Innovative Investor: Cathie Wood

If confirmation bias where a country, I’d be King. In all seriousness, Patrick O’Shaughnessy’s interview of Cathie Wood from 3 years ago really put some pieces of the puzzle in place. It’s been a slow discovery for me. Pealing back the onion, layer after layer, after layer.

The key takeaways for The Artificially Intelligent Investor revolve around the benefits of open source research, networking intensively, and a disdain for benchmarks.

Cathie believes disruptive innovation is inefficiently priced. Where most analysts screen indexes for ideas, she’s pushing her analysts out into the communities they’re researching. She encourages them to network intensively. Thought leaders are allowed on the ARK research intranet. They tend to be professors, venture capitalists, or entrepreneurs who are interested in exchanging knowledge and pushing the frontiers of knowledge forward. Something impossible to do in traditional asset management firms.

There are two reasons Cathie believes disruptive innovation is the most inefficiently priced part of public equity markets.

The first is passive trends that mimic benchmarks, or indexes. (This aligned with Howard Lindzon’s thoughts on the eventual “unbundling” of the indexes, though reasons may vary.) The second reason is most larger asset managers tend to look in the pre-IPO…