Cathie Wood has quickly become one of the best-known investors on Wall Street after her firm, ARK Invest, produced funds that more than doubled in value in just a handful of years. Wood takes an innovative approach to investing, building funds specifically around emerging technologies like space, 5G, fintech, and more.
In this guide, we’ll take a look at 10 top pieces of investment advice from Cathie Wood.
Cathie Wood Investment History
Cathie Wood’s career began in 1977, when she took a job with the long-term investment firm Capital Group. She moved on to a job as chief economist at Jennison Associates in the 1980s and then co-founded the hedge fund Tupelo Capital Management in 1998.
In 2014, Wood founded ARK Invest to build funds that focus specifically on large-scale innovation. The firm’s flagship ETF, the ARK Invest Disruptive Innovation ETF, produced returns of over 150% in 2020 and average annual returns of 34% since its inception. ARK now has nine funds that cover themes like ‘Genomic Revolution,’ ‘Space Exploration,’ and ‘Fintech Innovation,’ with plans for more on the way, and the firm manages over $52 billion.
Cathie Wood Investment Advice
Cathie Wood’s investment advice encourages investors to think big and surround themselves with good ideas. In many ways, her advice reflects the approach she’s taken to build ARK Invest.
So, let’s take a look at 10 of the best pieces of investment advice from Cathie Wood.
1. Look at the Big Picture
ARK Invest is all about big-picture thinking. As Wood says, “I think I understand how [the world] works now. But how is it going to change?”
Diving into the details of a company can be helpful for finding small, relatively short-term investment opportunities. But the biggest opportunities come from companies that promise to change the world. So, think about how the world could change, and what companies are going to be essential in that new world.
2. Be Curious
Wood approaches investing with an innate curiosity. “You know how kids ask, ‘Why? Why? Why?’,” says Wood. “I was probably one of those kids.”
She encourages investors to bring the same curiosity when researching companies. Ask what problem companies are solving, whether demand for that solution will grow, and whether there are other companies doing similar things.
3. Be Willing to Share Your Ideas
Many of the investment firms that ARK Invest competes with are tight-lipped about their latest research and ideas. But ARK frequently publicizes the thesis behind a new investment idea or tells investors what stocks the company is thinking about investing in.
According to Wood, being willing to share your ideas is part of being successful. “In the sharing economy and the networking world, if you don’t give, you don’t get.” You might take some risk in telling others about your ideas, but you could also get important feedback or learn about related opportunities.
4. Work Hard
While ARK Invest has produced eye-popping returns in the past several years, Wood makes it clear that the firm didn’t get there by accident. In the firm’s early days, when Wood was paying employees’ salaries personally, “we didn’t stop,” she points out. “We didn’t just sit there waiting for something to happen.”
Investing takes hard work, day in and day out, as well as perseverance when things aren’t going your way. “You make your breaks,” says Wood.
5. Learn from Others
Wood is quick to point out that a big part of Wood’s success is thanks to the team she’s assembled.
“They are bringing the most interesting, provocative, or controversial ideas they’ve heard all week.”
She advises investors to surround themselves with the innovators who are working to shape the future. The more forward-thinking advisors you have around you, the better your investment portfolio will be.
6. Start with a Blank Page
One of the best ways to brainstorm new ideas is to start with a blank page in front of you. “The white sheet of paper starts us asking questions,” says Wood.
If you need inspiration for where to take your thoughts, start with a problem the world is facing or question basic assumptions about why the world works the way it currently does.
7. Ignore the Critics
Cathie Wood’s approach to investing was fiercely criticized by others on Wall Street – even when her funds were outperforming the market.
Wood advises investors not just to ignore the critics, but to thrive on thinking beyond conventional wisdom. “Those were the most exciting times for me,” according to Wood, “because I always believe truth wins out.”
8. Find an Investing Style That Inspires You
One aspect of investing that’s not often talked about, according to Wood, is the importance of finding a strategy and style that keeps you inspired. As Wood puts it, her “wow moment” came when she worked at Capital Group in 1977. “The first project I [was] put on involve[d] Hong Kong 1997… The focus on such a long-term time horizon was one of the things that really got me.”
If the companies and themes you’re investing in truly interest you, you’ll be more motivated to think more deeply about what the future holds.
9. Be Willing to Take Risks
Wood’s investment portfolio shows that she isn’t afraid to take risks, particularly on tech companies and startups that she believes have a strong vision for the future. Wood has long been bullish on Tesla, even setting price targets above what Elon Musk has wanted the company valued at.
It’s in part her willingness to take risk that’s made Wood and ARK Invest so successful. Without swinging big on companies that other investors would call “unproven,” Wood would never have made it to where she is today.
10. Stay Ahead of Disruption
Wood is more clear-eyed than many investors about the fact that disruption is always just around the horizon. So, she tells investors to “make sure you’re on the right side of change.”
That means that you need to be willing to look around the corner, focus on emerging technologies before they become mainstream, and consider how disparate industries can interact to change the world.
Cathie Wood has turned ARK Invest into a firm with more than $50 billion in assets under management by taking a big-picture, forward-looking approach to investing. She encourages investors to stay ahead in a changing world by working hard, sharing ideas, and being curious.