Cathie Wood: The Next Bull Market Is Here (…What It Will Look Like)

**Cathie Wood** (0:00)
My name is Cathie Wood, CEO and CIO of ARK Invest. When we were going out in the early days, nobody believed us. Economic activity is energy transformed. I think the market's never been more inefficient than it is today.

**Robbie** (0:23)
Guys, welcome back to The Rollup. Today, we have a special guest, Cathie Wood, the CEO and co-founder of ARK, a local from my hometown as well.
Now a local, but once up here in New York, where I am in the Empire State Building. Cathie, welcome to the show.

**Cathie Wood** (0:38)
Thank you so much. I'm happy to be with you, Robbie and Andy.

**Andy** (0:42)
It's a pleasure to have you with us, and very excited. You have such a vantage point on so many disruptive innovations. And so, yeah, we're really, really excited to get into it.
And so, why don't we just sort of kind of set the frame? You have five innovations, innovation platforms that kind of gave way to 15 technologies, and now those technologies are converging. And so, before we dive into the digital assets and public blockchains area of this thesis, just maybe give us just a broad, holistic view of how you approached this space in general before we dive in.

**Cathie Wood** (1:22)
Sure. Well, you mean the innovation space or the crypto space?

**Andy** (1:27)
The thesis around disruptive innovation in general.

**Cathie Wood** (1:29)
Oh, yeah, yeah, yeah. Well, the seeds for everything that's going on today, they were planted in the early years of my career. So in the 80s and 90s, I watched seeds being planted for everything that we're seeing today. We didn't get the cloud, though, until 2006
So that tells you the 80s and 90s ended with the tech and telecom bubble, which simply happened because investors were just throwing capital at anything that was.com or internet related.
And unfortunately, the technologies weren't quite ready, and the costs were way too high. So as I said, the cloud didn't even exist until 6 with AWS. And I remember back then trying to explain to investors and advisors what the cloud was. It was such a foreign concept to them. And we didn't get the really big breakthroughs in AI, so deep learning in 2012, and then even more important transformer architecture in 2017, which effectively led us towards chat GBT and natural language programming. So again, too much capital, chasing too few opportunities too soon. We went through the bust, and today we're in the opposite situation. We're ready for primetime with five innovation platforms, as you say, thank you for doing your homework, involving 15 different technologies that are all converging, and investors are fearful. They're really scared.
As a portfolio manager, I much prefer operating in this environment than in the tech and telecom bubble. It was crazy back then. So, I think, and I know many people find this hard to believe, the valuations today are much lower than what we saw during the bubble, and the technologies are ready, and most importantly, the costs are dropping at such an incredible rate that these technologies can be made available to more and more industries and more and more individuals. So, that's how it started. Why did I start ARK in 2014? I started ARK because thanks to the tech and telecom bust, and even more so the 08-09 global financial crisis, we now have risk-averse investors certainly in the institutional world, less so in the retail world. So, risk-aversion, and I saw our industry go passive.
That caused the boom in ETFs to begin. And then even in the active world, benchmark-sensitive, so watching portfolio managers really guide their screening for ideas with benchmarks. We don't do that. The screen for our ideas is our research, our original research. So, yes, five platforms, 15 technologies. And I think research has to be reorganized. In the traditional financial world, you'll see research organized by sector or industry or sub-industry. Many firms have five consumer analysts, five healthcare analysts. We think that in order to capitalize on innovation correctly and efficiently, that you have to set up a research team by those 15 technologies. Why? Because they're going to cut across sectors, cut across industries. So you have to be looking at the technology and not siloing responsibilities by industries.

**Andy** (6:00)
And why are investors so scared? Is it because they've not thought clearly about this organizational structure in order to really connect and understand these technologies as they converge?

**Cathie Wood** (6:14)
I think this convergence is confusing. Tesla is a great example. Most directors of research handed Tesla to their auto analysts, when rightly, it should have been handed certainly, at the very least, to the technology analyst, but even more specifically by technology, to three people collaboratively, robotics analysts, energy storage analysts, and AI analysts.