Hey guys it's sasha over the last year, our investment and kathy wood, who is the ceo, have become so trendy that entire markets seem to swing based on what she has to say. The company went from having 3.1 billion dollars under management at the end of 2019. To over 50 billion dollars, just a few weeks ago, in february 2021, kathy's achieved some kind of cult status in the world of investing. Everyone wants to talk about her.

Everyone wants to listen to what she has to say. Everyone is fascinated by the concept of what she's doing, how she's doing it. The markets listen to her and the fortune of entire companies seems to be dependent on her opinion and what her particular fund does in terms of their investment strategy. But why is it? Why is it that this one fund manager seems to have a you know such a big say when her portfolio across all the different arc investment portfolios is just less than 10 percent of the market cap of just one company like tesla, and why is the opinion Of her suddenly seemingly more important than the performance of tesla itself now, let me give you a bit of background kathy wood founded ark after working in the industry for quite some time, the funds uh invest based on different themes and the most popular fun out of The different ones that they offer is the arc innovation, etf symbol, uh r-a-r-k-k, which seems to have gone completely bonkers and everyone wants to put their money into it.

It is really easy to see why this is happening. The fund grew a whopping, 152 percent during the course of 2020.. That sounds completely bonkers. Given that regular, you know some actively managed funds during the same period have managed to deliver single digit results.

Naturally enough, everyone wants a piece of this. Everyone wants their money invested in it and the fund is growing rapidly, but here is my problem now i have no, i no doubt that kathy and all the people who work at ark are incredibly smart and make incredibly smart investing decisions. I am not saying anything to the country. I am not trying to cast any kind of shadow uh not far from it, but just look at their portfolio and you'll notice that there isn't anything, mystical or mythical or crazy or weird uh about it.

It is a pretty good. It is a pretty robust tech based portfolio that invests in tech stocks that happen to grow a huge amount of percent during one of the biggest tech bull runs we've ever seen, maybe the biggest one we've ever seen in the history of stock markets. Tesla is more than 10 of the entire fund. I think at one point it was like as high as 11, maybe even 12, and there are a number of other rising established tech giants.

Let me list a few square: paypal, twilio, nintendo, twitter, zoom and many others. Now all of these companies exploded in 2020 for different reasons, and if you had any of them in your portfolio, then your portfolio will also have exploded in a big way. I know i did and i am not some kind of investment guru in any shape or way. Now, let's look a bit further back if you were to invest in a fund, you'd probably want to see some continuous results over a long period of time in order to ascertain you know, long-term performance and ability to manage the swings of the markets.

You wouldn't want to invest your money into something that is a flash in the pan right. So what did ark do before their crazy 2020 run? Well, they returned a very respectable, in fact, a really good 19 per year on average. Before that point, that's really good. I mean that is a really great result, but it's not quite the 152 percent that everyone went nuts about it's also over a period when there were no crashes.

There wasn't any massive downturn in any particular tech industry and we had a huge, unprecedented tech boom, depending on when you were invested in the fund as well. It is really important to remember that three years out of those five, they return less than four percent, with one of those being a loss making year. Yes, that fund did beat the s p 500 significantly, which returned only about 10, just over uh on average over exactly the same period. But while the s p, 500 just had a tiny wobble over the last month or two months during the sell-off of the tech stocks that has happened.

Um arc is down over 22 as it stands after recovering from being far further down than that hey. I am not claiming to be anything at all. I am down a lot too. My investment portfolio has lost a ton of value over the same period, because predominantly i share a lot of my investment philosophy with kathy and with arc.

I'm not i'm not actually in any way really different in that sense, but here's my point: we've had a fund manager who has done exceptionally well for a period of about 12 months. The fund has done really well by banking on high-risk companies that have done very well during a period when those types of companies happen to grow massively and there's not been any crashes or any kind of bear. Market periods now kathy is on every single tv show out there on every single tv channel, and everyone takes a work word as gospel. We have sort of a warren buffett mark two situation where suddenly every decision that she makes is a decision that everyone else wants to make, because, naturally enough, she has attracted so much kudos and so much credibility that everyone wants to emulate.

What it is that she does, and yet entire funds, the entire sum of the funds that are under management by arc are a tiny fraction of what a market cap, as i mentioned, of just a single company like tesla, is and tesla keeps posting insane updates. They are posting market, defeating results; they are building some of the biggest factories ever built on this planet ever in the history of mankind. Just take that into into your thinking. This is the kind of thing they're doing, but that is not interesting enough for cnbc and nobody seems to really care because they go and sell off that stock by that company.

Who is showing you that and telling you those things like you know it doesn't really matter now. I am not a financial advisor and i can't provide financial advice to you. This is just my personal opinion, but there wasn't any real world real actual news that caused tesla stock to go down by 40 percent. You know it was caused by a bunch of different market macro scenarios and effects, but but yet we don't seem to value the fundamentals in the same way that we value the opinion of somebody who goes and does a big 45 minute.

Video and everyone watches it and suddenly markets begin bouncing back. I'm i i'm confused. I do find it, however, really really interesting. We live in an age where the cult of personality is so big that people get fascinated by other people to some unfathomable degree.

Now i do guess it is sort of a weird transposition of maybe a somewhat natural human reaction. You know we're far more driven by what some people out. There say that then, maybe by even our own thinking or by the numbers, by the fundamentals by things that are facts. Sure a lot of these people do sound incredibly impressive and do run companies that manage billions of dollars, but make sure that you don't get blinded by perceptions.

Those people have their own views and opinions, and they may be good, but they may also not be good, and in some years they will return 152, but in other years they'll lose two percent, the exact same people with exactly the same mentality and exactly the same Knowledge - and we haven't even seen what this, for example fund, does in a real, proper big market crash. Yet don't just blindly follow what you hear on the internet or what some famous investor says. Make sure that you understand exactly what you're doing with your money and exactly what you're investing in? I can tell you that there are a lot of other funds and other cathy's out there who are managing them. Who haven't had their crazy year, but maybe they will have it next year and maybe next year cathy wood's arc will not the problem? Is you don't know the names of these people? Neither do i and you won't know them until they've made it and until they're sitting there so make sure you do one really important thing whenever you're doing investing make sure you do your own research always check the numbers always check the facts.

Don't invest in anything that you don't understand and definitely don't invest in anything that you can't go and explain to somebody else using normal words and feeling, like you, actually understand it yourself. Don't trust schmucks like me who sit there on the internet, telling you what you should invest in or what you should do, because i can tell you one thing: the people who make billions from investing the people who are really really good at it, don't sit there. All day, making youtube videos stay safe out there, the markets are jumping up and down. We have big tech companies who are gaining 10 percent or losing 10 or even more per day at the whim of just weird people, saying stuff and random, twitter, stuff and and all kinds of things like that things are incredibly volatile and nobody.

Nobody knows. What's going to happen, regardless of what they say.