# Anyone Investing with ARK



## rl1983 (Jun 17, 2015)

Just came across this the other day, ARKK ETF. Looks like it's done very well. Just looking for input on this product or picks.

https://ark-funds.com/arkk#fundmaterial


----------



## Spudd (Oct 11, 2011)

Yes, I have the genetics one, ARKG. But I hold it via the Canadian version, EAGB. I think the Canadian version of ARKK is EARK. 

They are doing amazingly well. I don't particularly believe in the underlying stocks, but you can't deny they have momentum on their side.


----------



## MrBlackhill (Jun 10, 2020)

rl1983 said:


> Just came across this the other day, ARKK ETF. Looks like it's done very well. Just looking for input on this product or picks.
> 
> https://ark-funds.com/arkk#fundmaterial


Currently the best ETFs you can buy in the disruptive tech sector, backed by Cathie Wood.

Yet to prove how such ETFs deal with momentum swings.

I like them.


----------



## Jimmy (May 19, 2017)

rl1983 said:


> Just came across this the other day, ARKK ETF. Looks like it's done very well. Just looking for input on this product or picks.
> 
> https://ark-funds.com/arkk#fundmaterial


They are great. EARK or ARKK holds all 4 of their themes and is the general one. Pretty diversified too actually w a blend of med, IT, communications and consumer discretionary stocks. 
They have lots of good research white papers and articles on tech too.









Innovation Research and Models by ARK Invest


Original research on investing in disruptive innovation and breakthrough technologies by the analysts of ARK Invest.




ark-invest.com


----------



## afulldeck (Mar 28, 2012)

Jimmy said:


> They are great. EARK or ARKK holds all 4 of their themes and is the general one. Pretty diversified too actually w a blend of med, IT, communications and consumer discretionary stocks.
> They have lots of good research white papers and articles on tech too.


They hold nearly 10% in Tesla....


----------



## Jimmy (May 19, 2017)

afulldeck said:


> They hold nearly 10% in Tesla....


Tesla has worked out quite well so far up 500% or so this year . They have done many in depth reports on how the company is leading in EV and self driving AI cars etc They see it going to ~ $1500 in 2 yrs.


----------



## afulldeck (Mar 28, 2012)

Jimmy said:


> Tesla has worked out quite well so far up 500% or so this year . They have done many in depth reports on how the company is leading in EV and self driving AI cars etc They see it going to ~ $1500 in 2 yrs.


I don't know who "they" are, but Tesla is worth more on paper than all other Car manufacturers combine. This isn't realistic, and it will end badly for many. 









Tesla becomes most valuable automaker, worth more than GM, Ford, FCA combined


Tesla is now worth more than any automaker in the world as its stock price soars past $1,000 per share.




www.cnet.com


----------



## Jimmy (May 19, 2017)

afulldeck said:


> I don't know who "they" are, but Tesla is worth more on paper than all other Car manufacturers combine. This isn't realistic, and it will end badly for many.
> 
> 
> 
> ...


They is ARK's team of researchers. Noone knows how it will end. Tesla is miles ahead of everyone in EV and autonomous vehicles. The more production they have the lower their costs and EV car prices go making Evs more and more affordable. Some think they will maintain their lead some don't. personally It looks risky but I don't care as it is only 10% of the ETF.


----------



## doctrine (Sep 30, 2011)

One short term tech bull run does not long term investing genius make. NASDAQ could drop 50% and still trade at reasonable valuations. ARK is primarily running of tech success.


----------



## Jimmy (May 19, 2017)

doctrine said:


> One short term tech bull run does not long term investing genius make. NASDAQ could drop 50% and still trade at reasonable valuations. ARK is primarily running of tech success.


They have done well for 5 years in reality. Their main fund is also disruptive innovation and only 30% in tech.


----------



## doctrine (Sep 30, 2011)

A strategy that runs well for 5 years must also run well for..how much longer? I've seen this show before. They might be okay, but if you anticipate another 1000% return in the next 5 years, then I believe you will be quite disappointed.

It is unfortunate that people don't understand economics and capitalism. When you have such high valuations against such relatively low revenue and extremely low profitability, even with high growth, no matter how far "ahead" you are in your "disruptive innovation" and other words, you just give that much more time for either everyone to catch up, or for the underlying situation to change. People overestimate how much can change in 1 year, but underestimate how much can change in 10 years. Good luck though.


----------



## MrBlackhill (Jun 10, 2020)

doctrine said:


> A strategy that runs well for 5 years must also run well for..how much longer?


The NASDAQ index has been on a bull run of 20% CAGR for the past 10 years and even 16% CAGR for the past 18 years.

If a basic index can do that for nearly two decades, a good ETF can manage a 25% CAGR on the long run.

We all know that investing comes with risks. We can fear the risks, saying it's overvalued and missing a 20% CAGR in the next 10 years. Maybe it will also drop 50%, who knows. We make our choices based on our risk profile and beliefs, and it's okay.

I personally believe the disruptive sector has a lot of good ideas which are currently changing the world and there's still a lot to come and a lot to implement for the next decade.


----------



## Jimmy (May 19, 2017)

doctrine said:


> A strategy that runs well for 5 years must also run well for..how much longer? I've seen this show before. They might be okay, but if you anticipate another 1000% return in the next 5 years, then I believe you will be quite disappointed.
> 
> It is unfortunate that people don't understand economics and capitalism. When you have such high valuations against such relatively low revenue and extremely low profitability, even with high growth, no matter how far "ahead" you are in your "disruptive innovation" and other words, you just give that much more time for either everyone to catch up, or for the underlying situation to change. People overestimate how much can change in 1 year, but underestimate how much can change in 10 years. Good luck though.


Their 'strategy' is simply finding disruptive trends. So far they have found all the right trends. When these trends end or are replaced they find new ones. You are the only one who doesn't seem to understand economics. These trends are already well established and will be in place going forward for years. Who knows how much longer but do you think electric cars aren't going to be around in 5 years time?

As far as 'catching up' there can be clear leaders in their industries. Has anyone 'caught up' to Facebook yet? You can find companies out there growing and returning 30%+/yr for 5 years on end too. Not sure why that startles you so. Cloud and other innovative companies are also extremely profitable btw. Some have over 70% gross profits.

Amazon and cloud computing have been in place already for 10 years actually and is established as the future in IT. They are also predicting cloud computing, ecommerce, connected tv, genomics etc and many of the other innovations to to grow at ~ 30%/yr for the next 5 years. People aren't going to revert back to cable tv, ICE cars , paying by cash or stop mapping and editing DNA for disease prevention and cure and if they do the fund will adjust accordingly.

If new trends disrupt these eventually they will be in the fund. If you don't want to learn about innovation or are just risk averse then this fund is not for you though.


----------



## afulldeck (Mar 28, 2012)

Jimmy said:


> Amazon and cloud computing has been in place already for 10 years actually and is established as the future in IT. They are also predicting cloud computing, ecommerce, connected tv, genomics etc and many of the other innovations to to grow at ~ 30%/yr for the next 5 years. People aren't going to revert back to cable tv, ICE cars and paying by cash or stop mapping and editing DNA for disease prevention and cure.


Yes, I would agree that most people really don't understand cloud computing yet. Explaining you can use any pc, phone, ipad, android, mac, linux machine to connect to your Microsoft virtual Desktop is pretty amazing. Especially when they cannot tell the difference between local and cloud.


----------



## james4beach (Nov 15, 2012)

afulldeck said:


> Yes, I would agree that most people really don't understand cloud computing yet. Explaining you can use any pc, phone, ipad, android, mac, linux machine to connect to your Microsoft virtual Desktop is pretty amazing. Especially when they cannot tell the difference between local and cloud.


Cloud computing isn't a new thing. The notion of a dumb terminal in computing with centrally located computers was how things were normally done in the 1970s.

So 'cloud computing' or centralized servers are about 50 years old. All they did was bring back the concept with new buzz words (cloud). It's not new. IMO the whole thing is over hyped






Observation: Cloud computing is nothing new | Linux Journal







www.linuxjournal.com


----------



## afulldeck (Mar 28, 2012)

james4beach said:


> Cloud computing isn't a new thing. The notion of a dumb terminal in computing with centrally located computers was how things were normally done in the 1970s.
> 
> So 'cloud computing' or centralized servers are about 50 years old. All they did was bring back the concept with new buzz words (cloud). It's not new. IMO the whole thing is over hyped
> 
> ...


So I agree with you. I started work in the early 80's with a dumb terminal connection to a mainframe, later unix, so dumb terminals have been around for some time. The difference now, is the solution is going main stream where end consumer (non-techy) user can use any browser. Its a big step forward in my mind


----------



## Juggernaut92 (Aug 9, 2020)

Have heard of them but would go with something safer along the lines of vanguard. Something like VOO.


----------



## latebuyer (Nov 15, 2015)

I just read this article 









This couple made a fortune in Apple shares — now they have to turn it into a stable retirement


Two decades ago, Bill and Cindy bought $41,300 worth of Apple shares. Today, they’re worth $3,360,000




financialpost.com





where the couple had bought 41000 in apple shares and they are now worth 3 million. It would be nice to have a piece of the next big thing.


----------



## afulldeck (Mar 28, 2012)

latebuyer said:


> I just read this article
> 
> 
> 
> ...


Yes it would. And sometimes is make sense to invest in the last great thing.......even more.









The 5 Best-Performing Stocks of the Past 20 Years


Find out which stocks have performed the best over the past 20 years, which industries generated the most growth, and how much these stocks appreciated.




www.investopedia.com


----------



## Jimmy (May 19, 2017)

james4beach said:


> Cloud computing isn't a new thing. The notion of a dumb terminal in computing with centrally located computers was how things were normally done in the 1970s.
> 
> So 'cloud computing' or centralized servers are about 50 years old. All they did was bring back the concept with new buzz words (cloud). It's not new. IMO the whole thing is over hyped
> 
> ...


Not really. The business model is entirely different. You pay subscriptions vs having to purchase licences each year like w MS.

Many of the services they offer are new too. Like sw to place ads in videos and online content ( the Trade Desk) , sw for cashless payment ( SQ, Paypal ) sw for posting gig work ( Fiverr) , sw for security ( Crowdstrike etc) sw for data management ( Datda dog), sw for ecommerce (Shopify, Lightspeed) etc

Either way the field is booming. Even Amazon is still returning 60%/yr


----------



## doctrine (Sep 30, 2011)

Reality coming back to bite these unprofitable buy-at-any-price stocks that "are the disrupting future". IPOs indexes are also down year to date in both Canada and US despite 10%+ index gains. Once again, IPO and hype is failing. It's always just a question of when. ARKK dropping past a 6 month low and still holds air stocks that do not make money. I guess it wasn't going to keep returning 50-100% a year.


----------



## MrBlackhill (Jun 10, 2020)

doctrine said:


> Reality coming back to bite these unprofitable buy-at-any-price stocks that "are the disrupting future". IPOs indexes are also down year to date in both Canada and US despite 10%+ index gains. Once again, IPO and hype is failing. It's always just a question of when. ARKK dropping past a 6 month low and still holds air stocks that do not make money. I guess it wasn't going to keep returning 50-100% a year.


It depends how you see it. Big gains comes with big volatility and therefore big drops, but as long as the gains outpaces the drops, I'd be happy.

Since inception, both ARKK's and ARKW's 3-year and 5-year rolling returns are totally outpacing S&P 500 and NASDAQ.

Sure, those ETFs are still young and we'll see what happens when NASDAQ gets a real correction as it deserves, but so far so good for ARK. This behaviour is healthy. It's as healthy as NASDAQ staying below 14,000. Nothing to worry about.


----------



## Jimmy (May 19, 2017)

doctrine said:


> Reality coming back to bite these unprofitable buy-at-any-price stocks that "are the disrupting future". IPOs indexes are also down year to date in both Canada and US despite 10%+ index gains. Once again, IPO and hype is failing. It's always just a question of when. ARKK dropping past a 6 month low and still holds air stocks that do not make money. I guess it wasn't going to keep returning 50-100% a year.


Yup has 'slipped ' to 44%/yr cagr over 5yrs. Square, Twitter, Shopify, Zoom, Zillow, Docusign etc are very profitable btw. SW as a service companies generally are one of the most profitable groups on the market. Docusign's gp is 74%. Shopify's ~ 50%.


----------



## doctrine (Sep 30, 2011)

Jimmy said:


> Yup has 'slipped ' to 44%/yr cagr over 5yrs. Square, Twitter, Shopify, Zoom, Zillow, Docusign etc are very profitable btw. SW as a service companies generally are one of the most profitable groups on the market. Docusign's gp is 74%. Shopify's ~ 50%.


Let me clarify: unprofitable*/*buy at any price. It's great some of these companies are squeaking out tiny profits. P/Es measured in 3 digits are a recipe for failure. Some of these companies can continue to grow at 30-50% per year for a decade or longer and shareholders today could still be holding the bag of a lower share price. In the long run, as a stockholder, you are buying net earnings, not gross margin. Or you might be waiting 20 years for a return of or on capital. Especially in a company with no real moat or with technology that can be reproduced at 1% of the market cap of the company or less; Zoom is not Microsoft. The bagholders who bought Zoom at $588 just 6 months ago at an est forward P/E of 150 are down 50% when the S&P 500 index is up 25%. Most of those other companies are similar stories.


----------



## Jimmy (May 19, 2017)

doctrine said:


> Let me clarify: unprofitable*/*buy at any price. It's great some of these companies are squeaking out tiny profits. P/Es measured in 3 digits are a recipe for failure. Some of these companies can continue to grow at 30-50% per year for a decade or longer and shareholders today could still be holding the bag of a lower share price. In the long run, as a stockholder, you are buying net earnings, not gross margin. Or you might be waiting 20 years for a return of or on capital. Especially in a company with no real moat or with technology that can be reproduced at 1% of the market cap of the company or less; Zoom is not Microsoft. The bagholders who bought Zoom at $588 just 6 months ago at an est forward P/E of 150 are down 50% when the S&P 500 index is up 25%. Most of those other companies are similar stories.


No they aren't. You don't know the holdings apparently . The P/E of this fund is 51 in reality.

They have held Zoom for years btw when no one had heard of it and made fortunes . They wouldn't be adding at $588 either. The same bagholders also lost 40% on ZSP or XIU during the covid fall if you want to look over just 6 months back in 2020 or 25% on gold recently lol.

You can dislike the ETF if you don't understand the valuation or tech if you like though


----------



## doctrine (Sep 30, 2011)

I think I understand the valuation quite enough. I'm a fundamental investor. The top 10 holdings speak for themselves and many of them have no earnings at all. 

Another 6 month low for ARKK. Down 36% from February, when the S&P index is up 12-13%. ARKK has to return 50%+ just to get back to it's high. It's going to be a challenge. 

It doesn't really matter to me whether ARKK goes down or up from here, my overall goal here is to point out valuation matters, and there have been some epic nosebleeds going on here. Every time it happens in the past, it ends poorly, eventually, with few exceptions that rarely make up for the losses. 

I hope anyone holding took home some of these 100-400% historic returns, because I know a lot of people who are now sitting on losses. Almost all of the volume in the 5+ year history of ARKK is from higher prices in the last 6 months.


----------



## AltaRed (Jun 8, 2009)

These kind of ETFs are speculative things for a play portion of a portfolio, but not really needed if one believes in broad index ETFs. A broad market ETF already has circa 20+% in technology. Why risk more when there is no certainty certain sectors will remain hot for extended periods of time, e.g. decades.


----------



## fireseeker (Jul 24, 2017)

Interesting news about ARK.

One successful investor will be wrong -- will it be Wood or Burry?




> Short interest in star investor Cathie Wood’s flagship ARK Innovation ETF was at a record high, data from analytics firm S3 Partners showed on Wednesday, as several hedge funds disclosed this week they had bet against the top performing ETF of 2020.
> 
> About 24.87 million shares - or 13.4% of the ETF’s free float - are currently shorted, making it the largest short in the ARK family of ETFs, said Ihor Dusaniwsky, managing director of predictive analytics at S3 Partners.
> 
> ...


----------



## james4beach (Nov 15, 2012)

It's also worth noting that Cathie Wood has a long history of failure. She ran a hedge fund (Tupelo Capital) during the dot com bubble, which got wiped out. The fund lost practically all of its assets under management during the bear market.

Cathie abandoned that hedge fund and abandoned her investors when things went sour.

There's no reason to think that Cathie has any kind of long term management skill. I think she's more of a charlatan who takes advantage of hot market conditions.

I'm about 99% certain that she has underperformed a diversified index over the long term, if we start from 1998 when she co-founded Tupelo.


----------



## Jimmy (May 19, 2017)

She co founded Tupelo and it is still in existence today. I can't find anything not that it is relevant 20 yrs ago and everyone lost in the dot com bubble. How much Nortel did you have in XIU at the time lol? Do you have some hater blog article you can share?

In modern relevant history. 



> Wood was named the best stock picker of 2020 by Bloomberg News editor-in-chief emeritus Matthew A. Winkler.[14] Wood is known for making bold predictions.[15] Wood received considerable media attention in February 2018 after she stated on CNBC that she believed Tesla stock could reach a price of $4,000 in five years, a 1,100% increase from its price at the time, and reiterated the claim in May 2019 after its price had dropped 29%.[16][17] While Wood's statement was widely ridiculed at the time, Tesla's price reached her target on a split-adjusted basis two years early in January 2021.[18][19]


Cathie Wood - Wikipedia


----------



## james4beach (Nov 15, 2012)

Jimmy said:


> I can 't find any of that bs about Tupelo. She co founded Tupelo and it is still in existence today. Do you have some hater blog hater article to share?


Do your own research Jimmy. That means finding source data and looking through it yourself, instead of just reading articles written by others.

With some digging, you can find SEC annual portfolio disclosures filed by Tupelo. You will see a huge reduction, I believe something like 80% to 90%, in their assets under management (AUM) during the dot com crash.

Cathie quit Tupelo just as those AUM plummeted.



Jimmy said:


> She has destroyed the S&P 500, actually the non diversified risky tech S&P 5 FAANG index, in modern relevant history. As well


These returns mean nothing without including her prior track record. It's the same problem as the Motley Fool, which I have told you about repeatedly. They had horrendously bad stock-picking in the past. Motley Fool did so badly with their stock picking that they had to remove their old portfolios, and now they pretend they never existed.

Just like Cathie pretends her past tech portfolio at Tupelo never existed.

Don't you see? It's the same game, and it really tricks a lot of people.


----------



## Jimmy (May 19, 2017)

james4beach said:


> Do your own research Jimmy. That means finding source data and looking through it yourself, instead of just reading articles written by others.
> 
> With some digging, you can find SEC annual portfolio disclosures filed by Tupelo. You will see a huge reduction, I believe something like 80% to 90%, in their assets under management (AUM) during the dot com crash.
> 
> Cathie quit Tupelo just as those AUM plummeted.


So nothing to back up your propaganda as usual. Maybe their AUM went down because people were tired of losing w dot.com stocks in general everywhere and it had nothing to do w her. Lots of $ left the markets after the dot.com crash.



james4beach said:


> These returns mean nothing without including her prior track record. It's the same problem as the Motley Fool, which I have told you about repeatedly. They had horrendously bad stock-picking in the past. Motley Fool did so badly with their stock picking that they had to remove their old portfolios, and now they pretend they never existed.
> 
> Just like Cathie pretends her past tech portfolio at Tupelo never existed.
> 
> Don't you see? It's the same game, and it really tricks a lot of people.


So more nothing. She never had complete control over her own funds before and these companies woudln't buy the stocks she wanted so she quit and started her own firm. Her record started w ARK.

The MF debate is closed too. Mr B already corrected your fallacies and propaganda . 20% cagr over 7 years.
. Anything beats the market index in the same thread too









MrBlackhill's reckless fun and struggles


Here's more info about the status of my playground portfolio (in bold my biggest positions): 27.69% Tech 11.37% CSU 4.74% CTS 3.24% KXS 1.63% REAL 1.60% HAI 1.40% HBGD 1.39% BEW 1.17% TOI (from CSU) 1.16% RIWI 17.13% Consumer Cyclical 9.15% BYD 3.28% FOOD 3.22% RPI-UN 1.47% DOO 11.89%...




www.canadianmoneyforum.com


----------



## MrBlackhill (Jun 10, 2020)

james4beach said:


> They had horrendously bad stock-picking in the past.


I don't recall you commenting about my post here where there's a study over multiple decades showing how different weighting styles are all beating the market cap weighting.

It is also showing that the "bad fund managers" are simply those that weren't given a chance by the impatient investors.

It is showing that the best performing fund managers over 15 years had 5 years (and even more) of underperformance, but on the long run they were outperforming.

Also, when I show you data over 30 years of outperformance, you call it hindsight bias and that past performance doesn't guarantee future results.

But then when you see a few years of underperformance in the past, you say "see, they are bad".

So, based on your comments you say :

Decades of outperformance are irrelevant
A few years of underperformance proves the manager/advisor is bad
Basically, you make the conclusion that fits your belief, even though it makes no sense.


----------



## james4beach (Nov 15, 2012)

@MrBlackhill

I didn't comment about your lengthy post because there are million different methods that, in hindsight, could have given outperformance. Check out 'factor investing' for another example. Fama & French made a whole career based on this.

What I'm telling you and Jimmy is the truth. But the market is a tricky place that constantly entices new players with the promises of easy riches.

You and Jimmy also repeatedly choose to interpret things to confirm your belief that it's pretty easy to pick stocks and beat the market average. I have no financial interest in trying to correct your misconceptions, which is why I'm going to lazily post and respond sometimes.

Example: I said that long term track record matters. And with Motley Fool and Cathie Wood, if you look at long term track records, the picture isn't as good. Especially with Motley Fool which had very poor performance in their late 90s portfolios. You are choosing to ignore that data. You should also dig further into Tupelo.

*You need to be more critical*. The default belief should be that Cathie Wood (formerly Tupelo) did not perform well. And then you need rigorous data to convince you that they did in fact outperform. You need to find Tupelo's performance data to confirm that she did well there.

If you can't find that data, then it's a safe assumption that she did poorly. AUM does not plummet when a manager is doing well.

Cathie Wood has been picking stocks since the year 2000. So you need to find out what her actual performance was over the last 20 years.

Time and again, you and @Jimmy take these insanely optimistic views. _It's clear that you want to believe_.

Analyzing this properly is very difficult. These people like Cathie, and Motley Fool, conceal their track records. That's what jumping around between different funds, or creating endless new portfolios (MF) does. Now ask yourself why their long term performance data is hard to find. There is a method to this game. It's called Wall Street and the active management con.

Why isn't Cathie transparent about her 20 year performance, and her CAGR at Tupelo Capital? Isn't she proud of what she accomplished there? Didn't she beat the market?

What did she do in the intervening years? Did she also beat the market during the rather good market from 2003 - 2014. Where is the proof of her performance during this time period?

Is she a charlatan or is she for real? Where is the evidence, the 20 year (Wood) or 25 year (MF) performance, *including all variants and funds that were terminated?*


----------



## Jimmy (May 19, 2017)

More fallacies. Cathie Wood never got to choose stocks she wanted so who cares what her record was at Alliance Bernstein?

The MF record for Stock Adviser goes back to 1993. Your problem is you need to learn how to do fundamental analysis so you can determine for yourself what the good and bad stocks are. That sudy was conclusive. Putting no thought into your investments in a market cap index gets the lowest possible investment returns.

Your own analytical deficiencies , disinterest in learning and general paranoia about stock valuation are your problem. Projecting your issues onto Cathy Wood,MF, Peter Lynch and others wont diminish their records either and just makes you look jealous. You should spend some time learning about fundamental stock analysis too perhaps instead of getting frustrated w the success of others.


----------



## james4beach (Nov 15, 2012)

Jimmy said:


> The MF record for Stock Adviser goes back to 1993.


Absolutely not true. A snapshot of their web site in 2001 shows no trace of 'Stock Advisor'. They began it somewhat later, I don't know when, but definitely after 2001.

If they are advertising pre-2001 performance, it's fabricated in hindsight, and fake.

You are also failing to consider the performance of multiple failed strategy from Motley Fool. To really calculate their performance, you have to consider all the failed strategies.

How come you never talk about MF's Harry Jones portfolio?


----------



## Jimmy (May 19, 2017)

james4beach said:


> Absolutely not true. A snapshot of their web site in 2001 shows no trace of 'Stock Advisor'. They began it somewhat later, I don't know when, but definitely after 2001.
> 
> If they are advertising pre-2001 performance, it's fabricated in hindsight, and fake.
> 
> ...


You don't anything about them and just vent your hate. Their main stock adviser letter has existed since 1993. Maybe it was called something different in 1993 I could care less. They publish their record for the past 7 yrs on a rolling basis as they have a 5 yr horizon and are buying and selling stocks in that time frame.

You have already been corrected about your misinformation too about past services they discontinue to start new ones. ie again Rising Stars 2020 becomes Rising Stars 2021.



> David Gardner, Motley Fool is a native of Washington, D.C., graduated as a Morehead Scholar from the University of North Carolina at Chapel Hill in 1988. With many ideas, no regrets, and a solid handle on fifth grade math, he founded The Motley Fool as a humble printed newsletter in July 1993 with his brother Tom. In 1994,


----------



## MrBlackhill (Jun 10, 2020)

james4beach said:


> methods that, in hindsight, could have given outperformance


40 years of data is hindsight to you.

When there will be a study with 200 years of data showing outperformance, that'll still be hindsight, right?

You call hindsight whatever looks at the past. Well, guess what, we can't look at the future, so we assess the strategy and we look at statistics (which are based on the past). So we combine our expectation of the future and observations from the past.

You don't like alternatives yet MSCI has factor indices consistently beating their index. Just look at MSCI Quality Index for any region in the world. Quality means based on sound fundamentals. Not on market-cap weighted sentiment.

You totally don't see the flaw in a market cap weighted index. The flaw is huge, *it'll pick on bubbles*, because the cap is the price and the price is given by irrational investors until it burst back to fundamentals which cannot be denied.

I'll use things in which you trust and belief. Ok, you like Ben Felix and he told Small Cap Value outperforms. That's based on historical evidence (oh no, hindsight I guess) and... because the strategy makes sense. That's the most important part. Yet you invest in market-cap weighted indices like everybody else because it's easy and that's ok, I get it and there's nothing wrong with it. But don't reject the fact that it's flawed. How much small caps is there is SPY? How much small caps is there in XIU.TO?

Think about this. You hold XIU.TO. How much SHOP.TO does it hold? 9%! What's its market cap? $235B. What's its revenue? $3.85B. Its performance in the last 12 months? +40%. Now, how much CTS.TO does XIU.TO hold? None. What's its market cap? $2B. What's its revenue? $1.13B. Its performance in the last 12 months? +576%. What if XIU.TO was weighted by revenue? You would've picked on CTS.TO performance.

Do you like BUZZ ETF? It's a market sentiment ETF. We laugh at it, right? Don't you get that market cap-weighted index is also a market sentiment index? Because market cap is based on price and price is given by investor sentiment. There's no such flaw in revenue weighted index, for instance.

What was the performance of US Large Cap vs US Small Cap Value during the dot-com bubble? Well there you go, it picked on the bubble and crashed.

I hope you know that the S&P 500 is fully driven by its top 5 holdings. What about diversification? You like diversification, right? But S&P 500 has more than 20% of its holding in 5 highly correlated stocks. It picks on bubbles. And it's currently doing it again. What do you think S&P 500 will look like in 10 years? 50% FAAMG? Non-sense.

Otherwise, FAAMG is taking over the world. But they are already taking over the world, the government didn't put antitrust but it should. Why it didn't? Because it's a battle against China, so the US lets their big names grow before China takes over. It is very scary to think about the future. Democratic governments won't have power. The big names will have power. They already have it.


----------



## james4beach (Nov 15, 2012)

MrBlackhill said:


> 40 years of data is hindsight to you.


Which thing are you referring to, with 40 years?

40 years of proven performance with real money is good proof of active management skill. That's good. I would accept 20 years too! But neither Lynch, Cathie Wood, nor Motley Fool have that.

But 20 or 40 years where you look back after the fact and construct "I could have done this" is a bit of a game. It *may* or may not work.


----------



## MrBlackhill (Jun 10, 2020)

james4beach said:


> Which thing are you referring to, with 40 years?


The three tables in my post here which shows data for over 40 years.

Here's one of those tables.


----------



## james4beach (Nov 15, 2012)

MrBlackhill said:


> The three tables in my post here which shows data for over 40 years.


If you think the results stem from some fundamentally meaningful thing (a sound reason to expect good performance), then it's a nice discovery and yes it could keep making money.

Factor Investing (Fama-French models) are one of the only things of this type that I am aware of. Thorough research has been done in this area, and academics expect that long term factor-based investing might lead to slight outperformance versus benchmark equities. But even then, the outperformance is expected to be rather small, and somewhat eaten up by fees.

The type of findings you mention would have to be repeated across several countries. And then one would have to apply factor analysis to see if you might have inadvertently picked up some factors (such as Small Cap Value) while doing those steps. There are many techniques which act as proxies to factor investing, and it often describes their outperformance.


----------



## MrBlackhill (Jun 10, 2020)

james4beach said:


> The type of findings you mention would have to be repeated across several countries.


Yes, that's another of the three tables in my post.

You can also look at the performance of any MSCI Quality index.











ACWI









World









US









Canada









Japan









Europe









Emerging Markets


----------

