Cathie Wood Says Most Money Managers Are Short-Sighted, Recommends This Investment Horizon

Investment guru and Ark Invest founder Cathie Wood-managed funds fared badly in 2021, including ARK Innovation ETF ARKK, following a very strong showing in the previous year amid the COVID-19 pandemic.

The equity market and most risky bets have pulled back notably thus far this year amid the intensification of geopolitical tensions, even as macroeconomic uncertainty continues to weigh down equities.

What Happened: The most productive time horizon amid the current fluid environment would be around five to 10 years, Wood said in a quote tweet on Saturday.

The fund manager's comments came while quoting a tweet by Ark Invest analyst Brett Winton, who shared a graphic on the real returns of the S&P 500 Index over the years for different holding periods. The graphic revealed that the longest holding period of 20 years generated more than 10 times cash-on-cash returns, while the shortest holding periods left investment reduced to one-fourths.

"Time is more important than timing," Winton said.

Commenting on the graphic, Wood said the time horizon of most traditional assets managers is "short-sighted."

According to this chart, the 12-18 month time horizon of most traditional asset managers is short-sighted. A five- to ten- year investment time horizon seems to be much more productive. https://t.co/gCltDiXih9

— Cathie Wood (@CathieDWood) April 2, 2022

Related Link: Cathie Wood Says 'Fed Seems To Be Playing With Fire'; Aggressive Interest Rate Hikes Could Be A 'Mistake'

Why It's Important: Wood's deduction is in line with the investment strategy of Ark Invest. The fund focuses on companies that promise disruptive innovation, and it aims at long-term growth with low correlation to traditional investment strategies.

Wood has been sounding out that innovation stocks are in deep value territory for some time now. She said in a blog post in December that Ark focuses on a five-year investment time horizon.

"We take advantage of volatility during corrections and concentrate our portfolios toward our highest conviction stocks," Wood said.

Related Link: How To Invest Like Cathie Wood

Photo: Courtesy of Diverse Stock Photos on Flickr