⚡ Cathie Wood on Tesla Stock & Market Bubbles (Supercut)

arkanvest just released their latest episode of in the know kathy wood's monthly video series where she talks about the stock market the economy and advanced technologies she had a ton of awesome insights in that episode but it was almost 50 minutes long i recommend watching it in full but if you're short on time i created a super cut of the highlights for you i'll be back after the super cut to provide you with a bunch of independent resources that you can track for yourself to see whether cathy woods ideas are coming true over time speaking of time your time is valuable so time stamps are enabled for your convenience and i'll see you after the super cut during the coronavirus crisis when it hit it was clear to me that the headlines that people were reading generally both investors and the general public were not capturing what was really going on in the economy we believe that innovation is in deep value territory we believe that kovid 19 the coronavirus crisis accelerated the shift towards the innovation platforms around which we have based all of our research i do want you to know that of course we've been through a very difficult time since the uh significant rotation from growth into value started nearly a year ago in mid-february i want you to know that we're in there with you we're all in and my conviction uh couldn't be higher uh that the innovation that has been evolving and was accelerated coming out of the coronavirus crisis is unstoppable and the convergence uh between and among the 14 different technologies that we are researching that they are on that convergence is underway now and is and is causing and will continue to cause explosive growth they are going to cause a lot of problems for the underlying economy the traditional world order what has happened is in the early stages of the coronavirus when i was doing those videos we had algorithms and quantitative strategies focused on just a few variables and they were at that time cash burn and cash cushion and a lot of our stocks did not have big cash cushions and were burning cash especially in the genomic space they were taken down by 75 many of them in a month just in a month three weeks to a month and of course that was the wrong answer the algorithms got it wrong and that there was a massive head fake because of course genomics was a big part of the solution to a problem we were facing in the coronavirus since february as this rotation into value from growth really accelerated these same algorithms have had good success with this strategy uh they've been focused on inflation inflation fears interest rates and valuations and they have likened what we're going through right now to the tech and telecom bubble and the bust because the valuations that people chased were simply based on eyeballs that might materialize and never did materialize we are nowhere near that situation now uh the dreams back then so the internet was quite transformative and led to the cloud and artificial intelligence uh we are living in the reality that that dream started and uh this reality has companies like teledoc and zoom just to give you a sense of the contrast here you know teledoc has about 2 billion 2 billion in sales its revenues have gone up four-fold uh since the beginning of the corona virus zoom's revenue one year ago fourth quarter was up six and a half fold since the beginning of the coronavirus solid revenues uh growth continuing from very tough comparisons and we've got two companies here that are being dismissed as stay-at-home stocks that are going to fall back to earth we believe that the dismissal of these stocks is quite misplaced and suggests that analysts or investors are not doing their homework what has riled the market in the last week or so is uh fed minutes being released suggesting that the fed is going to become more aggressive at uh raising interest rates perhaps sooner than many expected maybe in the march time frame and it does not want to be blamed uh for inflation being sustained and and certainly not moving out of control we think that some of the economic statistics that i'm going to share with you in a bit the fed knows very well and those statistics suggest that inflation is indeed transitory now what we've been trying to size up for the last few months is where is real demand now that all of these employees are coming back to work we're looking at other statistics that show a divergence from that one of them the most important is consumer sentiment consumer sentiment is down to levels that we last saw at the depth of the coronavirus both in november and december now that's a very important part of the time of the year for the consumer to be feeling unconfident because it's the biggest selling season of the year the other is again reflecting on third quarter gdp statistics in the third quarter of last year real gdp was up 2.3 percent it was a big disappointment relative to expectations but what the headlines did not feature and i and still are not featuring is that practically all of that growth went into inventories it wasn't sold real final sales were were up a tenth or maybe two-tenths this is something i don't think the headlines have captured you might be surprised uh to hear it as well then we get to autos i think this is the most fascinating part of what's going on in the economy right now the mannheim used car index has been screaming i think uh the prices of used cars at their peak had increased on a year-over-year basis something like 60 the bubble was in used cars and that it might be bursting new auto sales peaked in april at 18.25 million units now when we got to october and uh the auto oems were talking on earnings reports each one of them including elon musk was saying okay the chip shortage is beginning to alleviate now they have been blaming the decline in sales because it started in april and it was cl declining declined to 13 million units from 18 and a quarter uh chips were the missing link okay they're starting to be replenished november 12.86 december we just got this number 12.44 meanwhile you've got electric vehicle sales up near nearly a hundred percent at an annual rate what's going on here well it could be a combination of consumer sentiment not being consumer not being happy about what's going on and a consumer preference shift that is why at the ces show the consumer electronics show you heard these auto oems uh talking more about uh electric vehicles of course it was the uh electronic show and we saw that ford's f-150 lightning they were going to have to double production given all of the demand well what they don't tell you during those appearances at ces and so forth is that electric vehicles make up maybe two to three percent of their sales and that 97 of their revenue bases gas powered vehicles and it's probably 90 percent plus of their production now if there is the combination of the consumer turning off not wanting to spend as much money certainly not on big ticket items and a preference shift if they're going to spend they're going to spend on electric then these oems have an issue we think we're going to hear more about it in the quarterly reports now i look at the i look at the performance of stocks like gm and ford they soared on those electric vehicle announcements think about that that's ridiculous it's only two percent of their sales and what if the other 98 or so forth are on their way out as the consumer preference shifts toward electric they have problems now on to market signals the rotation is still towards value it is hurting growth we think it's long in the tooth we think it's going to end but it hasn't ended yet in the crypto market we're seeing a correction they are starting to succumb to what we're seeing in the equity market which is this strike against technology uh growth innovation we we think that's going to be uh short-lived and giving you a sense of where the bubble might be in this market it is not in innovation stocks they've been cut in half many of them some by 75 but listen to this i i gave you the the story about ford reporting that it would have to double its electric vehicle production of the f-150 lightning and this the stock just taking off uh not paying any attention to the uh auto statistics i just mentioned well when i think of what could happen in that space and i see these stocks uh ramping on sales that mean nothing to these companies uh in terms of their earnings shall we say a lot right now in fact they need to invest a lot more in electric to make it happen and to move the needle in these companies but what if we're right and the there is not a 20 increase in sales maybe sales are flat-ish year to year that would put them at roughly 15 million units and they'd probably have to start cutting prices if we're right on the used car market and the pricing there which means they're probably going to be facing some credit issues since they uh they're hugely leveraged to the credit that people take out on their autos and as prices go down residual values go down you know auto credit was the best performing credit in 0-809 and so there's a lot of complacency in that market so we think that complacency is misplaced and that the auto credits out there could become a mess and i wouldn't be surprised if at least one of the companies loses money next year which would be most unexpected if it loses money what is that valuation where are the crazy valuations now are they in our stocks now that zoom is down to 33 or 35 times this year's earnings or is it in an auto stock where there might be losses and what's that p e ratio that's infinity that's where the bubble is and i think you're going to see a lot more cases in point as this year moves along and the innovation that we see evolving so rapidly dna sequencing transforming healthcare robotics solving the labor shortage problem we're having energy storage the consumer preference towards electric artificial intelligence which is the glue that is uh helping all of these technologies converge and the last one blockchain technology we think that we're in a period of innovation that was the dream in the late 90s but those those companies were vaporware they were based on nothing but eyeballs we have real revenues we have incredible growth rates and if we're right and the economy has an inventory problem then our growth rates are going to look far superior to anything you'd find in the value space and we are really looking forward to that but i do think as we see these earnings reports coming in and the guidance for the first quarter and this fessing up out there into what's really going on with inventories uh that we're going to see the turn sooner rather than later wow what an important episode there are a ton of valuable indicators that kathy wood is using to conclude that growth stocks are in deep value territory and that a bubble is forming in value stocks let me show you what data sources you can track completely independent from arkhanvest to stay informed and come to your own conclusions as always all of my sources can be found in the description below kathy wood mentioned that one of the most important indicators is consumer sentiment especially around the holidays when people tend to spend a lot more money on goods one great place to track consumer sentiment is through the university of michigan's surveys of consumers consumer sentiment and expectations in december are all down by large amounts year over year which means people are doing less shopping consumer sentiment is a leading indicator for demand when demand falls prices of supply should fall to meet it over time so tracking consumer sentiment is a great way to get one data point on the future changes in price inflation the federal reserve is reacting to changes in inflation and one place you can see that reaction directly is in the federal open market committee's meeting minutes i kind of treat these meetings as earning calls but for the entire economy there are eight fomc meetings this year one about every seven weeks so setting a calendar reminder and then checking their minutes for talk of interest rate increases is a great way to stay on top of what's going on directly from the source without media bias as of their december 15th meeting the expectation for the first increase in the federal funds rate moved from the first quarter of 2023 to june of 2022 meaning they're thinking about raising interest rates about nine months sooner than was expected by the market before that meeting the federal reserve is reacting to changes in the consumer price index or cpi so keeping track of that is a great way to anticipate what the fed might say and do in the future the best source for the cpi is the u.s bureau of labor statistics their website shows the cpi broken down by different categories of goods and services when kathy wood talks about the prices of certain items forming a bubble you can see them for yourself here for example here's inflation for all items in november at 6.8 percent like everyone's been saying now check out how high inflation was for new vehicles where kathy woods said that the bubble is forming 11.1 percent inflation on new vehicles now check out the inflation of gasoline talk about a volatile asset no pun intended this volatility and high inflation rate on gas could be partly responsible for consumers wanting to shift towards electric vehicles and the us bureau of labor statistics is how i like to keep track of that price and a part of why i covered tesla so much so let's switch to tesla and its competitors fred uses data from the u.s bureau of economic analysis to track total vehicle sales if we zoom into the data since the pandemic we can see that vehicle sales peaked at about 18.8 million units in april and are now at about 13.3 million units which is a whopping 40 decrease at the same time electric vehicle sales continue to break records up double or even triple digits year over year so the last thing we should track is which car companies have the majority of their sales coming from electric vehicles since the data appears to suggest that's where the world is heading for example ford's battery electric vehicle sales account for roughly two and a half to three and a half percent of its total volume today by 2025 that number is expected to be 11 and a half percent and by about 2030 one-third of their total sales volume should be electric even then there are big differences between the products coming from tesla and from ford like their battery technologies software options and even their charging infrastructure clean technica is a great place to get electrical vehicle sales data and compare it to each brand's overall sales data to see the percentages that come from evs for each brand quarter over quarter their sales data roundup for all of 2021 should be released in the next few weeks hopefully this supercut helped you catch up on arkhanvest's latest episode of in the know with kathy wood as well as provided some independent resources for you to track to stay ahead of the game my goal with these supercuts is to add value by saving you time and gathering all of the relevant resources in one place and i'll save my own opinions and commentary for a separate episode if you find that valuable as an investor let me know by liking this video and subscribing to the channel with all notifications turned on that's a great way to invest in the channel that invests in you so stay long stay strong and thanks for watching until next time this is ticker symbol you my name is alex reminding you that the best investment you can make is in you you

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Id: 5FZI0Tmxf8w

Length: 19min 1sec (1141 seconds)

Published: Sun Jan 09 2022