ARK Invest founder Cathie Wood opened her conversation with Solomons clients on 14 September with a view that runs against the market mood. Many investors are worried about oil-driven inflation and rising interest rates. She noted, however, that US equities were near all-time highs even as rates climbed. In
her analysis, rising real yields are doing more to lift long-term rates than inflation is, and she reads that as a sign of stronger underlying growth.
“We believe that real growth is going to accelerate during the next few years and be sustained at the 7% plus range.”
She made the case using long-run history. Global growth averaged around 0.6% a year in the centuries before the industrial revolution. It then rose to about 3%, driven by three platforms: electricity, the telephone and the internal combustion engine. ARK now tracks five platforms: artificial intelligence, robotics, energy storage, blockchain and multi-omic sequencing. On that basis, Cathie described the 7% figure as somewhat conservative. She also said productivity-led growth should mean lower inflation than most people expect.
Convergence is central to the argument. “The five platforms involve 15 different technologies and they’re all converging,” she said, which is why ARK organises its analysts by technology rather than by industry. She gave autonomous vehicles as the example, combining robotics, energy storage and artificial intelligence, and put that opportunity at “a $10 trillion plus revenue opportunity in the next 5 to 10 years”.
She was candid that this takes time to become visible. Innovation, in her words, arrives “slowly, slowly, then all at once”, and she noted that ARK spent twelve years researching autonomous vehicles before they began to commercialise.
