Clichés usually don't become clichés unless they're good enough to be repeated a lot. I think a great example of this is hockey legend Wayne Gretzky's quote, "I skate to where the puck is going to be, not where it has been."
Gretzky's approach is applicable in many areas, especially investing. It's a maxim that Ark Invest CEO Cathie Wood seems to take to heart. Whether you like her investing style or not, she is always looking to the future. And Wood is still betting big-time on these three megatrends.
1. Crypto
Nearly every cryptocurrency has plunged this year. Major crypto exchange FTX has declared bankruptcy. You might think the last trend Wood would be putting money into these days is crypto. Think again.
Three different Ark exchange-traded funds (ETFs) scooped up shares of Coinbase Global (COIN +7.67%) last week. Wood's flagship Ark Innovation ETF (ARKK +1.15%) bought more than 207,500 shares of the crypto exchange operator. Ark Fintech Innovation ETF (ARKF +0.66%) and Ark Next Generation Internet ETF (ARKW +1.35%) purchased smaller positions.
NASDAQ: COIN
Key Data Points
No one would ever refer to Wood as a value investor. However, she probably views the valuation of Coinbase as attractive, with the stock down close to 85% year to date. The Ark Invest founder is betting that the current crypto winter won't last forever.
2. Electric vehicles
Wood has been a longtime proponent of electric vehicles (EVs). And her fervor hasn't diminished one bit.
In recent days, three of Wood's Ark ETFs have added to their positions in Tesla (TSLA +3.87%). Ark Innovation ETF, Ark Next Generation Internet ETF, and Ark Autonomous Technology & Robotics ETF (ARKQ +1.73%) bought shares of the EV maker.
NASDAQ: TSLA
Key Data Points
Tesla ranks as the second-largest holding for the Ark Innovation ETF and the Ark Autonomous Technology & Robotics ETF. It's No. 4 for the Ark Next Generation ETF.
This buying activity isn't surprising. Ark executive Sam Korus stated in Wood's weekly newsletter recently that EV sales could reach 67 million in 2027. That's even higher than Ark's previous bullish forecasts.
3. The metaverse
The metaverse has its fair share of skeptics, but don't include Wood in the group. Last year, she predicted that the metaverse could one day be worth trillions of dollars. Wood remains optimistic about the potential for a virtual universe.
That optimism is obvious based on recent buying activity. Last week, three of Wood's ETFs increased their stakes in online game company Roblox (RBLX 1.48%). Ark Innovation ETF purchased nearly 292,000 shares. Ark Fintech Innovation ETF and Ark Next Generation ETF made smaller buy transactions.
NYSE: RBLX
Key Data Points
2022 has been a rough year for most metaverse stocks. Roblox is no exception, with its shares losing close to two-thirds of their value year to date.
But Wood could be eyeing some of the details in Roblox's Q3 update. For example, Roblox CEO Dave Baszucki said in the company's conference call that user engagement levels are higher than they were pre-COVID and only slightly below peak COVID levels. Roblox is also launching limited marketplace items next year. Baszucki thinks this could boost user engagement even more and expand Roblox's economy.
Should you follow Wood's lead?
It's not a good idea to buy any stock just because a famous investor has done so. However, Wood could be on to something with some of these megatrends.
Increased adoption of EVs, for example, appears to be highly likely over the next decade and beyond. Does that mean that Tesla is the best stock to buy to profit from the megatrend? Not necessarily. There are plenty of other EV stocks you can buy with more attractive valuations. However, Tesla could be one of the big winners.
I think the other two megatrends that Wood is betting big-time on are much riskier. Perhaps crypto will make a major comeback. But it might not. The metaverse could eventually be worth trillions as Wood projects. But maybe it won't. Investors should keep these risks in mind before buying big positions in stocks such as Coinbase and Roblox.
Investing similarly to the way Wayne Gretzky played hockey -- skating to where the puck is going to be -- is smart. Just remember that the puck doesn't always go where you think it will.
