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Discussion Starter · #1 ·
The numbers show that Cathie Wood sucks at her job and is a failure. She provides inferior risk-adjusted returns to a dumb, low fee index.

Let's compare her flagship ARKK to a tech-focused major index, QQQ

Going back to inception, ARKK's sharpe ratio (the risk adjusted return) was 0.89 compared to 1.24 for QQQ. This shows that, per unit of risk, QQQ was a superior investment.

Applying only 25% leverage to QQQ beats ARKK:
  • QQQ leveraged has returned 27.3% CAGR with a max drawdown -20.5%
  • ARKK has returned only 26.4% CAGR with a max drawdown -30.6%

And this isn't theoretical. One can easily leveraged QQQ using the QLD fund, and this too has been superior to ARK.

Here's a comparison of ARKK and QLD. They have similar risks (similar drawdown and volatility) and yet QLD has a far superior return.
 

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On CNBC, Josh Brown described Cathie Wood's investing style as her reading Reddit and other social media for the most hyped stocks and then rushing out and putting them all in one basket. He said almost every holding in her ARKK fund is an unproven meme stock.

Her funds are plunging with no bottom in sight. The holdings in her fund have cratered and many investors are withdrawing cash.

I wouldn't be surprised to hear she suspends withdrawals to sell stocks to pay the withdrawals.
 

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One can easily leveraged QQQ using the QLD fund
Good luck with QLD though if we have another bubble burst like in 2000. That 2x leverage on QQQ would mean a drawdown of at least -98% when applied to the 2000s.
 

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Your numbers just show another misleading comparison. You compare her fund to a fund plus 25% leverage and somehow think that is a fair comparison. Her fund beats QQQ easily w the same leverage or w no leverage. ex below is w both leveraged.

Rectangle Font Magenta Circle Art


Misleading also as they are different types of funds - an index w 100 stocks vs a concentrated portfolio of 35-55 stocks. Smaller funds will naturally have more volatility.

QLD is a 2x levered fund and not a regular 1x ETF so they can't be compared either. QLD isn't even designed for 'buy and hold ' and only recommended as a "short-term tactical instrument "


QLD ETF Report: Ratings, Analysis, Quotes, Holdings | ETF.com
 

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The numbers show that Cathie Wood sucks at her job and is a failure.
Not sure, her real job is to attract piles of money and get paid massive fees. She's doing that quite well.

She provides inferior risk-adjusted returns to a dumb, low fee index.
Because she's a crappy investor.

The thing is, she grabs headlines, because of her ability to sell funds, but she doesn't actually understand what she's working on, at least to the level of the real experts, who she openly disagrees with.
 

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The numbers show that Cathie Wood sucks at her job and is a failure. She provides inferior risk-adjusted returns to a dumb, low fee index.

Let's compare her flagship ARKK to a tech-focused major index, QQQ

Going back to inception, ARKK's sharpe ratio (the risk adjusted return) was 0.89 compared to 1.24 for QQQ. This shows that, per unit of risk, QQQ was a superior investment.

Applying only 25% leverage to QQQ beats ARKK:
  • QQQ leveraged has returned 27.3% CAGR with a max drawdown -20.5%
  • ARKK has returned only 26.4% CAGR with a max drawdown -30.6%

And this isn't theoretical. One can easily leveraged QQQ using the QLD fund, and this too has been superior to ARK.

Here's a comparison of ARKK and QLD. They have similar risks (similar drawdown and volatility) and yet QLD has a far superior return.
To be fair one should really evaluate her against other actively managed tech ETFs. Her micro skill is there. The macro decision - to invest in an active fund as opposed to an index - lies with the investor who purchased the ETF.
 

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I expect that if people knew the origin of the word "sucks" as used in such a context, most would not use it. It was a 1970s expression which referred to a particular sex act. Like so many words, it passed into the language with most people unaware of the meaning.
 

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Discussion Starter · #9 ·
Good luck with QLD though if we have another bubble burst like in 2000. That 2x leverage on QQQ would mean a drawdown of at least -98% when applied to the 2000s.
I'm not endorsing QLD, would not hold it myself. I'm just showing that it's a leveraged QQQ and how it also has a superior risk-adjusted return to ARKK.

You can just hold QQQ, and already you beat ARKK in risk-adjusted terms.
 

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To be fair one should really evaluate her against other actively managed tech ETFs. Her micro skill is there. The macro decision - to invest in an active fund as opposed to an index - lies with the investor who purchased the ETF.
Uh no, if you can't beat an index fund, you're not justifying your fees.
That's a well established norm. It also makes a lot of sense.


To be fair the time period is really too short to be comparing equity returns.

There are "active" funds that manage according to a formula or nonstandard index. How do these fit in your comparison?
 

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Discussion Starter · #11 ·
There are "active" funds that manage according to a formula or nonstandard index. How do these fit in your comparison?
If you're interested in this, you might want to check out some of the content from Ben Felix. For example one can match exposures of known factors (market cap size, growth or value, that kind of thing) to benchmark to an appropriate index. There are regression techniques, or mixing of factor funds from Vanguard, that can be used as equivalent benchmarks.

It won't work if the active fund uses something like tactical/dynamic asset allocation (which means they do whatever the hell they feel like doing) but it does work if comparing to something like a US Growth or Value fund.

Ben Felix has repeatedly pointed out that there is no evidence of any kind of skill in active management. Perhaps before fees a tiny bit, but NOT after fees.

An interesting thing about this kind of comparison is that if you actually analyze the factor exposures of some of the best long-term fund manager track records, you find that they either perform on par with, or worse, than an equivalent factor index benchmark.

This analysis can even be applied to Buffett. I don't have the paper handy but much of his returns are explained by the value premium, which makes sense as he was one of the first and best disciplined value investors. Buffett still has some alpha, but not nearly as much as commonly believed. He shouldn't be compared to the S&P 500 but rather to an appropriate value index.

Which means you can get the same from Vanguard or iShares. And you probably should :)
 

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Morningstar does an annual Mind the Gap report, comparing the return of investment funds (i.e. time weighted return) to the return of investors in the fund (i.e. money weighted return).

ARKK: An Object Lesson in How Not To Invest
Morningstar said:
ARKK: An Object Lesson in How Not To Invest
Over the past five years, for example, the fund’s 41.3% annualized return places it among the top five best-performing U.S. equity funds and ETFs, and it trounced the S&P 500 (the benchmark listed in its prospectus) by more than 15 percentage points per year. After the adjusting for the timing of cash inflows and outflows, though, we estimate that investors earned less than a fourth of that return.
Note that the article is dated Dec 13, 2021, so it's even worse now.

Cathie's not the only dummie.
 

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Uh no, if you can't beat an index fund, you're not justifying your fees.
That's a well established norm. It also makes a lot of sense.


To be fair the time period is really too short to be comparing equity returns.

There are "active" funds that manage according to a formula or nonstandard index. How do these fit in your comparison?
I am merely making the point that someone who has cash to invest bears responsibilty for choosing the investment class and the vehicle. These are macro or top level decisions. And she didn’t make them. She makes decisions about how to invest the money given to her. Thsee are micro decisions and her performance should be evaluated against others trying to do the same thing.
 

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Not sure, her real job is to attract piles of money and get paid massive fees. She's doing that quite well.


Because she's a crappy investor.

The thing is, she grabs headlines, because of her ability to sell funds, but she doesn't actually understand what she's working on, at least to the level of the real experts, who she openly disagrees with.
No she isn't. If she was such a crappy investor why are other huge ETF firms copying the strategy of her funds? BMO, Evolve, Horizons etc. Not sure who she disagrees w either kook Michael Burry ? She, Elon Musk and Jack Dorsey all seem to agree on bitcoin's future.
 

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Cathie Wood sucks at her job and is a failure.
You should buy SARK (short ARKK) then, rather then insulting her. Did you? Put your money where your mouth is. Otherwise what is the point of this thread? Ark investors, invest long term (should), DCA (to lower their cost) and not hope to get rich overnight.
There always will be people with (spare) money (hoping to get rich quick) who tend to buy high and sell low. Those are not investors, those are gamblers or unfortunate speculator.
just my opinion.
 

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Discussion Starter · #18 ·
You should buy SARK (short ARKK) then, rather then insulting her. Did you? Put your money where your mouth is. Otherwise what is the point of this thread? Ark investors, invest long term (should), DCA (to lower their cost) and not hope to get rich overnight.
SARK is an exotic fund that uses derivatives or something to engineer a reverse return, and probably with daily tracking. That's not a reliable way to bet on the reverse.

Taking an inverse bet is not the right thing to do with bad investments.

What is the point of this thread? To point out that a celebrated active manager actually has poor results. Her returns are inferior to QQQ. So if you like this kind of investment, buy QQQ or XLK instead, since these have superior risk-adjusted returns.
 
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