Others fear her greed, "Wood Sister" bottoms out technology stocks

Wood's Ark Investment Company (ARK Invest) has bought various technology stocks in the market downturn. Ark Investment manages $6.7 billion in assets and is a influential company, but its funds have recently performed poorly. Reports earlier this year showed that investors withdrew a total of $2.2 billion due to the poor fund performance.

Wood hopes to turn the situation around. This week, at least two of Ark Investment's ETFs bought stocks of technology companies that have experienced a sharp drop in stock prices over the past month. The actively managed ARK Innovation ETF bought stocks worth about $45 million in companies such as Amazon, Advanced Micro Devices, and Coinbase based on the opening price of the day. The company's ARK Next Generation Internet Fund bought stocks worth $9.5 million in Meta, Tesla, and Robinhood using the same calculation method. These two funds also bought other stocks.

All of the above companies have been caught in the sharp market downturn that has spread across the entire market. However, whether Wood bought the stocks at a low price or when the market began to collapse remains to be seen.

George Kailas, CEO of Prospiro, said, "She may be right, or she may be wrong. In the past few years, she has certainly been both."

Kailas was referring to Ark Investment's bet on Tesla, which made a lot of money when Tesla's stock price rose in 2021. However, since then, the company's performance has been much more disappointing. The Next Generation Internet Fund, which invests in cloud-related internet companies, has fallen by 2% this year. Meanwhile, its flagship fund, the ARK Innovation ETF, has fallen by nearly 20% this year. Neither of these ETFs has reached the heights they soared to in 2021.

The decline in technology stocks coincided with a global stock market sell-off, with some suggesting that the former is the main culprit. Last Friday, stock indexes from Japan to the United States experienced sharp single-day declines. Since then, both Japan's Nikkei index and the S&P 500 index have rebounded slightly, but not enough to dispel fears that the stock market may only be experiencing a short-term rebound.

Gene Goldman, Chief Investment Officer of financial services company Cetera, said, "I think this is a dead cat bounce." Goldman Sachs predicts that the S&P 500 index will "fall 10% or more from peak to trough".

Kailas also agrees, but with a more cautious attitude. He said that if he had to choose a direction for the stock market, it would be "slightly bearish".

Like Wood, a group of long-term growth investors also see the current state of the market as an opportunity UBS stated in an analyst report on Thursday that despite market volatility, many technology companies are still in good shape, making their declining stock prices look very cheap. "We believe that the fundamentals of tech stocks remain solid, while valuations have been revised lower," the analyst wrote.

UBS expects earnings growth in the global technology sector to be 20% to 25% higher in the second quarter than the same period last year. The bank also forecasts continued earnings growth of 15% to 20% over the next year and a half.

However, even investors looking to make a move are proceeding with caution. Renowned tech stock investor and former portfolio manager Paul Meeks said, "I haven't bought yet. While I like this price, I don't like the timing."

In the United States, investors were caught off guard when the Federal Reserve chose to hold off on rate cuts in July. The market now sees a rate cut in September as almost a certainty.

UBS remains bullish on tech stocks, partly due to what they call "technical factors," which are more related to macroeconomic conditions rather than individual companies themselves.

For Kealas, there are other macro factors that worry him, mainly the U.S. presidential election. He said, "The real difficult part is that the declines we're seeing, I think, are related to political and geopolitical issues."

For investors, trying to predict any election outcome can be a headache. However, this time, whether it's the Republicans or Democrats taking the White House, it could mean greater uncertainty for the tech industry.

No potential government has provided a clear tech regulation plan, Meeks said.

Democrats have shown determination to regulate large tech companies, which is largely unprecedented. On the other hand, Democratic presidential candidate and Vice President Harris has close ties to some key figures in Silicon Valley.

Meanwhile, there is uncertainty surrounding the Republican candidate himself. Vice Presidential candidate JD Vance was a former venture capitalist and has received support from influential tech companies like Peter Thiel. However, former President Trump has proposed imposing comprehensive tariffs, which could be devastating for some tech companies