Innovation investor Cathie Wood said Wednesday her Ark funds should be way more valuable over the long haul, even as technology stocks have struggled recently amid rising rates. "With some of the increased estimates we are now using based on fundamentals, not at all on valuation, we now see a quadrupling over the next five years in our portfolio," the Ark Invest founder said on CNBC's " Squawk Box ." Ark Invest believes disruptive innovation currently represents about $10 to $15 trillion in the public markets. In 10 years, the firm estimates those companies will make up $200 trillion. However, Wood's flagship fund — Ark Innovation — is down more than 6% this week, while the tech-heavy Nasdaq Composite is 1.8% lower on the week. Those declines come as Treasury yields have jumped after the White House on Monday picked Federal Reserve Chairman Jerome Powell for a second term. Higher rates often hit tech shares particularly hard because rising short-term yields can devalue the future cash flows that high-growth companies promise out in the future. "I get very unsettled when I see people selling at what I know are bargain-basement prices," Wood said. "Our optimism and confidence have increased in here, not decreased." Wood believes inflation will soon turn into deflation. In a deflationary environment, the Fed would not have to act as aggressively to tamp down rising prices by tapering its asset purchase program more quickly or hiking interest rates. "This is the beginning of the cyclical correction that we're going to see in inventories and in commodity prices," Wood said. In the longer term, Wood believes the companies in her fund will develop into "mature growth companies" and disrupt legacy players. "We assume massive multiple compression from this moment on to five years out," Wood said. "All of our stocks, or most of them, will have FAANG-like multiples," referencing the acronym for Big Tech names likes Amazon and Apple. Wood garnered a large following after Ark Innovation returned nearly 150% in 2020. The fund is down nearly 15% this year.
Innovation investor Cathie Wood said Wednesday her Ark funds should be way more valuable over the long haul, even as technology stocks have struggled recently amid rising rates.
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