Cathie Wood and ARK are this bull market’s superstar research firm. The research and worldview is enlightening, refreshing and inspiring to anyone that can tune out the negativity prevalent in western society today. They’re in the perfect place at the perfect time.

While ARK’s ideas are great and working right now, almost every single growth idea that can be imagined is working insanely well.

Last week ARK’s head of research was on a podcast and he said something really interesting - at some point he expects people will think ARK was a fraud. Why would he say that? Because the business/sentiment cycle always eventually turns.

You can say ARK’s success is simply the product of suppressed interest rates like you’re some sort of obviously-past-your-prime permabear (and that is part of it), but there are also larger secular trends supporting the ARK thesis.

There’s exponential growth in information. Remember the Covid vaccine? We had the information just lying around and it took a couple of days to analyze the virus and cook up a vaccine with completely new technology. You better believe that isn’t the only useful information we have lying around waiting for useful application.

Human capital is being unleashed in a manner that is incomprehensible. Not only is information growing exponentially, it’s flowing exponentially. That means access to ideas and opportunity for people in rural areas of developed nations. That means literacy exploding in un-developed countries. That leads to more people having more ideas and solving problems and finding new ones, which leads to more new companies in new industries across the world at a faster and faster rate.

It’s a cycle that’s going to take decades if not generations to fully play out.

What they don’t tell you about the tech bubble

People like to say ‘this is the 1999-2000 all over again’ Well, they’re at least kind’ve right.

At the end of the tech bubble, the fear of Y2K computer glitches led to the Fed’s greatest increase of liquidity ever (well, at the time). After 2000 came and went the Fed withdrew the liquidity and then we had the 2000 peak.

The Y2K special lending facility ran from October 7, 1999, to April 7, 2000. In that period the nasdaq composite rallied 95% in that period before declining 78% over the next two and a half years. Liquidity is awesome on the upside, but when you remove it - not so much.

And of course the Fed has been thinking about this and the end game of the current support regardless of what they say. Late night Friday the Fed announced their annual stress test to see how big banks would handle a 55% drop in the Dow over the next couple of years. They aren’t doing that for nothing. The cycle is going to turn eventually.

Just like tech stocks in 2002, ARK will one day come out of favor, but that doesn’t mean the foundation of what they’re doing isn’t rock solid in the long run.

Value relative strength still bottoming out

Insurance relative to the S&P is trying to bottom at the 2009 low.

Value relative to growth continues to trough. Here’s small cap Value/Growth.

Around the World

You don’t think the global economy is back? Check out this action in shipping ETF BDRY as it screamed to 52 week highs last week.

The China rally has been incredible, but the Shanghai Composite really hasn’t even gotten going yet. Here’s the daily view

And the long term look

Portugal with the long term breakout backtest if you’re down for some European speculation

Argentina is through a major inflection and making new highs.

Metals and Mining

Metals and Mining ETF is digesting a major inflection point and there is some evidence it may continue higher soon.

Copper relative to gold is confirming we prefer industrial metals relative to precious metals.

That said, constant buyers of the two largest gold miners remain.

Names like US Steel are also holding key support

Thanks for reading. Trade ‘em well!

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