The Lemon Fool

Ark invest, run by Cathie Wood is, imho, more in touch with innovative developments that disrupt the macro environment than anyone else and all of their research is shared freely including regular "In the Know" with Cathie. The most recent one covers most of the recent macro developments with Ark's take on them and is imho, very worth the nearly 41 minutes watch time:

https://youtu.be/cgdxBl6kIEE

Regards,

Interesting video where Cathie Wood attempts to explain her strategy of buying innovation to other fund managers who are arguing that the only game in town now with inflation is value & that anything with out earnings is a short. Cathie attempts to argue that inventories are large & that the inverted yield curve are all signalling a change. As of now Cathie has been creamed with many of her holdings down, folk wanting out leading to more selling & they are selling their growth names like Tesla to satisfy sales & buy more of their preferred growth shares. A fascinating variance of opinions:

https://youtu.be/l-pz4rbkAxI

Fwiw I am ambivalent here & waiting to see what happens with fed rates & whether the growth stocks start to give indications of some kind of bottom. If Cathie is wrong her picks still have room to fall, if she is right this is a huge buying opportunity. These kinds of polarisations are not that common & although I generally like what Cathie is suggesting I am certainly not interested in selling stuff that is going up to buy what is going down. Should this reverse I will reverse, but currently I do not see this.

Regards,

I've got two comments to make about Cathie's narrative.

Firstly she has holdings in typically innovative, high risk stocks some of which are not generating profits. Then she claims that when the products made by these firms hit market in a big way, then their uptake will exponential. Indeed she seems a fan of using S-curves to depict technology adoption. She may well be correct, and hence firms selling into these exponential growth markets will see massive earnings growth etc. etc. However, as her funds are diversified I see it as being very likely that, when for example one stock "goes exponential" it's gains will be diluted in the fund in it's entirety by the other stocks which are either still loss-making or have failed. It seems that hopes for her fund to go big are being pinned all her boats rising in tandem.

Secondly she makes a big argument for the emergence of "strong deflationary forces" as her stocks revolutionise the world. Somehow I don't see this as ever happening. Most Central Banks of the developed world seem fixated on maintenance of low, but still positive, inflation. So her idea of future deflation, seems a little to, umm, too futuristic for me to agree with.

Matt

From what I have seen of her analysis, the big mistake, IMO, is extrapolating huge profit margins at firms like Tesla as they expand.
I really don't believe that will be the case or that the barriers to entry in for example, cars and self driving, are so great that Tesla will not face significant competition from existing car makers as they get their act together. I think I saw her say that Tesla will be worth $3,000 per share in the next few years.

TheMotorcycleBoy wrote:I've got two comments to make about Cathie's narrative.

Firstly she has holdings in typically innovative, high risk stocks some of which are not generating profits. Then she claims that when the products made by these firms hit market in a big way, then their uptake will exponential. Indeed she seems a fan of using S-curves to depict technology adoption. She may well be correct, and hence firms selling into these exponential growth markets will see massive earnings growth etc. etc. However, as her funds are diversified I see it as being very likely that, when for example one stock "goes exponential" it's gains will be diluted in the fund in it's entirety by the other stocks which are either still loss-making or have failed. It seems that hopes for her fund to go big are being pinned all her boats rising in tandem.

Secondly she makes a big argument for the emergence of "strong deflationary forces" as her stocks revolutionise the world. Somehow I don't see this as ever happening. Most Central Banks of the developed world seem fixated on maintenance of low, but still positive, inflation. So her idea of future deflation, seems a little to, umm, too futuristic for me to agree with.

Matt

All the major growth themes that Cathie talks about are in huge markets where it is difficult for one business to be totally dominant, but if any manage it they make out like bandits. If we consider the move to smart phones, it was certain that Nokia and Blackberry would stay dominant and that the Apple offering was a joke. However, the iPhone was technologically superior to anything that Nokia and Blackberry had and we all know how this turned out. A basket of mobile phone stocks would have put an investor in the right place and then he/she could have adjusted holdings as the growth in iPhones became clear. If one looks at the reasons that Apple has continued to be strong in mobile it is that they have built a huge technology business dedicated to eating their own lunch by making products that are better than what they are selling. It is very difficult for anyone to challenge Apple technology and on top of that is there software and its ease of use and relatively simplified product line that once someone becomes familiar with is hard to leave, especially if a user has a lot of stuff on Apple cloud and lots of Apple devices that all work together. Cathie seems to be betting on sectors, admitting she does not know who will win, but makes sure she has fingers in pies and does enough research to selectively add as the winners begin to emerge.

Regarding deflation, the emergence of the information economy makes it far easier for manufactures and service to know what is going on and tailor their products to the best areas. E.g. both my car and house insurance policies have come down a lot on recent renewals after jumping over the last few years. I put this down to the brokers being able to easily search around and the underwriters unable to keep margins high in cartel behaviour which was much easier before the information revolution. This also applies to goods and although car prices have ramped with shortages there are only so many folk who must have a car at what ever the price and once those folk have got their car, the demand falls off until prices are reduced. However, when was one has shortages of parts or food the information revolution doesn't help and one has too much money chasing too few goods. Cathie argues that at some point shortages are fixed and then there are more goods and manufactures must sell or risk being stuck with inventory and all manufactures try to avoid this and deflationary forces dominate.

Regards,

scrumpyjack wrote:From what I have seen of her analysis, the big mistake, IMO, is extrapolating huge profit margins at firms like Tesla as they expand.
I really don't believe that will be the case or that the barriers to entry in for example, cars and self driving, are so great that Tesla will not face significant competition from existing car makers as they get their act together. I think I saw her say that Tesla will be worth $3,000 per share in the next few years.

As of now Tesla can make a car in less than 10 hours, VW take more than 30. hours. This is because Tesla are using casting presses. VW are copying but have lead time issues and then hits to the balance sheet as they have to write off existing kit that will be replaced by castings. With self driving the barrier to entry are more severe. VW for example have struggled to get over the air updates to work whereas Tesla are relentlessly collecting driving data and re-training their neural net on the data, not yet using their neural net Dojo computer which once it is going with their newly changed variable memory precision will give them another advantage. It would take VW a few years to catch up even if they had no internal problems, but many on the VW board and union don't want to close factories and lay off work force and they have successfully hobbled the VW battery platform making it heavy and uncompetitive to protect their ICE production. It is very hard for legacy to catch Tesla who are relentlessly eating their own lunch and making better stuff and delivering better margins.

Regards,

scrumpyjack wrote:From what I have seen of her analysis, the big mistake, IMO, is extrapolating huge profit margins at firms like Tesla as they expand.
I really don't believe that will be the case or that the barriers to entry in for example, cars and self driving, are so great that Tesla will not face significant competition from existing car makers as they get their act together. I think I saw her say that Tesla will be worth $3,000 per share in the next few years.

Not the bit where she claims that founding her company was fulfilling the direct will of God?

Good grief, this place is becoming a kindergarten. Could we have a Gullible section and stick this thread in there, with the alien interaction and self driving threads?

Another super interesting video from Cathie Wood who still believes inventory levels at major uS retailers will bring down inflation & cause the fed to stop tightening:

https://youtu.be/6Y6Hhb6TkEU

Regards,

odysseus2000 wrote:
As of now Tesla can make a car in less than 10 hours,

Regards,

Maybe, but by all accounts it isn't a very well made car.

https://www.businessinsider.com/tesla-r ... ?r=US&IR=T

OhNoNotimAgain wrote:

odysseus2000 wrote:
As of now Tesla can make a car in less than 10 hours,

Regards,

Maybe, but by all accounts it isn't a very well made car.

https://www.businessinsider.com/tesla-r ... ?r=US&IR=T

I have watched many of the tear downs of electric cars by Munroe and it’s as clear as can be that Tesla build quality & engineering is best in class whereas VW id3 has poor build quality & poor engineering too.

Many magazines & web sites have agenda & do not give a fair review.

Regards,

Teslas are consistently rated as shoddy junk in Which? surveys of actual owner experiences. One of the worst brands in the world.

odysseus2000 wrote:

OhNoNotimAgain wrote:

odysseus2000 wrote:
As of now Tesla can make a car in less than 10 hours,

Regards,

Maybe, but by all accounts it isn't a very well made car.

https://www.businessinsider.com/tesla-r ... ?r=US&IR=T

I have watched many of the tear downs of electric cars by Munroe and it’s as clear as can be that Tesla build quality & engineering is best in class whereas VW id3 has poor build quality & poor engineering too.

Many magazines & web sites have agenda & do not give a fair review.

Regards,

Evidence?

And I quote CW from her Twitter account, 22nd May 2022.

"Within 6-12 years, breakthroughs in AGI could a accelerate growth in GDP from 3-5% per year to 30-50% per year. New DNA will win!" (AGI = Artificial General Intelligence)

This is utter nonsense on so many levels ....

The other thing that makes me extremely sceptical of her judgement is that she is apparently a religious fruitcake who reads the bible assiduously.

More from Cathie Wood, some super interesting stuff on inflation, inventory, clicks v bricks shopping etc:

https://youtu.be/6Y6Hhb6TkEU

Regards,

OhNoNotimAgain wrote:

odysseus2000 wrote:

OhNoNotimAgain wrote:

odysseus2000 wrote:
As of now Tesla can make a car in less than 10 hours,

Regards,

Maybe, but by all accounts it isn't a very well made car.

https://www.businessinsider.com/tesla-r ... ?r=US&IR=T

I have watched many of the tear downs of electric cars by Munroe and it’s as clear as can be that Tesla build quality & engineering is best in class whereas VW id3 has poor build quality & poor engineering too.

Many magazines & web sites have agenda & do not give a fair review.

Regards,

Evidence?

Just study what ever interests you & then compare your knowledge with what popular magazines & web sites say about the same thing.

If you have a product that a retailer likes & you sell it to them, watch how they hype it by e.g. making it a top seller before they have sold 1.

Regards,

CliffEdge wrote:Teslas are consistently rated as shoddy junk in Which? surveys of actual owner experiences. One of the worst brands in the world.

And yet Tesla are selling like crazy with huge waiting lists, but they do not pay anyone for advertising, so why would any media outfit that needs advertising revenue ever say anything good about Tesla?

Regards,

odysseus2000 wrote:

CliffEdge wrote:Teslas are consistently rated as shoddy junk in Which? surveys of actual owner experiences. One of the worst brands in the world.

And yet Tesla are selling like crazy with huge waiting lists, but they do not pay anyone for advertising, so why would any media outfit that needs advertising revenue ever say anything good about Tesla?

Regards,

Isn't the Model 3 the UK's biggest selling car in recent months? Can't all be bad if that is the case, bad word soon gets around.

Crazy isn't it

https://eand.co/britain-is-self-destruc ... 92870ffc28