Inside the strategy and faith of Cathy Wood
Finding the delicate balance between risk and reward is a fine line that every investor has tried their whole life to perfect. For investor Cathy Wood, founder of ARK Invest, her faith has given her a foundation to build upon that inspired her to leave an established firm and venture out on her own investing in the next generation of innovative tech companies. Her strategy has paid incredible dividends to her investors most notably in 2020 when her funds produced an astounding return of over 150% in 2020 by investing in what she calls the “new creation” – the next generation of companies creating the future.
Wood’s firm ARK Invest picks disruptive technology stocks and groups them into ETF funds which allow the fund to be traded just like a stock, yet the ETF contains groups of stock similar to a mutual fund. The popularity of ETF funds has surged in recent years according to Investopedia, attracting over $7 trillion in cash invested in ETFs in 2020 which was also Wood’s banner year. She’s become a household name among stock pickers compared to the likes of Peter Lynch and Warren Buffett of Berkshire Hathaway.
She recalled in recent interviews how her relationship with the Holy Spirit inspired her strategy.
“I remember walking into my home on a beautiful sunny day. I get these beautiful sunny days when I am not really thinking about anything. I walk into my home and complete silence – my three kids, two dogs, and a nanny were away for two weeks, the first time ever in this house. I wasn’t even thinking about work, and I got the message loud and clear, “You have to take all of the technologies that have disrupted other industries and start to disrupt your own and focus on the new creation,” she told Carol Massar of Bloomberg Businessweek TV.
She then went on to explain her relationship with God and the role of the Holy Spirit as a guide to her. “In terms of that Aha moment you know many people would describe that as the force or the universe, but I would call that the Holy Spirit. The Holy Spirit is a guide.”
This idea of the new creation prompted her to invest in stocks including a big bet she made on Tesla years ago has proven true. The NY Times wrote about her, “But Ms. Wood and her firm’s unusual approach to investing — which combines high levels of risk with high levels of transparency about her views to produce, at least last year (2020), astronomically high returns — have connected with new investors in a way the financial industry had only dreamed of.”
“We are seeking the truth as these new technologies, we are trying to allocate capital to the best use and do the right thing,” she told Bloomberg.
The NY Times reported, “Her firm bet heavily on tech stocks that flourished with most of the country stuck at home. Its flagship fund, Ark Innovation — crammed with shares like Roku, Zillow, and the payment technology firm Square — soared almost 150 percent, trouncing the S&P 500’s 16 percent gain.”
Cathy told Jesus Calling that, “I believe that in starting ARK Invest, I was fulfilling His will for me here on Earth and that if I had not done it, that I would have died an unhappy woman not having not fulfilled my promise here.”
Her company name comes from the Old Testament Ark of the Covenant, a place where God’s presence was manifested and dwelt.
She shared with Jesus Calling podcast that, “I decided to name my company after the Ark of the Covenant because as I was going through that very difficult period starting in ‘06, where the market, nothing made sense to me, I started reading the One-Year Bible after I would read the passage for the day, I would then just open it up randomly and say, “God, speak to me. Just show me what to do. Show me Your will. Show me Your way.”
Wood explained in another interview that her fund deeply underperformed the market in ‘06 and she considered calling it quits. Thankfully friends around her and her deep faith called her to persevere and not give up.
In speaking with Jesus Calling about the role of reading God’s word and seeking his will in her work, she continued, “I would run into the Ark of the Covenant being taken into the Israelites, taking the Ark of the Covenant into battle before them, because they believed that the presence of God was in the Ark of the Covenant. As I began to get this idea of a firm going and realized that I was fighting this war, I knew I had to name my company “ARK” for Ark of the Covenant.”
She recalled in a talk on faith and work, this is the most confusing time of her life in 2006. She was advised to be reading Psalm 91 and began to open her eyes to the spiritual forces at work against her and the role that faith plays in her daily life, and the battles she faces.
Faith, as it turns out and seen clearly in Wood’s life, has benefits for this age, and the age to come.