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In this video, I discuss the basics of thematic #investing, disruptive innovation, and how #ARKInvest understands history better than any other investor. I go over their 5 major platforms of disruptive innovation before covering the 14 technologies they think will become the general-purpose technologies (GPTs) of the modern era. Finally, I use this historical context to explain why #CathieWood is so passionate about ARK Invest's top holding, #Tesla (TSLA), which spans 3 of their 5 major innovation pillars (advanced robotics, artificial intelligence, and energy storage). As a bonus, I share some ways I look at ARK Invest's holdings data, which they make publicly available via their trading desk, which I will begin sharing in a video series titled “mARKet Mondays”.
The world we're going into is much different, we think, than the world that we've just left, and that's because and this gets into disruptive innovation and why we formed ARK.
Hello and welcome to Ticker Symbol You, the channel that invests in you. My name is Alex, and in this video we'll be talking about how ARK Invest will keep making history because they understand it better than anyone else. This video is going to have three parts. What is thematic investing, a brief history of disruptive innovation, and the next technologies and trends that ARK thinks are inevitable. “I'm inevitable.” And stick around to the end of the video where I'll show you how I track ARK's every investment move and how you can, too. Let's dive in.
Thematic investing focuses on investing in a core idea. Maybe you care a lot about sustainable and scalable agriculture or animal free and cruelty free meats. Or maybe you're really passionate about the environment, so you buy stocks in renewable energy like wind, hydroelectric and solar. Or maybe you're as excited for the legalization of cannabis as I am. Thematic investing can include things like defensive investing, where you buy bitcoin, gold or bonds to hedge your bets and manage your risk.
Maybe you want to focus your investments on trending industries like smartphones, mobile technology and social platforms, or you've recognized the shift from in-store to online shopping. And you want to put your money behind e-commerce, whether you're talking about trends in technology, sustainability or just hedging your bets. These are all things that you can put your money behind today. But where should you put your money if you think the future is going to look very different? Well, that's where ARK Invest comes in.
ARK's big idea is that we're on the cusp of some massive changes, bigger than any of us realize. And, with the world moving more and more online lately, these changes might be coming sooner than we expect.
I founded ARK Invest in 2014 for one reason, and that was to focus solely on disruptive innovation. We believe that there are five innovation platforms evolving at the same time. This has never happened in history. You have to go back to the late eighteen hundreds to see three innovation platforms evolving at the same time. Back then, electricity, telephone, and the internal combustion engine. For the 50 years through 1929, because of those innovation platforms, we experienced a booming economy and very low inflation.
So this is a plot that's worth spending a little bit of time on. In the beginning of the video, I said that the reason ARK will keep making history is because they understand it better than everyone else. What you're seeing here is the historical innovation platforms since the steam engine in the late seventeen hundreds all the way until ARK Invest was founded in 2014. It's important to remember that these are technology platforms and not market sectors. For example, the Internet is listed on here and there's no market sector today that isn't heavily impacted by its existence.
The dotted line is the aggregate or the sum of all of the economic productivity of all of the innovation platforms at a given time. As you can see, productivity sometimes goes down. That's because these are disruptive innovations. Not everyone adopts a new technology right when it comes out. The Internet was being developed all throughout the 1970s and 80s, but it didn't really become the World Wide Web until the 90s. And even then it had its share of naysayers.
Well, I just as I mentioned, I have no desire to be part of the Internet because I feel like I'm so inundated with information all the time that I don't really I don't want more.
Tech adoption takes time. As you can see, a lot of these technologies took 30 years or even longer to make their lasting impact on society. And new technologies will keep replacing more than one older technology. Think about all the devices that computers and the Internet have replaced over time. The next thing to know is newer, innovative technologies often leverage more than one technology that came before it and their impact on the economy and our lives will increase proportionally. A good example of this is artificial intelligence, which relies on many technologies that came before.
We'll speak more about artificial intelligence later in the video because it's incredibly important to both ARK Invest's worldview and their overall investment thesis. So with this historical context in mind, which innovative platforms does ARK Invest think we should be investing in today?
The five innovation platforms upon which we base all of our research, are DNA sequencing, robotics, energy storage, artificial intelligence, and blockchain technology. These platforms cut across sectors, they cut across geographies, they cut across markets. And importantly, they are converging with each other to spawn new innovation.
So this is ARK Invest's cluster of innovation platforms, as you can see, artificial intelligence is smack dab in the middle and it touches and empowers many of the other platforms that they invest in. Let's spend a little time and talk about the different applications of artificial intelligence now. Artificial intelligence is fundamentally about finding structure in and making decisions with mountains of data. For example, it can be used to reconstruct faces even without all the data to do so. Artificial intelligence is used in medical diagnostics to find indicators for disease, and it can be used in medical imaging to detect tumors that a doctor may miss with just his eyes.
And AI can be trained to combine data from different sensors, such as cameras and radars, to paint a picture of the world with enough confidence to drive your car through it. And of course, it can do things like send you ads that you definitely want to click and it can predict your crimes and arrest you before you can commit them. Wait. Oh, there's almost no limit to the types of problems that artificial intelligence can help solve. That's because one of the fundamental rules of machine learning and artificial intelligence is if an expert human can do it, a machine can be trained to do it as well with enough data.
Artificial intelligence is at the heart of many of the biggest companies that we invest in today, like Google, Apple, Microsoft, the recently “IPO'd” Palantir and even Tesla. While artificial intelligence lies at the center of this chart, it's important to understand that these other four innovation platforms are also fundamentally changing the way the world works. For example, Elon Musk often says that Tesla's long term competitive advantage is in its manufacturing. By focusing on building the machine that builds the machine, Tesla uses advanced robotics to outpace its competition.
Likewise, Tesla's advancements in battery technology give it the competitive edge when it comes to energy storage. Another thing that Cathie Wood points out is that these innovation platforms are converging. That means that their overlaps are getting bigger and bigger and new innovations are springing up out of combinations of existing platforms, just like we saw in the past. For example, autonomous mobility sits on top of advancements in energy storage and artificial intelligence. Here is a table of ARK's major innovation platforms, but shown in a different way.
As you can see, there are actually 14 new technologies that sit on top of their five pillars of disruptive innovation. One thing that should be painfully clear when looking at this list is these are not technologies in the future. These are things that are already upon us and that we interact with every day. In fact, most of these technologies are more than a decade old already. The beginnings of 3D printing, for example, were in 1986 and people were talking about cloud computing in the early 2000s. The next thing we can do is add these 14 innovations back to our historical plot.
This is what Cathie Wood is so passionate about. Because these disruptive innovations are happening at roughly the same time and have a lot of technological overlap, they are ripe for investment opportunities if you can spot them early. Here is the total market cap that ARK Invest attributes to these 14 technologies over the next 12 years. As you can see, ARK Invest thinks that these technologies will be responsible for over 60 trillion dollars of market cap in the next 12 years. With artificial intelligence, robotics and energy storage making up the majority of that,
there's no wonder why Tesla is ARK Invest's biggest holding. So if you believe in thematic investing, specifically in disruptive innovation, here are some things you can do as an investor. The first thing you can do is sign up for ARK Invest's trade notifications. By doing that, you'll receive an email every day that they make trades or update any of their positions. They also have a dedicated page for each one of their thematic ETFs. At the time of this recording, ARK has five actively traded ETFs: ARK-K, which is their biggest general innovation fund, ARK-Q which focuses on autonomous technology and robotics,
ARK-W, which focuses on next generation Internet technology, ARK-G, which focuses on genomics and their newest fund, ARK-F, which focuses on blockchain and financial technology. ARK Invest also constantly releases new YouTube videos, podcasts, blog posts and webinars. And if you're looking for the ultimate deep dive into their portfolio, holdings and updates on their positions, this is the right channel to subscribe to and hit that notification bell. Here is a quick overview of the types of things I plan to share during my Monday market updates.
I will get their total assets under management broken down by each fund. For example, here you can see their assets under management have almost doubled in the last three months. Here is a bar chart of all their holdings across all of their funds, colored by which fund the holding is in. As you can see, multiple stocks appear in multiple funds, and Tesla is by far their largest position, representing almost eight percent of all their holdings as an institution.
I also rank all of their holdings as an institution instead of fund by fund and track their biggest buys and sells each week. We can, of course, also look at individual holdings over time. All in all, I love poring through ARK's data and I'm happy to share it with you every week during my market Monday updates. This is probably a good time to mention that I am not affiliated with ARK in any way and nothing in this video is investment advice.
Thanks for watching and remember, the best investment you can make is in you.
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