Frank is traveling this week. Rather than the normal Market Letter, hope you enjoy this note from Frank on changing leadership and changing investment styles.
Who among us hasn’t had a bad year or two? If you’re one of them, go stand in the back of the room with the other liars. Not to be unkind, Cathie Wood has brought much of this on herself. The issue seems to be in understanding this is a market of stocks. Stocks are not companies, they are pieces of paper. The biggest best most innovative companies can have stocks that perform poorly, for any number of reasons. And as per what follows, investment styles do change. That’s what keeps the business interesting.
What follows is a paragraph from our Market Letter of March 5, 2021:
“Woodstock is a fond memory … will the same be true of Wood’s stocks? Cathie Wood has garnered quite a bit of fame, and deservedly so. Those ARK Funds which she founded were up a gazillion percent last year, but who’s counting. Nonetheless, we always find it a bit risky when everyone knows your name, so to speak. It certainly proved so for Gerry Tsai when, after his success at Fidelity, he founded the Manhattan Fund in 1965. By 1969 the funds collapsed, losing 90% of their value. While his was an aggressive style of growth stock investing, that of Bill Miller’s was a value style of investing. His fame resided in his record of beating the S&P for 15 years in a row. When the market turned against value in 2006, a run of underperformance left him lagging the S&P by 50%. Changing fortunes in both cases were not a matter of intelligence, it was a matter of changing investment styles. For now, it’s about reopen/reflate, if that can be called a style. Cathie Wood isn’t exactly covered in that look.”
Frank Gretz
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