New York –News Direct– Masterpieces
It’s been two years since Cathie Wood’s ARK Invest broke out during the pandemic, and in the time since then the fund has hit a major rock bottom.
In 2021, the fund’s holdings in Roku, Teladoc and Zoom declined in value of the ETF. However, the latest market implosion crushed the faltering company. Ark fell more than 60% through August, fifty percentage points worse than the S&P 500.
Market decline proves too much for concentrated positions
Many believe that in 2021 the money manager was way too exposed to his concentrated positions in scientific and technical growth stocks. When meme stocks went “to the moon,” the lack of diversification left Wood’s company decimated.
In the latest market decline, critics say the company has not learned its lesson. As of August, the hedge fund was still concentrated in tech growth positions. According to Ark’s latest 13F filing, technology stocks still made up 34% of the portfolio.
Billionaires survive by this rule of thumb for investing
Prior to Ark’s decline, Wood had backfired for her contrarian views on the markets. Insiders speculate that Ark’s continued lack of diversification was another key factor in the fund’s performance.
Many alternative assets can prevent investors from a similar fate, especially tangible assets with a low correlation to traditional stocks. Real estate provides a hedge for many, but currently experts are forecasting a recession in the housing market, dependent on inflation and Fed rate hikes.
It may sound unconventional. Companies make a profit. Rental housing collects the rent. But what is possible? visual arts to deliver?
Well, it can potentially offer the one thing that matters most to investors: growth.
According to Citi, contemporary art prices have outperformed the returns of the S&P 500 by as much as 164% over the past 25 years. And investing in art is becoming a popular way to diversify because it is a real, physical asset with little correlation to the stock market.
On a scale of -1 to +1, where 0 represents no relationship at all, Citi found that the correlation between contemporary art and stocks was only -0.04 over the past 25 years.
Earlier this year, Bank of America investment chief Michael Harnett cited artwork as a sharp way to potentially outperform over the next decade, largely because of the asset’s track record as an inflation hedge.
Visual arts have long been the favored asset class of the financial elite and have recently been unlocked by tech entrepreneurs through companies like masterpieces.
Masterworks’ mission is to democratize the world of art investment and help people access an investment previously exclusive to the ultra-wealthy. We are the only platform that allows you to invest in multimillion dollar artworks from artists like Basquiat, Picasso, Banksy and more.
This post contains sponsored advertising content. This content is for informational purposes only and not intended as investment advice.
Check out the source version at newsdirect.com: https://newsdirect.com/news/cathie-woods-ark-etf-is-getting-crushed-the-basic-investing-lesson-we-can-all-learn-682519315