WWW.FASTCOMPANY.COM
Tech investor Cathie Wood on how Trump can boost the U.S. economy
U.S. tech investor Cathie Wood is calling on Donald Trumps incoming administration to boost economic growth and policy certainty by backdating promised corporate and personal tax cuts to Jan. 1, 2025, she told Reuters.A laggard in recent years, Woods flagship ARK Innovation exchange-traded fund has surged 17% since Trumps victory, which is expected to bring policy changes that will benefit the funds holdings.Two of its stocks, electric carmaker Tesla and crypto exchange Coinbase, are already up 54% and 7% respectively since Nov. 6, while the S&P500 has risen about 1.7% in that time.ARKKs other top holdings include Robinhood and Block, both of which could also benefit from friendlier crypto and AI policies.Wood has publicly backed Trumps economic platform, arguing that his plan to unleash deals, promote innovation in crypto and artificial intelligence, and cut red tape and government costs will make life easier for corporate America.Tax policy was also central to the election race, with Trump pledging to cut the rate paid by companies that make goods in the United States and to extend individual tax cuts Congress passed in 2017 that are set to expire next year.Thats a key area where Wood said shes pushing for more clarity.I see them saying, okay, were going to cut taxes but we will make them retroactive to Jan. 1, 2025. That would be very helpful, I think, in terms of providing certainty for the markets, Wood said in an interview.If they dont, youre going to get companies and individuals perhaps holding back. Im trying to communicate that pretty regularly to anyone who will listen.While Wood said she does not generally support tariffs, which act as a tax increase on goods, Trumps threat to hike them on major trading partners appears to be a negotiating strategy.TAX REFORMAnalysts expect the new Republican-controlled Congress to pursue tax reform next year, but Trump will kick start other key policies with executive orders upon his Jan. 20 inauguration. He has also announced new regulators who can start to implement his pro-innovation agenda.Campaign finance records indicate that Wood did not financially back Trump in the 2024 election cycle.She told Reuters that she has only met Trump once, earlier this year at his Florida home, but is in contact with Tesla boss and billionaire Trump backer Elon Musk and crypto enthusiast Wyoming Republican Senator Cynthia Lummis, both of whom are helping to shape Trumps policies.Wood has been one of Musks top cheerleaders, investing 16% of ARKKs $6.4 billion in assets in Tesla. That oversized bet reflects her confidence in Musk and her conviction that AI, including autonomous vehicles, will be a major driver of investment returns going forward, she said.He understands that technologies are converging, that artificial intelligence is the biggest catalyst, said Wood.However, she is selling some Tesla shares to reinvest in other companies likely to benefit from the same trend, like Archer Aviation, a developer of autonomous aircraft.Florida-based ARK has also been a leading proponent of crypto, launching a spot bitcoin ETF in January. Wood said a crypto crackdown under President Joe Biden put the United States in a vulnerable position, but the new administration will not want to lose innovation to the rest of the world.Lummis said in a statement that engaging with stakeholders was a priority and that Wood is a leader in digital assets and someone who has shared feedback with me on a number of issues related to innovation.Although some of the market exuberance over Trumps victory has fizzled, Wood said she believes the Trump bump, which has benefited crypto, small-cap and financial stocks, will eventually spill over into more of the market.I do think that the market is going to continue broadening out. Itll definitely favor innovation and anything that has been held back by policies in the last several years, she said.Neither Musk nor Trumps transition team responded to requests for comment.CONTRARIAN PATTERNWoods outsize bets on stocks like Zoom generated a 152% return at the height of the pandemic and won her a huge retail investor following but she has struggled to sustain that outperformance.Investors have pulled roughly $3.5 billion from ARKK over the past two years, with $300 million flowing out in the past month, according to data from Morningstar and VettaFi.Thats an atypical pattern for most ETFs and mutual funds, but typical of the contrarian pattern weve seen for Cathie Woods funds, said Robby Greengold, a Morningstar analyst.Wood said that even the most favorable new policies wont end that volatility.Were telling people that, hey, we offer a highly differentiated exposure to innovation. As a result, she added: yes, were going to be volatile.Suzanne McGee, Reuters
0 Comments 0 Shares 38 Views