Did ARK Invest just claim that value investing is dead?
In a recent article on Marketplace, Cathie Wood has been accused of “smashing value investors, innovation doubters and other nonbelievers over the head” by Josh Brown of Ritzholt Wealth Management.
Brown was referencing a tweet and white paper by ARK Invest that highlighted the “bad ideas” prevalent in modern investment strategies.
As technologies emerge & transform entire industries, investors in traditional benchmarks may face more risk than ever before. Don’t miss our brand-new white paper highlighting the “Bad Ideas” investors should avoid over the long-term!
📄: https://t.co/mqtw94Qyet pic.twitter.com/3OEmpr3lcj
— ARK Invest (@ARKInvest) October 14, 2020
Like their other marketing pieces, this white paper argues that disruptive innovation is transforming many industries from the ground up – and that investors who are on the wrong side of change will lose out.
While I personally don’t see anything in the tweet disparaging value investing (and in fact, it seems clear to me that ARK Invest integrates both value and quantitative investing into their approach), they do take a bearish stance on certain investment ideas.
For instance, in their white paper, they argue that investors should avoid:
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Physical bank branches
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Brick and mortar retail
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Linear TV
Traditional industries, they say, will be completely disrupted, disintermediated, or even destroyed by more modern technologies such as:
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Cash apps and digital banks
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Online commerce
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Streaming content
Brown criticized the aforementioned tweet as “trollingly bizarre,” yet having read virtually all of ARK Invest’s publicly available white papers, I can confidently claim that there is absolutely nothing new or unusual about their messaging in this piece.
All of their marketing argue essentially the same thing: that a specific set of disruptive technologies will transform the world and do away with many traditional industries and sectors.
ARK Invest is hardly the only one sounding the warning bell, however.
There are countless other signs that suggest we are in the midst of a major, unstoppable technological revolution:
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McKinsey strongly advises companies to go all in on business transformation, since in today’s environment not changing is like being “parked on the side of a volcano”
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The World Economic Forum claims we are in the midst of a fourth industrial revolution and that automation will radically transform labor markets
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Trends such as these will further widen the digital skills gap and could even produce a shortage of highly skilled workers by 2030
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In the coming decade, the demand for clean energy will continue to accelerate, while the demand for oil will flatten
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Telehealth exploded in 2020 and will only continue to grow
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Deloitte claims that they are doubling their investment in innovation
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In 2020, Accenture compacted three years’ worth of digital transformation into three months
In short, there should be little doubt that the world is undergoing a massive technological shift and that this shift will have a major impact on the investment world.
Rather than questioning whether ARK Invest’s standard tweet is trolling, perhaps the bigger question we should ask ourselves is whether they are right or not.
Personally, I think it is better to focus on analyses, facts, and profits – not how a piece of investment advice makes me feel.
