Investor Cathie Wood on Bitcoin, Why She Sold Stocks in China, and What Her Company Is Buying Now

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Cathie Wood, Founder and CEO of Ark Invest, is bullish on Bitcoin and has sold stocks in China.

Eli Warren for Forbes

Cathie Wood, the wealth manager known for making a huge bet on Tesla, weighed in on her support for Bitcoin, explained why her company Ark Invest sold almost all of the Chinese stocks she previously owned and talked about what his company is now buying. during an appearance on a panel Thursday. Here’s what Wood, who was on Forbes’ list of the richest self-taught women in America in August, with an estimated net worth of $ 400 million, told the panel, moderated by angel investor and entrepreneur Jason Calacanis at PreMoney, a conference hosted by the investment company 500 Global in Miami Beach, Florida.

Bitcoin

In September, Wood predicted that the value of Bitcoin would reach $ 500,000 in five years. She remains a staunch supporter of Bitcoin, even though some in the crypto world have lost their affinity for it. “There is a feeling that the Web3 world is moving from Bitcoin and Ether to cheaper and faster cryptocurrencies,” she said. “But they forget that the more features you have, the more centralization… you talk about recreating Visa.” That is, recreating an old structure in a new form. Wood said she had “heard that Bitcoin was so yesterday. I think this is a big mistake. Look at what’s going on in El Salvador.

Calacanis asked in response, “Do you believe this dictator? Don’t you think he’s a bad actor?

Wood replied that they “donate $ 30 to each Chivo account [the digital wallets created for each citizen in El Salvador]. Before Chivo, only 1.2 million people had bank accounts. Today, 3 million out of 4 million eligible people in El Salvador have banking services. “

Calacanis continued, “Most technology doesn’t last longer than a decade. Why would Bitcoin last longer than this? “

Wood replied, “This is the most secure blockchain technology out there. What is happening right now would have been [Nobel Prize winning economist] Robert Mundell’s dream: to introduce a world monetary system that is not under anyone’s control. (Wood explained that she had studied with supply-side guru Arthur Laffer – an economist famous for the Laffer curve – who was influenced by Mundell.) She clarified, “Look at Turkey. The Turkish people have lost half of their purchasing power since February. Wouldn’t it be nice to have some Bitcoin? “

CHINA

The topic turned to China and the measures taken by the Chinese government this year CK regarding digital assets – banning cryptocurrency exchanges and banning cryptocurrency mining. Wood said his company held shares in Chinese e-commerce giant Alibaba, but sold them along with other Chinese stocks. “We own very, very few stocks there [in China] because they are unpredictable. They grapple with what most governments grapple with: the rich-poor divide. Wood added that 75% of consumer savings in China are held in real estate and real estate values ​​are starting to fall. His analysis: That the Chinese government is prepared to risk falling real estate values ​​in order to close the wealth gap.

Calacanis put it this way: “I think the Mad King spins around his chariots because he feels threatened. I am talking about Xi Jinping.

Wood’s response: “I think it’s in the interests of the United States if China isolates itself. They are less likely to become the world’s superpower.

WHAT WOOD IS BUYING NOW

Wood said Ark bought Robinhood – a stock that has fallen nearly 40% since it went public in July – but hasn’t explained why. Also: “We’re looking for the digital wallet: Coinbase, Square’s Cashapp, Paypal’s Venmo minus,” she said. “Most analysts are focusing on banks, which we believe are being gutted… by challenge and digital wallets.” It is therefore moving away from traditional banks.

Two other stocks it buys: Zoom video communications tool and cloud communications company Twilio, both part of a new wave of telecommunications tools. “What I don’t think people recognize is that we haven’t had a refresh cycle [in telecom] in 30 years. She explained, “I’m thinking of Cisco … and the old telecom stack.” Covid, she said, has inspired a new crop of options.

Calacanis asked about electric carmakers (possibly Rivian, although he didn’t say so), saying, “Speaking of fraud, should a company that hasn’t sold any cars be worth it? 150 billion dollars? “

Wood’s response: “Investing is the future. This is not fraud, maybe it is a bad evaluation. I do not call this fraud at all. Regarding the crop of publicly traded electric automakers with little to no income, Wood said, “We called Nikola. We knew what he [former chairman Trevor Milton] said it was wrong. We knew there were problems. (In July, Milton was charged with securities fraud by the U.S. Attorney’s Office in Manhattan; he pleaded not guilty). Wood also mentioned Rivian and Lucid, claiming that Ark doesn’t own any of the shares. Why? “They are attacking niche markets.” She said Ark spoke to the two companies about self-driving, which they weren’t focusing on. Wood’s take: Without autonomous drivers neither can evolve, although Rivian may be helped by his ties to Amazon, which owns part of the business and is committed to moving to electric delivery vehicles. .

Her bearish outlook is hardly surprising, given the big bet she made on these firms’ biggest competitor. Wood pointed out that ARK discloses its holdings at the end of each day and has been doing so since 2014. Its single largest holding, by far: Tesla, where Ark has a stake of $ 2.4 billion.

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