The exchange traded fund ARKK is one that many people are familiar with. Unfortunately, it’s also one that isn’t doing particularly well right now. It’s down about 60% from last year, and 80% from it’s high. So, let’s look at what broader economic environment we need before it’s worthwhile again. To put it simply, we need a market environment that’s much more friendly in terms of money availability.
Liquidity is one of the biggest problems we face in the market right now. With interest rates having gone up over 2,000%, we are not at a point where investors are happy to buy ETFs. Now, we don’t necessarily need feds to cut interest rates, but we do need them to stop raising them and acknowledge the issues happening in the economy. If they do stop raising interest rates, we expect to see an initial rally followed by a decline, then a rate cut. At the end of the day, it’s liquidity in the system that will make ARKK ETFs worthwhile again.
What You’ll Learn:
- What the fundamentals of valuation are.
- What liquidity means in terms of money availability.
- What quantitative tightening means.
- And much more!
Favorite Quote:
“At the end of the day, these stocks need an environment more conducive to risk taking.” -Serge Berger
