🔥 Disrupting Wall Street: Chamath & ARK Invest Bet BIG on the Future of Investing and YOU (Ep 7)

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Like, if you ask me, Howard, like Chamath, where could you make a ton of money in the future? Number one is understand technology. Number two is understand biotech. Now, biotech is much harder, but why those two? Now those are two obvious areas that are not well suited for traditional buyside backwords based forecasting. And so the setup is amazingly good for retail because you are going to run circles around institutional capital.

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Hey there, Alex here. And this is Ticker Symbol: You, the channel that invests in you. I have something special for you in this week's Market Recap, so I hope you like it. And let's dive right in. Typically, the market recap focuses on adding context to ARK Invest's predictions of the future and active trading. This week, I'd like to focus on something a little different. I'd like to focus on you. Yes, you. That's because communities like this one and other investing communities you are a part of not only play a huge role in ARK Invest's investment philosophy and open research ecosystem, but more and more forward thinkers like Chamath Palihapitiya are realizing that social communities have unparalleled access to information and unmatched agility when it comes to using it.

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Here's Cathie Wood explaining how important investing communities are to ARK Invest.

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We understand how quickly the world is changing and we cannot use just traditional financial research resources anymore. We have to use social media, reach into communities and meet people we would never meet in the traditional financial world. They take our research and share with us their research and get to know each other that way. It becomes a very powerful community. We're all very passionate.

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OK, but this channel focuses on ARK Invest. So obviously my views on investing in you are going to align with Cathie Wood. So let's raise the stakes.

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By the way, I mean, let's just state the obvious. As you mentioned, some of these names…

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So, I mean, people go, I'm going to short Tesla. Why don't you short the banks? Like I mean, you may take a 20 percent risk, but they're going to.

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I love it. I mean, those dummies have lost so much money. How many times do you have to get your face ripped off to realize you're just an idiot? Go short a bank.

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This is Chamath Palihapitiya. He was an early senior executive at Facebook and now he's the founder and CEO of Social Capital. That was him talking about Tesla, ARK Invest's biggest holding. Don't worry, it'll all come together by the end of this video. Chamath is looking to be our generation's Warren Buffett. And based on his recent performance, I'd say he has a shot. Don't believe me? Let me show you. Virgin Galactic, ticker symbol SPCE, is a space exploration company focused on enabling near Earth space tourism and eventually hypersonic point to point travel.

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It's entering flight testing soon and plans to fly billionaire Richard Branson into space on its first commercial flight in 2021. ARK Invest holds it in ARKQ. Chamath sits on the board of Virgin Galactic. Open Door, currently under ticker symbol IPOB, is a company focused on disintermediating all parts of buying and selling a home. It's going public through a SPAC merger with Social Capital. ARK Invest holds it in ARKW and ARKF. Chamath is the founder and CEO of Social Capital and is the financial figurehead of bringing this company public.

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By the way, he literally tweeted out a summary of his investment thesis in Open Door to the world, for free, no middlemen. And of course, most recently it was announced that Slack, ticker symbol WORK, is being bought by Salesforce, ticker symbol CRM, which we'll talk about more in a minute, because ARK Invest holds both of these companies in ARKW and holds Slack in ARKF, for now. And Chamath sits on the board of directors for Slack. Just a quick note,

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These three cards come from ARK Invest's weekly stock commentary emails which cover any stock that rises or falls by more than fifteen percent in the same trading week. All three of these massive jumps in stock price have happened within the last three weeks. There's no doubt that when it comes to figuring out and investing in the future, Chamath is on fire. Let's see what Chamath has to say about online communities and the future of investing.

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The real escape velocity for me would be to figure out a way to be more part of a StockTwits community or Wall Street bats or whatever it is where I can have a YouTube presence or Discord or whatever. I haven't figured any of this out yet, but I think like being more connected to retail where we can have a community and I can be a part of that. And I think that would be the best outcome. If you can have for example, if you look at Tesla, Howard, I don't know if you spent time in the Tesla community and Twitter.

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So the smartest people and, you know, you let the battery guys, the physicists, the material science people, they work in a community. You get to ground truth on Tesla. I got to ground truth on Tesla in 2016 from those folks.

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This is the heart of Ticker Symbol: You. It's challenging for me to come out and say this stuff without sounding like I'm preaching on a soapbox. So I hope that Chamath, who helps lead three high performing companies held by ARK Invest, and Cathie Wood, who leads ARK Invest itself, have convinced you of how important you are to investing, not just how important investing is to you. Great. So let's talk about Slack. Slack is being acquired by Salesforce for twenty seven point seven billion dollars and this acquisition is the talk of the town. Less than one month ago in late November

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2020, Slack was ARK Invest's seventh biggest position overall. It was the sixth biggest position in ARKK, which I also have some important news about later on in the video, the fourth biggest position in ARKW and the twenty third biggest position in ARKF. Altogether, ARK Invest had almost three quarters of a billion dollars in Slack less than one month ago. Here's a plot of every Friday's market close on the X axis and Slack's ARK rank on the y axis.

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ARK rank is its position size relative to all of ARK's other holdings across all five of their actively managed ETFs combined. And you can see this massive drop in Slack's rank, right, as the Salesforce acquisition announcement happened. I'll steal a little bit of my own thunder here and tell you that ARK Invest has opened a position in Salesforce last week. More on that when we cover ARK Invest's buys and sells. Funny coincidence or is it? Salesforce also owns Tableau, the program I use to visualize and present all of this data.

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I'd like to show you how Wall Street is thinking about Slack right now.

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Bloomberg Intelligence says this is a smart move. How will Salesforce.com and Slack compete more aggressively with Microsoft?

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That's what this is all about. Salesforce wants to take on Microsoft, which is the big company that's taking over our offices and workplaces. Microsoft, I'm sure, will respond that they have a product called Teams, which is very popular in this work from home environment. And that will really be the question. Well, Salesforce is Slack. If they'll be able to compete with Microsoft Teams, that's what we'll be watching. But Slack for some reason didn't take off, probably because the competition I mentioned earlier with Microsoft Teams really going after that corporate customer.

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Microsoft Teams is a direct competitor to Slack. So the conversation always turns into a comparison between the two. But comparing them makes absolutely no sense, because when you buy Microsoft stock, ticker symbol MSFT, you're buying a lot of other stuff, not just Teams, you're buying Windows, you're buying Xbox, you're buying the Microsoft Surface Pro, you're buying Microsoft Office. And that's not even getting into the cloud and data center stuff like Microsoft Azure. That's several huge multibillion dollar business units that really don't have much to do with Teams at all.

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When it comes to understanding how society adopts innovation, it's hard to beat Simon Sinek. Here's a quote from Simon that really reminds me of this whole situation.

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I spoke at a leadership summit for Microsoft. I also spoke at a leadership summit for Apple. Now, at the Microsoft summit, I would say 70 percent of the executives and this is under the Steve Ballmer days, I would say about 70 percent of the executives spent about 70 percent of their presentations talking about how to beat Apple. At the Apple summit, 100 percent of the executives spent 100 percent of their presentations talking about how to help teachers teach and how to help students learn.

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One was obsessed with their competition. The other one was obsessed with where they're going. So at the end of my presentation at Microsoft, they gave me a gift. They gave me the new Zune, which was the competitor to the iPod Touch when it was a thing. Right. And I have to tell you, this piece of technology was spectacular. It was beautiful. The user interface was incredible. The design was amazing. It was intuitive. It was one of the most beautiful, elegant pieces of technology I'd ever seen.

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Right now, it didn't work with iTunes, which is an entirely different problem. I couldn't use it. But that's something else. I'm sitting in the back of a taxi with a senior Apple executive, sort of employee number 12 kind of guy, and I decide to stir the pot and I turn to him. I say, you know, I spoke at a Microsoft summit and they gave me their new Zune. And I have to tell you, it is so much better than your iPod Touch.

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And he turned to me and said, I have no doubt. Conversation over. Because the infinite player isn't playing to be number one every day with every product, they're playing to outlast the competition. If I said to Microsoft, Oh, I've got the new iPod Touch, it's so much better than your new Zune. There was a can we see it? What does it do? We have to see it because one is obsessed with their competition. The other is obsessed with why they do what they do.

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The other is obsessed with where they're going.

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Let's see what Slack's biggest insiders have to say about it and if they're also constantly comparing themselves to Microsoft or if they've got a separate vision, starting with Stewart Butterfield, Slack's CEO.

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Now, what do you make of the narrative that this deal was done because of increasing competition and increasing threat from Microsoft, that they were starting to beat you and customers, and that the perhaps smartest way forward was a tie up with another giant?

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I think that narrative will eventually be dispelled. I personally, I'm sick of talking about Microsoft, so I'm going to take it from a slightly different angle here. So just looking at the US and to be clear, we have a very strong business worldwide. Japan's are number two markets growing very quickly, UK and Europe all very strong. But just look at the US biggest telco: wall-to-wall on Slack, largest media company, wall-to-wall on Slack, I have to look at my notes here because there's so many here.

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The largest issue of credit cards, wall-to-wall Slack. The biggest in consumer electronics, wall-to-wall on Slack, the leading retailer wall-to-wall Slack. Number one in payroll, wall-to-wall Slack. And if you zoom out from it, it's two thirds of the Fortune 100. It's three of the five biggest companies in the US by revenue. Our customers operator, the nation's largest integrated health care system or the six biggest telcos. I mean, I could just go on this list forever.

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So I kind of have given up on trying to point people to the empirical facts here, because there's an article of faith about the competition that I'm unable to overcome.

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And of course, we can't leave out Chamath since he sits on the board of directors.

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Learning on this was was one that has frankly cost me billions of dollars personally. You know, there was opportunities for us to invest in Uber all the way into the series B. I remember when Menlo called and Benchmark and, you know, on a Sunday night, just put in ten million dollars and which would have turned out to be a multibillion dollar piece. And I said no, because I didn't understand how an investment like that could sit inside of a very traditional venture portfolio.

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That was my mistake. I've made similar mistakes like that in the past. You know, one of our biggest investments is a company called Slack. And I still think to myself, why did we not just lead every single round and write the entirety of the fund into that company? It was obvious from day one that Stewart Butterfield is an iconic CEO and that Slack is going to be one of the most important tech companies in the world.

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So Slack is a very strong suite of communication tools in its own right, and its leadership is playing the long game. They're not necessarily concerned about the runners in the race next to them. Their eyes are fixed on the horizon. Now, let's see how Slack fits into the bigger picture of Salesforce. And if this acquisition fits into that long term vision. Here's what Box's CEO Aaron Levie has to say about this acquisition causing a disruptive transformation in workplace connectivity and productivity.

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This is one of the most important M&A deals that we've certainly seen in many years, at least ever maybe in enterprise software. I think Slack joining forces with Salesforce is going to completely transform this part of the industry around the future of work and productivity software. And I think what Slack really brings Salesforce is this modern operating system for knowledge work, where you can connect the front office, the back office, your customers, their partners, and have a common interface to be able to communicate and collaborate across all those different experiences.

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So I think it's very transformational for Salesforce. I think it's exciting for Slack and I think it's great for the rest of the software ecosystem where Slack is really an open platform that more software can plug into and create new experiences for customers. I think it's pretty exciting all around, but overall, I think what this is the bigger signal of is just, again, how big these markets are. Even when we think about today in either the US or other key markets for enterprise software, we're probably only about 10 percent of the way penetrated when you think about modern software like Slack.

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So, you still have this significant portion of knowledge workers around the world that need to be using these modern tools that we'll be using, the modern tools in the future. So for us, as as far along in this journey that many of us are in, and these kinds of companies have progressed on, we're still very early in the total potential of the market.

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What do you make of the competitive threat of Microsoft? You heard Stuart, there saying he's sick of talking about it, but it seems like the threat is real.

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Well, I think I think in Stewart's case, Slack is a very different kind of product than some of the other competitive tools out there. It's really an open platform for bringing together different software, different communication with partners and external vendors and internal employees. So there really isn't a perfect kind of one to one comparison where what you where Slack has built something that is completely unique and disruptive, where customers do use it in a different way. And I think, again, the recognition of the market is that Slack

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plus Salesforce is able to now go after this market in a much bigger way. And I think that we have to sort of think about this market, not in the maybe typical Zero-Sum way, that maybe some other industries have evolved where, you know, if one company wins, another company loses. I actually think the markets are so large that we're going to see growth from most segments of software in the coming years simply because of how much of the world still has yet to be digitized, the amount of business processes that haven't gone digital yet, the amount of workloads that are still in legacy data centers that are going to move to the cloud, the amount of knowledge workers that are going to be using digital technologies to do their jobs in the future.

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For all of these reasons, we're still in the very early days. So I don't think we're going to see the same level of head to head competition that that maybe it seems like.

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That's said Slack has made the contention that Microsoft…

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By the way, Emily Chang, the anchor of Bloomberg Technology and the interviewer in that clip is a really smart and talented journalist. And even she can't step back from this flawed comparison between Slack and Microsoft. As Aaron Levie pointed out, the total addressable market for Slack and Microsoft Teams is massive and growing, and modern enterprise software has really only penetrated something like 10 percent of it. Microsoft and Slack are individually empowering

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productivity and knowledge work in very different ways. So instead of pitting them against each other, what if we thought about them together? Here's a big piece of my investment strategy. One thing I look for in quickly growing markets are the winners, not the winner, the winners, plural. I'll link the TED talk that really opened my eyes to this part of my strategy in the description below. The TED talk is by Malcolm Gladwell, author of The Tipping Point

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and it's about much more than just spaghetti sauce. In any expanding landscape or a growing total addressable market, there are usually three to five dominant players. Here we can see the monthly active users across the biggest social media platforms out there. As you can see, Facebook is number one. YouTube and WhatsApp are tied for number two, Messenger's, number three and so on. Of course, this graphic is missing a very key piece of information, which is that out of the top 10 social platforms, Facebook owns four and Tencent owns another three.

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Another example is the digital advertising space where Google, Facebook and Alibaba claim the vast majority of digital ad revenues. My point is, why are you trying to pick the best spaghetti sauce when you know different people like different sauces? Why not instead find the three ish sources, you know, most people end up going with? Guess what? That's exactly what ARK Invest does. And they have positions in Facebook, Tencent, Google and Alibaba.

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We want to get rich, you know, find smart people, read, become an expert on one thing and take risks…

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Or honestly, like, look, you can pay other people to diversify smartly for you. Meaning, you know, if you look at Cathie Wood, you know, ARK Invest has a great platform where there's a team of thoughtful people. You know, I'm not going to make a judgment on their diversification. But the point is, you know, to pay seventy six basis points a year for her diversification, where then you can cherry pick the best ideas and get concentrated and really learn about them. That seems to be a much better strategy than you finding 50 companies to.

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And of course, back to Slack versus Microsoft if you strongly believe they will own the lion's share of the digital productivity space and you believe the thesis that the total addressable market is only 10 percent penetrated and there's plenty of room for both to grow. Why not think about your position in spagetti sauces as a whole instead of trying to pick a single sauce? Get it? Speaking of ARK Invest owning the landscape, ARKK just unseated JPSC, JP Morgan's ultra short income ETF, the largest active ETF.

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ARKK is of course, ARK Invest's Flagship Fund and is themed around disruptive innovation in general. It's a combination of ARK Invest's highest conviction picks across ARKG, ARKQ, ARKW and ARKF. In my opinion, presenting this ETF in context requires first understanding the individual pieces. And as you can see, we are well on our way to unlocking every piece of this puzzle. In a few more weeks we'll have all the tools we need to tackle this massive final boss.

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For now, let's at least cover what's in ARK Invest's flagship fund now the biggest actively managed ETF. As of market close on Friday, December 11th 2020, ARKK holds just under 16 billion dollars in assets under management, across forty eight holdings and has appreciated a healthy thirty four percent since the start of quarter four, 2020. Its top ten holdings are Tesla, Roku, Invitae, CRISPR Therapeutics, Square, Teladoc, Zillow, Spotify, Proto Labs and Editas Medicine.

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It holds companies we all know, love and use daily: like PayPal, Nintendo, DocuSign, Zoom, Shopify and Slack, just to name a few. It's funny how investing in companies that are innovating in areas we all touch almost daily is still considered a niche strategy by Wall Street. Let's get into the weekly buys and sells of ARK Invest, our quote unquote once niche upstart. ARK Invest's assets under management rocketed up by over 13 percent over the last trading week to a total of just under 30 billion dollars.

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ARKK and ARKG, ARK Invest's genomic revolution fund, grew by over a billion dollars each over the past week. That's insane growth. Here's the weekly trading board, where the dark green squares show the biggest net increases in the number of shares and the dark red squares show the biggest net decreases in the number of shares. The ten squares without percentages are new positions that didn't exist a week ago. So there's no change to track. And the ten squares with

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percentages are positions that legitimately had almost no change in share count week to week, anything with a CCT in front of it, by the way, is just a different currency. For example, CCTEUR is the euro and CCTJPY is the Japanese yen. So the new positions are in Base Inc, ticker symbol 4477; Salesforce, ticker symbol CRM; TCS Group, ticker symbol TCSLI; Peloton, Ticker Symbol PTON, and Sarepta Therapeutics, ticker symbol SRPT. I've begun cross checking some of my data with Lucid Tracking, a website that records ARK Invest daily trades,

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and you can see that we nearly match up. I show that Baidu Inc, ticker symbol BIDU has increased in position size from last week and Lucid shows it as a newly opened position in ARKK. I figured I'd just clarify that both of these are actually true. You can find Baidu in ARKQ's holding week after week, but ARK Invest recently added it to ARKK specifically, which is why Lucid shows that. I just want to mention that for those of you who are using Lucid and follow my weekly trades: both are accurate, but they just show different things.

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I like Lucid Tracking a lot and I'm excited to dig into their data in the future. Anyway, ARK Invest's outsized buys are in Baidu, BIDU; Roche Holdings, RHHBY; Google, GOOGL; and that's probably due to Alpha Folds deep learning breakthrough; Thermo Fisher Scientific, TMO; Regeneron, REGN, Takeda Pharmaceutic, TAKUN; and Novartis, NVS. Their biggest sell is in Slack, the focus of this video and they're picking up shares of Salesforce ticker symbol CRM, its new parent company, and also the parent company of Tableau.

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They've also completely sold out of DOUYU, ticker symbol DOYU, which we've seen them selling week after week. So for now, here's my short list of their biggest outsized buys and sells for the week. And just like last week, I'm still working on a better and more reliable system of picking out the clearly interesting position changes. Sorry, this video's coming out a little late, by the way. Life can get pretty hectic right before the holidays. I should have more time over the holidays to take care of a lot of the feedback I'm seeing in the comments.

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But for now, let me just address the easy questions that I see most often. One, there are tons of wonderful developments happening in the genomics space, and I'll cover them when I can. They're on my radar. Two, just for your reference, this is, what, a one hundred million dollar position at ARK Invest looks like right now. So if you're trying to decide which ARK Invest videos covering single positions you should watch, one hundred million dollars seems like a good threshold.

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And three, please comment below if you want me to cut or add any coverage to these weekly market updates. For example, ARK Invest's newsletter this week was awesome, but I pretty much covered it at a high level between my most recent two nonmarket update videos. So I'm not sure if you'd like me to also summarize that content here. And Chamath has one last point for us on the topic of community.

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And so what is the number one thing that you would like to tell people who have a Robinhood account, who have an eToro account, who want to buy a little bit of Bitcoin? Like what is how should they think about investing.

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First of all, you are the future. Second, I think more and better and more valuable community is coming through mechanisms like StockTwits and other things. Be open and be kind. There are some really smart people who want to be in this community to help.

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And, you know, being a dick is just kind of like a short lived thing and it never works. And every dick I've ever met is poor. So, you know, there's a real correlation with wealth and happiness. I think there's a correlation for people to want to help. So be intellectually curious and just be kind and just be patient, because I think you guys are going to rule the days.

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This is Ticker Symbol: You. My name is Alex, reminding you that the best investment you can make is in you.