Tesla Stock at $3,000: Cathie Wood's Faith? [Correspondent Diary]

[Asia Economy New York=Correspondent Baek Jong-min] Despite the COVID-19 pandemic last year, most assets including stocks, bonds, Bitcoin, and gold were strong.

The situation changed in 2021. This is due to the clear economic recovery and expanded vaccine distribution. The perception that life could return to pre-COVID-19 normalcy became evident.

This is why there are claims that investment methods and trends must also change.

The fact that Federal Reserve (Fed) Chairman Jerome Powell's remarks are being ignored by the market indicates that even experts find it difficult to respond. It also suggests that rather than a broad market rally, individual stock markets may unfold.

Because of this, some experts have called for increased interest in active investment strategies.

A representative example is Mohamed El-Erian, Chief Economic Advisor at Allianz. Considering the Fed's monetary policy, he advised investors to respond more actively.

The criteria he evaluated for promising investment targets were ◇ strong financial statements ◇ global growth trends ◇ independence from the COVID-19 situation ◇ strong management teams.

Wood, Shouting 'Buy' on Tesla Based on Faith

One who is putting El-Erian's remarks into practice is Cathie Wood's ARK Investment Management.

[Image source=Reuters Yonhap News]

The background to Wood founding ARK Investment Management lies in her rebellion against the shift of investment flows toward passive funds. Active strategy funds, which heavily depend on the fund manager's capabilities, had gradually been sidelined after the 2008 financial crisis. Instead, passive strategy funds that reduce fund manager intervention rose to prominence.

Wood judged that it was difficult to realize her investment philosophy and established ARK Investment Management independently. She focused on innovative technology stocks with a concentrated buying strategy and achieved great success.

Even during the recent correction phase, Wood again made large purchases of Tesla shares. Although Tesla already accounts for 10% of the portfolio and the stock price is adjusting, she did not hesitate. She projected Tesla's stock price to reach $3,000 by 2025. (More aggressive scenarios forecast $4,000, while the worst case is $1,500.)

Among young investors, legendary investors who changed investment trends such as Warren Buffett and Peter Lynch are being forgotten.

Current investors pay attention to the words of Wood, Tesla CEO Elon Musk, and Social Capital CEO Chamath Palihapitiya.

Ben Carlson, Director at Ritholtz Wealth Management, pointed out, "It doesn't matter what the investment strategy is. Thanks to social media, becoming a hype master has become easier than ever."

However, evaluations of Wood seem somewhat different. Rick Rieder, founder of RIA Wealth Management, noted, "Investors pay attention to them to make money. Claims by others besides Wood can be ignored at any time."

Yahoo Finance also focused on Wood's faith. The name ARK Investment Management is derived from the Christian 'ark,' showing her religious devotion.

Yahoo Finance reported, "Wood's faith can be both a help and a hindrance." It highlighted that faith can lead to investment success but can also be a poison in the opposite case.

This content was produced with the assistance of AI translation services.