Michael Kamerman, CEO of Skilling, shares his opinion on what stock you should watch this week.
After years of quiet performances, ARKK rose to prominence just before the Covid-19 pandemic and by the end of 2019, the Ark Innovation ETF had returned 165%, proving to be the best performing fund.
This stellar performance coupled with the trading boom witnessed during the pandemic sent the ARKK ETF soaring throughout 2020, ending with a record high just shy of $160 in February 2021.
Currently, the ETF has fallen to below the pre-pandemic high and is down just over 68% from its height.
Given that ARKK’s business model is to acquire shares in businesses that are ‘disruptive innovators’, the lack of good investment opportunities in a low inflation environment pre-pandemic helped to fuel ARKK’s early success.
The economic market trends we’re witnessing now, including the recent inflation surge and increase in interest rates, have undoubtedly contributed to the downturn in ARKK’s fortunes.
However, with many speculating that we’re going to enter a period of deflation, investors may be hopeful that ARKK will get a much-needed boost, along with other growth stocks. Typically, growth stocks tend to outperform as we move towards the end of a bear market, however, investors should remain wary that we’ve never seen a market as volatile as it is now.
When tech stocks do stage another recovery, the shares of ARKK will likely rise again, but it’s a high-risk option that requires caution and consideration.
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Not investment advice. Past performance does not guarantee or predict future performance.