stott, explained there were a lot of people who doubted her and a lot of friends were concerned. Yet her confidence, never wavered kathy risked her personal wealth because she had that degree of conviction i joined arc purely because of cathy.

I was blown away by her vision. The first few years were tough for arkhan vest kathy's fund, ranked in the bottom 25 of its peers and in order to pay for the expenses kathy was forced to sell minority stakes in ark and partner with other institutions. Today, 39 of arkhanvest is owned by two companies, nico asset management and american beacon. Not only that, but nearly 10 of arc is owned by arkhan vest employees, regardless of her initial lackluster performance kathy, was planting the seeds of her fund deep in the soil of innovation.

She purchased bitcoin at 250 dollars per coin in 2015 and also invested early in amazon and tesla. We think amazon is a much bigger idea than people understand today. It is now its market cap is now approaching that of walmart uh. We think it's going to surpass.

Walmart because we think online sales, which are now less than 10 of sales, are going to grow much larger amazon is leading the charge we think tesla has its eye on the autonomous taxi market and, of course, we know it's leading the charge in electric vehicles. So we're very excited about tesla right now, the enti, the market cap we'd call it a network. Value of bitcoin is a little over a hundred billion dollars. So it's come up.

It's come very fast, but it's at a fraction of apple's valuation of amazon's valuation and we think it's a much bigger idea than either one of those in 2017 arc started gaining traction after her stocks, which included netflix and v-day in salesforce all took off since then. The rest is history and kathy has absolutely destroyed. The s p 500 today kathy manages over 46 billion dollars through her six active etfs ark, arkq air kw, arkg, air, kf and arkx. Many criticized kathy wood for her lack of experience, but, as demonstrated by her life story, she wasn't the overnight success story that many believe she is for decades.

She worked hard at analyzing the economy at large in individual stocks, making a large debt in the investment space. Only today has she become a well-known name in the investment space, with their unconventional strategy and etfs throughout the entire journey. Her religious faith in god helped her tremendously through hardship, so i was born with the gift of faith. I really do believe that it has come very easily to me, though it has evolved and deepened over the years when i went through the various crashes in the stock market, so the tech and telecom bust and and the 2008-2009 meltdown.

When i went through my divorce, i am divorced. Each of those times was a time of deepening my faith. I never felt that god was leaving me or deserting me. I felt like i had to hold on a little tighter in the next five years.

Kathy expects arc, invest to triple in value providing her investors with enormous returns. Her net worth is estimated to be 250 million by forbes, which is based on a conservative valuation of ark, invest of 500 million dollars in october 2020. However, arc invests should be valued much higher than that, because it is generating at least 300 million dollars of revenue per year right now, not only that, but when you consider that kathy likely invested her own money in arcane investor arc invest related stocks. Kathy might just be a billionaire.

We now believe that our portfolios will deliver a closer to 25 compound annual rate of return. Kathy's life story has been legendary. So far, she went from being the first child in her family to ever attend college to become the investor that everyone knows today. Despite all the doubters in the financial space she kept on working hard and has proved that she deserves her spot as one of the leading investors today.

Do you believe in kathy wood and if so, are you invested in arkhan vest? Let me know in the comment section below: if you enjoyed this video, please hit the like button and subscribe and i'll see you in the next one. You.