A Perspective on Investing and Innovation with CEO/CIO Cathie Wood | Big Ideas Summit 2019 | Summary and Q&A

TL;DR

The content discusses the current state of the markets, the impact of innovation on valuations, potential growth drivers, and the role of disruptive innovation during economic downturns.

Key Insights

• 🥹 Genomics advancements hold significant potential that is currently undervalued by the market.
• ✋ Valuations in the private markets are significantly higher compared to innovation companies in the public sector.
• 👲 Five innovation platforms - DNA sequencing, robotics, energy storage, artificial intelligence, and blockchain technology - are expected to drive substantial market cap growth.
• ™️ A fairer and freer trade outcome from the US-China trade war could provide a tailwind for economic growth and innovation.
• ⌛ Yield curve inversion does not necessarily indicate an upcoming recession; innovation tends to thrive during tough economic times.
• 🪡 Investment management firms need to restructure and become more collaborative to effectively identify and capitalize on innovation opportunities.

Transcript

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Questions & Answers

Q: How do the current markets differ from the dot-com bubble in terms of innovation and valuations?

The speaker believes that the genomics space, with advancements in gene editing, holds significant potential that the dot-com bubble didn't have. Additionally, while private markets are overvalued, innovation companies in the public sector show more reasonable valuations.

Q: What are the next major growth drivers for the market, particularly in relation to innovation?

The speaker highlights five innovation platforms - DNA sequencing, robotics, energy storage, artificial intelligence, and blockchain technology - that are expected to drive substantial market cap growth in the future, with significant impact on various industries.

Q: How would the ideal outcome of the US-China trade war impact innovation in the public markets?

The speaker believes that fairer and freer trade would create a tailwind for economic growth and innovation. During tough times, disruptive innovation tends to gain traction, and the speaker expects this trend to continue. Lowering tariffs globally could lead to an economic boom, benefiting innovation-focused portfolios in the stock market.

Q: How are negative yield curves expected to impact deflationary growth cycles and innovation?

The speaker argues that the assumption of an upcoming recession due to yield curve inversion is incorrect. During past periods of strong growth and innovation, yield curves were inverted much more than they are now. The speaker expects strong economic growth, low inflation, and a positive environment for innovation in the future.

Summary & Key Takeaways

• The speaker believes that the current markets do not resemble the dot-com bubble of the early 2000s, especially in the genomics space where advancements in gene editing hold significant potential.

• Private markets show overvaluation compared to innovation companies in the public sector, with valuations ranging from two to thirty times higher using the price-to-sales metric.

• The speaker focuses on five innovation platforms - DNA sequencing, robotics, energy storage, artificial intelligence, and blockchain technology - which are expected to generate substantial market cap growth in the future.