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What “Bubble”? ARKK closing in on 70% for one year

edited September 2022 in Fund Discussions
(They say that market bubbles can only be identified after they have popped ….)

ARKK is currently down 67.5% over 1 one-year according to CNBC. It’s off 56% YTD and about $5.00 above where it bottomed earlier in the year. This isn’t to rag on the fund and manager. But just to lend support to the idea that there certainly appears to have been a genuine “bubble” in this sector of the market.

What I’m unable to fully understand are the specific factors contributing to its continuing descent. I believe short sellers have a heavy hand here. And investors are discounting future Fed rate increases plus anticipation of a recession in their valuation of the sector. Since TSLA is its largest holding, investors to an extent may be discounting Elon Musk - a dangerous bet IMHO. @bee mentions in another thread how higher interest rates impact speculative equities hardest. Posted for whatever thoughts or insights it might inspire..

Disclosure: Am holding a very small amount of ARKK as a long-term speculative play. Off 6-7% since averaging in.

Comments

  • @Hank, so this is an extreme example of the absolute kookiness that has taken place over the past few years with the fed's balance sheet expanding by 10x over the past dozen or so years. Social media, media assisted in driving the sheeple to lose their money in this Schmuddel. I can see this fund getting cut in half once again from here. Who knows?

    So ryhmed with the late 90's, no? Next generation of investors/sheeple done learnt their lesson, maybe?

    So...question for the class...let's talke about GAAP accounting or maybe better said the lack of it pertaining to most/many tech companies.

    Do they or do they not pay many of their assocatiates with stock...what about intangibles...is that on the balance sheet? What happens to their "earnings" if you put those "true" expenses back on there? Aren't some of those companies another farce similar to ARKK...Can some CPA/Finance expert explain Salesforce, CRM, the rollup of over 60 companies to me and what is really going on there. I have no idea but am wondering, asking for a friend? Compare it to MSFT who DOES report using GAAP, I beleive.

    And now those of us who don't suckle of the teet of the public tax payer with a pension have to fund our retirement in this piece of sheet casino?

    Baseball Fan
  • Too political. I view this as more about the “madness of crowds” than anything else. May drop another 50%. As a confirmed bottom feeder I”m comfy holding a tad. With NASDAQ off over 25% YTD some of the excesses have been removed.
  • @Baseball_Fan

    I may be suckling of the teet (sic) of the public tax payer with a pension, but hear this, joker: During my twenty years of public safety service I typically worked two to four hours of off-the-books UNPAID overtime each and every day. I appreciated my job, and felt it was no problem to give a little extra. The taxpayers got their money's worth and then some from me. Up yours, pal.
  • edited September 2022
    Pretty funny to complain about public workers, some of whom such as teachers are dramatically underpaid, “suckling on the teet of the taxpayer” in a thread about a fund with a manager who if not a billionaire is certainly a multimillionaire while completely destroying many shareholders’ returns. How many CEOs and other executives are also extravagantly overpaid for subpar work, destroying jobs, capital, our environment and the fabric of good government? Yet it’s the public sector workers that are the supposed problem. If one considers that something like 80% of active managers wind up underperforming a cheap index fund and are paid handsomely for failing, who is truly doing the “suckling” here?
  • edited September 2022
    Yeah - That right leaning “straight-from-FAUX” crap doesn’t deserve a reply.

    To attribute what’s left of ARKK’s prior valuation to still gullible investors and / or shoddy accounting at this point in the game is to ascribe to those who initially ran up the valuation of these companies to their 2021 peak a degree of stupidity that I’m unable to comprehend. These are by definition highly speculative companies. But, trading at little more than 30% of what they were assessed at only a year ago, I think they are worth looking at on a relative value basis (ie compared to the broader market). But, perhaps Grantham is correct that the entire U.S. market is but a shaky house of cards. In that case, God help us.

    And Heaven forbid that BBF is correct that retired public servants like @Old_Joe and myself are the underlying cause of all that ails the nation. In that case, all hope is lost.
  • beebee
    edited September 2022
    @hank @Old_Joe

    Often no one notices the work we do...accepts the kids and sometimes the outside world.

    Thank you for making a difference... much like my colleague whose life was cut short by COVID... Love you Tom...RIP... You made a difference in so many lives.

    A Connecticut Story
  • edited October 2022
    Another view of ARKK's collapse....

    image

    Scroll down to #4 in the link for more details....

    4. ARK runs aground

  • Tip of the iceberg perhaps? How many zombie companies are there out there that are publically traded? Maybe 15-20% of companies? Can't service their debt? At what rates will they have to refinance? Peloton, Carvana, etc. I'd be looking for another job if I worked there.

    More to come? Meaning the downdraft? Who knows?

  • There was certainly a whoosh of selling to start the day this morning. Smelled like panic.
  • The big bucks are beating the small bucks to death !
    What to do, Derf ?


  • And now those of us who don't suckle of the teet of the public tax payer with a pension have to fund our retirement in this piece of sheet casino?

    Baseball Fan

    Please! I think the appropriate terminology is "feeding from the trough"
  • edited October 2022
    From my OP - “This isn’t to rag on the fund and manager. But just to lend support to the idea that there certainly appears to have been a genuine “bubble” in this sector of the market.”

    No disputing it was a bubble. That’s what my modest post meant to address. Is 70% off the price of a year ago still a bubble? Remains to be seen. We all try hard here to steer clear of partisan politics. There’s enough blame to go around when it comes to falling equity and bond prices. I don’t think either party owns those issues 100%.

    Personal belief: I think we’ve all become too short term focused. Instant prices / up to date gains & losses / fund flows / interest rates / everything’s at our finger tips today, and trade on it we do. So what happens is that many markets “run to extremes” as the “smart money” latches on to the trend. ARKK’s meteoric rise is but one example. And it works in reverse too with short sellers owning the day now. Eventually over time prices sort themselves out to where there’s some rationality. I’m confident that in 5-7 years folks who bought ARKK at these prices will be glad they did. But it’s damn hard just to sit and not look. I think most equities will do better over 5-7 years. That’s the optimist in me. John Templeton was my very first fund manager.
  • >> … partisan politics. There’s enough blame to go around when it comes to falling equity and bond prices. I don’t think either party owns those issues 100%.

    ? Who has made such an argument?
  • I would say the default investment philosophy of making as much money as possible without concern for other people or the planet is partisan politically on its face. Politics are embedded in Wall Street's basis ethos.
  • edited October 2022
    - “And now those of us who don't suckle of the teet of the public tax payer with a pension have to fund our retirement in this piece of sheet casino?”

    - “Please! I think the appropriate terminology is "feeding from the trough"

    This sounds a lot like some of the stuff I’ve read in the IBD or editorial pages of the WSJ - though worded in somewhat less offensive language. Generally it’s associated with Democrats. But it can be partisan without reference to particular political party. My plea was to try and keep partisan politics out of discussions - especially threads I initiate. But I don’t run the board. So feel free to post anything you desire!
  • @hank Nahh, it's your thread. You should kick us all off.:-)
  • edited October 2022

    @hank Nahh, it's your thread. You should kick us all off.:-)

    No. This is really enjoyable!

    But please note that the thread was posted under “Fund Discussions”. And that the reference was to a failed fund. Now, pray do tell how we can devolve from Ms. Wood’s nearly defunct small cap ETF into bashing people receiving government pensions? Where’s the linkage - other than wanting to gripe on a totally unrelated subject?

    :)
  • LB, reading comp

    Of course investing is political

    He was talking about falling prices
  • Fellas, fellas...the original point was how wacked out the market is due to many reasons, some of which are crazy monetary and fiscal policy...which helped to enable cray cray funds like ARKK and many of those who do not have pensions have to "invest" in this stock market dreck/risky casino to fund their retirement while those with gov't pensions do not.

    Not to disparage those who have earned the pensions. A deal is a deal. No questions, I'm sure many have worked hard and served the public to earn them. But why is it they are guaranteed, many inflation indexed, no mattter what the markets do of which they are invested in and if the underlying investments underperform the taxpayer has to pony up, funding is cut for other public projects just to fund the pensions...is that the right thing to do?

    My belief is that the pension returns should be indexed to say the past 3 years rolling returns. I do not think is right that the taxpayer has to be on the hook no matter what happens in the market. Or let ALL workers participate in a national pension, why just if you were say a politician for 25 years?

    What really sticks in my craw is when those with the gov't pensions from a high tax state move right after they retire because "they don't want to pay the high taxes".

    Baseball Fan
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