Ark Invest CEO Cathie Wood believes shares are poised for growth as price pressures ease and lower interest rates are on the horizon. “In the fourth quarter, as the Fed’s dot plot began pointing to much lower interest rates, the equity bull market expanded sharply,” Wood said in an X post Thursday night. “This year the opposite happened. In our view, further price deflation and lower interest rates will invigorate shortlisted stocks.” The innovation-oriented investor has been calling for deflation since mid-2022, when the Federal Reserve was still in the middle of a cycle of aggressive rate tightening to combat inflation. She noted then that inflation was caused by temporary problems with inventories caused by the pandemic. There have been some signs of gradual progress in inflation lately, with the Consumer Price Index for April showing inflation at 3.4% annually, slightly below March levels. Excluding food and energy, the core consumer price index was 3.6%, the lowest since April 2021. Wood’s performance over the last few years has been disappointing. Its flagship Ark Innovation ETF is down 67% in 2022. It then grew by nearly 68% in 2023. The fund is down about 17% year to date. She said investors were flocking to safe havens and cash at a rate last seen in the 1930s. “In our opinion, the search for cash and safety in stock markets is as intense today as it was during the Great Depression of the early 1930s,” Wood said in the X-post. “When the fear dissipated, the market expanded and rewarded risk-taking again.”
