Almost two weeks ago, ARK Invest released its seventh edition of Big Ideas. You can find the link to the full content here.
I know many have been bashing Cathie Wood and ARK Invest in the recent 1-2 years. Their ETFs are mostly in the deep reds after a continuous decline last year. If I recall correctly, there might have been only one or two months when ARKK was in the green last year. There are many moments when I am frustrated with the performance of their ETFs (for those who followed me, you might have noticed that I have a couple of ARK ETFs in my portfolio).
However, I must say that ARK Invest is still one of the best firms in technological research. If you don't believe me, just take a look at the link to their content at the start of this article. It's more than 150 pages long but trust me, their content is easily digestible and you'll learn a lot about future technology trends just by reading this single content piece.
In this edition, ARK Invest releases contents in 14 different areas of technology. They are namely technological convergence, artificial intelligence, digital consumers, digital wallets, public blockchains, bitcoins, smart contract networks, precision therapies, molecular diagnostics, electric vehicles, autonomous ride-hail, autonomous logistics, robotics and 3D printing, and orbital aerospace.
This is really a wide ranging spectrum of technology fields. Remember the latest craze we have around ChatGPT? It's also mentioned in this research article. Generative AI like what ChatGPT does was predicted to have wide ranging effects on our lives in the near future. In the article, it's predicted that ChatGPT style applications will be deployed at the same scale of Google Search by 2030.
It's going to be really hard to cover all these 14 different areas of technology in detail in this single blog post. Hence, I'm going to list out a few technology areas which I am either personally invested in or have a keen interest in to just elaborate a bit more on what this seventh edition of Big Ideas has to offer.
Firstly, Bitcoin. I don't think that will come as a surprise to many. I have always been advocating that Bitcoin might be the single piece of best investment made available to us in current times. I know many will say otherwise but I encourage those who think so to explore some of the content made available in this edition of Big Ideas. In this edition, ARK Invest explores some of the fundamentals behind Bitcoin network and have shown that the hash rate for the network continues to hit all-high in 2022- a turbulent year in the cryptocurrency scene where we have seen multiple firms collapse. Despite the continuous decline in the price of Bitcoin last year, Bitcoin still continues to outperform global equities, global debt, and gold on several metrics like 3-year CAGR, 4-year CAGR, and 5-year CAGR. Similar to their previous research articles, this edition also includes prediction of Bitcoin prices by 2030 with a base case price target of $682,600. I personally find that this prediction might be a little optimistic but there is no doubt from me that the price of Bitcoin will definitely be a lot higher than what it is today by 2030.
Secondly, precision techniques. Precision techniques are a growing area of research as it aims to tackle the root cause of diseases instead of just alleviating symptoms. ARK research predicts that this is a technological area which will appreciate at 29% CAGR to be a $3 trillion market in 2030. Gene editing is an example of precision techniques and it's predicted to be really close to commercialisation with rapid growth expected in the next couple of years. In the area of precision techniques, it usually revolves around three components (DNA, RNA, protein). In this edition of Big Ideas, ARK Invest provides easy-to-read explanatory notes on what the progress of precision techniques on these three components are like today and in the future. I do think that there is a huge potential for genomics research in the coming decade and am personally invested in ARKG for that matter. I know it hasn't exactly been performing well over the past 1-2 years but I do think that explosive growth in this area is expected and I do not want to be not invested in it.
Thirdly, electric vehicles. I think it's safe to say that we all felt the impact of electric vehicles a lot more strongly in recent years. While most could not fathom why there was a need of electric vehicles 5 years ago, it's increasingly becoming a norm in recent years with several people around us starting to own one. In the article, it was shown that EVs have now hit price parity with gas powered vehicles, and might go even lower than gas powered vehicles in the next few years. These will all lead to exponential growth of EVs in the near future. While this might be something within the expectations of most, ARK Invest further highlights future trends whereby the rise of EVs might then be interrelated with the rise of autonomous ride-hail (so most people do not really need to own a vehicle anymore). This rise of autonomous ride-hail might even eat into the airlines market as ARK Invest predicts that 60% of short-haul airline flights can be replaced by autonomous taxis as they are more cost effective. While this certainly sounds like a pipe dream now, who says it won't be the norm by 2030?
While some of ARK Invest's predictions might seem overly optimistic, I do think that the fundamentals behind their research are intact and it's definitely worth your while to read through the latest edition of Big Ideas. In this current inflationary environment, we might not make sense out of investing in growth stocks. But I do think that the tide will change sooner than we think, and you certainly do not want to be left behind when it comes. So do take a read and maybe start exploring some of the growth stocks today.
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