we are a volatile strategy well volatility on the upside is not a bad thing spectacular growth rates
that no one is expecting uh there's a lot of money to be made we have our own philosophy five year
investment time horizon truth will win out this is a bargain wow it has been quite an exciting month
now that this channel has all grown up i think it's time we sat down and had the talk
i just want you to be safe out there you know uh i'm talking about risk and volatility what
did you think i was talking about the markets this year have been very choppy and archives portfolios
are filled with some of the most volatile stocks our strategy just to give you a sense how volatile
that is our strategy from mid-february through mid-may most people wouldn't admit this maybe but
was down 37 percent peak to trough yikes so i want to talk about both sides of volatility
since i think it's core to arc invest style of investing first i'll share a few ways that you
can manage your risk on the downside without compromising your own investment goals after
that i'll share archive's biggest position increases in october since many of them have
exploded to the upside your time is valuable so timestamps are enabled for your convenience
let's get right into it starting with volatility versus risk tesla stock is the only stock that
arc invest has over 3 billion dollars in across all of their actively managed funds combined
this year alone tesla has had multiple drops of over 10 percent in a single week tesla is also
up over 40 in the last month on the news of hertz ordering 100 000 vehicles from them even though
that's incredibly volatile nobody is complaining about it simply because that number is green
as investors shouldn't we all be complaining about this i definitely want to hold more tesla stock
and it just got way more expensive to buy the only other stock that arkhamvest has over 2 billion
dollars in is teledoc ticker symbol tdoc and its share price has fallen off of two separate cliffs
and it spent the entire summer in a landslide everyone is complaining about this stock because
it's been grossly underperforming the market and has been dragging down every arc invest fund that
it's in which is most of them i think this is a great company and it's basically been on sale
all year as investors shouldn't we be loving that i'm not a financial advisor and none of
this is financial advice but in my opinion buying an asset low and selling it high is a good way to
make money i'm not being sarcastic here my point is very simple the stock price going down is just
as important to making money as the stock price going up so if you find yourself worrying about
both sides of volatility here are some ideas to help you turn this lose-lose into a win-win
first off there's nothing wrong with defining your personal boundaries as an investor and sticking to
them if roller coasters aren't for you don't get on the ride people don't say that enough however
you should know that unlike a roller coaster you don't have to put all of your money in very
volatile stocks if you don't want to and if you do want to you can still choose to average that money
in overtime instead of getting on the ride all at once even though it's not always easy averaging
in prevents you from buying at the top and is actually the simplest form of good risk management
diversifying your holdings is another form of good risk management here's an example of a
great little micro portfolio of just four holdings tesla palantir the grayscale bitcoin trust and spy
which tracks the s p 500 in just three individual positions you've got exposure to the bleeding edge
of artificial intelligence energy storage robotics enterprise software in a wide variety of growing
markets and a cryptocurrency that more and more institutions are starting to put on their balance
sheets then you can use the s p 500 as a hedge and lower the volatility of this little portfolio
all while still getting very reasonable returns the less confident you are in picking your own
stocks the more you can consider putting into spy until you clarify your position on the individual
companies that you chose it's not all or nothing and people don't say that enough i get it we all
have lives filled with more important things to do than tracking the stock market and reading
investor presentations all day yeah totally that's where funds and money managers come in
you can have a certified professional control some or all of your money through different types of
accounts and investment vehicles that use a wide variety of strategies don't let any knucklehead on
youtube tell you that there's something wrong with your retirement fund from vanguard or fidelity
not even me for me personally though i want an investor that aligns with my vision of the future
and the technologies that i think are making the world a better place i want a fund manager who can
forecast these technologies reasonably well into the future and buy them at the right price today
kind of like a value investor would but with a framework that works better for the young
small cap volatile types of stocks that i like to hold here's a clip from a recent bloomberg
interview with one such fund manager talking about volatility i actually enjoy pushback because again
it tells me we're not in a bubble right and you know as a portfolio manager i much prefer to be
climbing a wall of worry those are the strongest markets and here we are we are a volatile strategy
well volatility on the upside is not a bad thing right and last year was a good example of that
um but that's the charts but the other thing we we we said at the time and and we actually took
our cues from a value investor who said to us i would never buy one stock in your portfolio
but i like your research and you might be right so i'm gonna just
put five percent there's a value investor five percent as a hedge uh and kind of thought we were
behaving like a value manager long-term time horizon and looking for extreme values well value
investors are using price to book and and dividend yield and that sort of thing we're using growth
you know we're using spectacular growth rates that no one is expecting and tesla was our first
proof of concept i would say a very visible one there's a lot of money to be made we have our
own philosophy five year investment time horizon truth will win out this is a bargain this you know
i believe i'm our compliance department say i believe that uh that innovation stocks are on
sale so all that has happened in the last uh few months as the price has come down that means the
law if we're right on our forecast that our rates of return have gone up so now i can take something
like five or ten percent of my money and put it in say arc k which is kathy woods flagship innovation
fund by doing that i've diversified the investing behavior that influences my results altogether
since now a separate person manages some of my money i also end up gaining exposure to some new
areas of technology like genomics and streaming and entertainment all in just five tickers and all
without compromising on my personal investment philosophy i know what i hold and if i don't i
at least can understand why my fund manager holds it at a high level why is that important because
that's exactly how you get the conviction to hold these things as they drop 10 20 30 or more in the
first place let alone buy more on the way down there's actually one more way to protect yourself
from volatility without compromising on your investment ideas and that's to invest in assets
that aren't correlated to the stock market i already mentioned one example the grayscale
bitcoin trust which tracks the price of bitcoin another example would be real estate which is
how investors like graham steffen meet kevin and even steven mark ryan got their start they can go
for more volatile kinds of growth stocks because they've spread their overall financial risk across
different types of asset classes like real estate and crypto as a fan of all three of those channels
i don't think they point this out enough well not everyone can afford a mortgage and not everyone is
comfortable holding crypto so how can we invest in assets that aren't correlated to the stock market
i actually spent a lot of time digging into this and the partner for today's video is a great way
to do just that masterworks dot io is the only platform that lets you invest in multi-million
dollar paintings without breaking the bank i like masterworks because according to a recent report
by citibank art had the lowest correlation to the stock market of any major asset class
if an asset class is uncorrelated with another asset class that simply means that they behave
differently before i found masterworks dot io i thought investing in art was only a hobby for the
super wealthy but i was wrong contemporary art pieces have almost tripled the s p
500's total return from 1995 to 2020 according to another study by citibank that's why billionaire
art collectors end up allocating between 10 and 30 percent of their overall portfolios to art
that's way more than you thought right on top of that the 1.7 trillion dollars held in art today
is expected to grow by another 53 percent in the next five years according to the accounting firm
deloitte masterworks is the largest buyer in the art market today and is looking to spend another
400 million dollars on fine art in the next year alone then their platform allows you to invest in
those paintings just like you would buy shares in a public company that means that masterworks dot
io is disrupting one of the most exclusive asset classes in history by giving everyone frictionless
access to fine art not just the ultra wealthy and that is really important to me here's how you can
invest let's say you think this painting by banksy is going to appreciate nicely you would simply go
to masterworks.io select the number of shares you want and then buy them now that you're invested
in the painting you can either wait for it to be sold or if you want access to your money sooner
you can sell your shares to their secondary market to somebody else in 2020 investors saw a 32 net
return on their sale of banksy's mona lisa that's two times better than the s p 500. i think the
reason that masterworks has such a long wait list is because they're making something that used to
be impossible so easy so i reached out to them to give you all vip access to their latest offerings
if that's how you want to diversify your portfolio i'll leave a link to that offer for you in the
description below hopefully i've given you some useful ways on how to manage your investment risk
without compromising your investment goals or the kinds of stocks that you like the most the
reason i wanted to share that with you is because a lot of arc invests biggest increases over this
past month have already exploded in price so they now have a much bigger downside let me walk you
through them here's a table of all 156 positions that kathy wood currently has when you combine
her six actively managed funds each row is one stock the rows are sorted by kathy wood's total
position size in that stock and they're colored by the percent change in that position size
relative to the change in arc invests assets under management at the start of october her funds had
just under 38 billion dollars in them total and they now have just over 41 billion dollars in them
which is a nine percent increase in aum the more green the row the more that position increased
over the last month relative to that nine percent number the bigger the total position size
the lower the rank rank 1 is always tesla so when you see the quick bait headlines about kathy woods
selling hundreds of millions of dollars worth of tesla you can check this table and see that it's
still arc invest's biggest position by far and the only reason she sold 16 percent of her shares
is because they jumped nearly 40 percent in price likewise kathy wood can increase the
weight of her positions in two ways she can buy more shares of the stock which is the first column
or she can hold the stock as it continues to jump in price which is the second column
so if we look at the second column we can see that many of the positions on this list
increased by double digit percentages over the last month including tesla teledoc coinbase and
unity software all saw huge jumps in share price over the last month this is huge volatility in
arkhanvest's top positions but this time it's to the upside if you're taking screenshots do so now
because i'm about to sort the table by the biggest changes in position size instead
since this episode has been all about volatility and managing risk let me keep pulling on that
thread kathy would increase the size of her cash position by over 50 percent which is one
of the biggest monthly increases in her cash that i've seen since i've started tracking the data
it's never a bad idea to make sure that you have some cash sitting on the sidelines ready for that
next deal one such deal happened when scorpion capital released a short report on ginkgo bioworks
at the start of the month dropping the stock's price by over 20 percent if you look at our
trading and we do publish our trades at the end of every day we are not a momentum player uh if you
were i was just talking about uh ginkgo over there and this is public um you know it got slammed two
weeks ago by scorpion a new short end and so ginkgo got smack it was down 50 over a few days
over this short report we were buying the heck out of it and then today it's up i don't know
if it ended up 15 or 20 percent so we are not a momentum chaser we are a liquidity provider
when you know what you hold and you have the cash to spend red days become your favorite days to
help you know what you hold i've made deep dives on many of arkhanvest's highest ranking positions
including ginkgo bioworks bitcoin teledoc coinbase and skills which i've put in one convenient
playlist for you i'll leave a link to that in the top right hand corner of your screen right now
and in the description below as well now that the metaverse is a hot topic i want to take
another serious look at companies like facebook now meta and snapchat as well that's how the
data drives the research that i share on this channel i'm interested in a lot of these stocks
but they've just jumped in price so i'm adding them to my watch list instead i'm hesitant to
highlight any of them so i'll report back if i find something worth talking about after i do
more research since this channel has now hit 100 000 subscribers they grow up so fast i'm going to
put all this advice into practice in my 100 000 portfolio which i'll premiere in the next episode
the goal of that portfolio is to show you how the research and investing habits that i talk about on
this channel all work together if you want to be updated as soon as i make an investment decision
instead of waiting for me to make a video about it consider joining my highest tier patrons on
patreon or channel members right here on youtube who already have access to that watch list and
what's in my portfolio so far my next episode will be about this portfolio so i would wait
until you watch that before deciding one way or the other to make sure you see that episode
as soon as it comes out consider liking this video and subscribing to the channel with all
notifications turned on that's also a great way to invest in the channel that invests in you
and comment below or tweet me at ticker symbol u with your thoughts on volatility and risk
are those the same things to you do you like it when stocks go in one direction but not the other
do you often think about your overall portfolio including assets outside of the stock market
do you do a good job managing your cash position and your watch list i read all of my comments and
tweets and i'm excited to hear your thoughts either way i hope this episode gave you some
fresh ideas or at least some good reminders thanks for watching and until next time this is
ticker symbol you my name is alex reminding you that the best investment you can make is in you
you