What you need to know about Cramer’s ‘WoodStocks’ list
- "WoodStocks" include the flagship holdings of ARK Invest's ETFs
- The stocks are concentrated in disruptive technology companies.
- Technology stocks have been trending down due to rising inflationary expectations.
Jim Cramer dubbed the top holdings of the ARK Invest’s portfolio as “WoodStocks” after the portfolio manager of investment firm Cathie Wood. These holdings are mostly concentrated in disruptive technology stocks that have done well in the past year but have taken a beating in the last month with rising inflationary expectations.
What’s included in the “Woodstocks”?
The so-called Woodstocks include Tesla (NASDAQ:TSLA), Teladoc Health (NYSE:TDOC), Square (BMV:SQ), Roku (NASDAQ:ROKU), Shopify (NYSE:SHOP), Zillow (NASDAQ:ZG), Twilio (NYSE:TWLO), Spotify (NYSE:SPOT) and Coinbase (NASDAQ: COIN). The investment firm aims to “invest solely in disruptive innovation” to “deliver long-term growth with low correlation to traditional investment strategies”, per the website of ARK Invest.
Cramer’s take on the holdings
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Cramer said that technology stocks are in for a wild ride in the rising inflation environment and investors need to brace themselves.
“Cathie Wood’s fantastic at identifying stocks like Twilio, but they’re not stocks for all seasons,” Cramer said. “They don’t work in this environment and they really don’t work in any inflationary environment where bond yields are on the rise.”
He further added that what worked in 2020 has not been working anymore this year and investors need to get used to it.
Performance of technology stocks
Tech stocks are coming off a period of strong growth since the market bottom last year in March.
Looking at some of the top holdings of Wood’s portfolio, Tesla, Teladoc Health, Square, Roku, Shopify, and Twilio are down 26%, 24%, 18%, 13%, and 23% respectively for the last one month period. Over the same time period, Nasdaq is down 6%.
Tech stocks have been hampered by the rising inflation expectations. The Consumer Price Index (CPI) increased by 4.2% per the report released yesterday. It’s the highest 12-month increase since 2008. Inflation has spooked investors.
ARK Innovation ETF (NYSE:ARKK), the flagship ETF of ARK invest, is down by about 20% for the last one month even though it is still up an impressive 82% for the trailing one-year period.
As Cramer said, what worked last year is not working anymore. So, investors should start to think beyond tech stocks and lean into sectors such as materials and the industrials that do well in an inflationary environment.