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The Queen Is Dead

The Queen Is Dead
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The Queen is Dead. Long Live The Queen!
As everyone knows, it’s all over for Ark Invest and its family of high octane Fin Twit darling holdings. And as for that know-it-all Cathie Wood? Good riddance! Rip her to shreds!
In Q1 2021 the investing world finally came to its senses and started dumping all these ridiculously overvalued stocks with no earnings and barely any revenue, and started buying General Electric instead. Even hardened technology investors beat a hasty retreat and decided that, in fact, SQL was the new NoSQL, as Oracle’s share price performance this year evidences. And it turns out that the future of telecom isn’t all that fancy edge computing garbage as hyped by Fastly on its promotional events masquerading as earnings calls - no, the future is AT&T.

CHART: Old Is The New New, Q1 2021
Yes, This Is Your Parents' Stock Market After All
Yes, This Is Your Parents' Stock Market After All
Boomers Get Their Mojo Back
Upon viewing the above chart, or thousands of variants thereof, Boomers everywhere were heard to say - good. Just as it should be. Order has returned to the universe and entropy has been put back in its box. Einstein was wrong! Call my broker, Marjorie, and tell him to sell that hot mess of a dot com two point oh portfolio he told me to buy. Tell that hotshot to buy me some of those good dividend stocks before I terminate his sorry mandate. Tell him to do it right now!
We Hate It When Our Friends Become Successful
A particular matter for Q1 2021 celebration in Boomersville, USA has been the decline of Ark Invest’s flagship funds, ARKK and ARKW. The poster children for dot com do-over, SPACy craziness.
You see, nobody really likes a big winner and so the number of naysayers who have arrived to feed on the expected carcass of Ark Invest at large, and Cathie Wood specifically, is legion. In part this is plain jealousy of the success, and in part it’s a reaction to the very different way in which Ark conducts itself in public. Oh, also, she has the temerity to be, you know, a girl and all.
Traditionally, public stock fund management - particularly active fund management - has been a business the protagonists thereof have sought to shroud in mystery, in pursuit no doubt of conjuring up the aura of genius. Some such fund managers are very very clever, and some are very very successful. And sometimes those aspects coincide - perhaps even have a causal link, we cannot say. Other such fund managers are doubleplusunclever, and some are successful only in turning your money into a dumpster fire. After the deduction of their fees, of course. Again, correlation, causation, who knows.
Annoyingly for all concerned, Ark does actually do things differently in this regard. As someone much smarter than us wrote on Twitter a few months back (if it was you, email us to claim your prize!), investment firms who think that they aren’t also media companies will soon also not be investment firms. What this wag meant was, if you want to keep shoveling money into that dumpster, sorry, we mean, building your assets under management, you need to market yourself in a whole different way to how it used to be. No longer is your sole concern to wine and dine prime brokers, registered investment advisors, and whatnot. You do still have to do that. But now you also have to live in real time on Twitter and Substack and StockTwits and Revue and a bunch of other places that Marjorie’s boss hasn’t heard of. And if you think the best people to do that work is the same marketing team which arranges for your favorite broker to play golf in a fancy setting with your favorite RIAs, well, good luck with that. 
Now, if Ark’s first smart move was to catch the third wave of the Internet, their second smart move has been to employ a corps of social-native analysts, the better to market with. And in amongst this army of child soldiers will be some investment geniuses. We don’t know which ones because some of them will be merely meme-weavers, and we aren’t smart enough to discern one from another via podcast. In any event, it doesn’t matter. For now, Ark is the Cathie Wood Show. (One day she will be Caesar’d by Brutus The Teenage Analyst. Probably the meekest-looking, friendliest one of them. But not yet.)
The other thing Ark does that your parents’ mutual fund manager does not, is to post a summary of some of their trades every night. Not all of their trades, as people seem to think. Just some of them. Read the small print. It says so. And this adds to the media narrative of, we do things differently here. No shroud of secrecy and occasional puffs of white or black smoke. Hey, we tell everyone our investment strategy, which stocks we love and why, we joust with the Technoking on Twitter, we publish our models on GitHub (no, really) and heck we even tell you [some of] our trades every night! And what all this says is: this isn’t Marjorie’s boss’s fund manager. Send money here. Hey, we take Bitcoin (of course we do. We’re scooping up armfuls of Coinbase stock!). And soon, in ARKX, we will be accepting Space Doge Token. Well, we will issue any redemptions in Space Doge Token. Purchases? Dollars only. Did you not hear us right? D-O-L-L-A-R-S. Yes fiat currency is dead. No you can’t pay us in altcoins.
We Suspect The End Is Not Nigh
We cannot be sure, but we rather suspect, that Ark will prosper for a while yet. When something truly bad happens to the market and/or the world - those things being completely different and unrelated, as any fule kno - perhaps folks will fall out of love with the new new thing, and dash back from Stock Mommy’s daringly fashionable town house to the comfortable sofa in Ma Bell’s country retreat. But for now, it appears to us that the Cathie Wood Show has very much secured another couple seasons.
CHART: Q2 2021 To Date
Marjorie - tell me he didn't sell those dotcom names yet?  Marjorie??  MARJORIE!!
Marjorie - tell me he didn't sell those dotcom names yet? Marjorie?? MARJORIE!!
Speaking for our own staff personal accounts, we’re happily long ARKX because we believe that space tractors are the future. And we often trade in and out of ARKK and ARKW usually when the market is going up but we can’t think of any great single stock ideas ourselves, so we outsource the judgment to Brutus and his/her buddies. That’s worked pretty well for us so far.
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Cestrian Capital Research, Inc - 15 April 2021
Disclosure - Cestrian Capital Research, Inc staff personal account(s) hold long position(s) in ARKX, COIN, FSLY.
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