Buffett vs. Wood: Whose Side Are You On?
I need you to help me settle an argument.
I recently got into it with an older family member…
She boasted that her personal investment portfolio is modeled off Warren Buffett’s. But I was less than impressed.
Buffett just doesn’t do it for me…
The value investing approach is dated, I argued.
It’s great if you can find a company trading at a discount to its monetary value. You’ll enjoy a nice little run when that stock reaches its full potential.
But then what? Where’s the potential?
Why take a step when you can climb the staircase?
That’s why I’m a proponent of growth investing.
I want a business that is going to disrupt life as we know it. I want to own a stock whose potential is off the charts.
And that’s why I’m a big fan of Cathie Wood.
The Times They Are A-Changin’
Ark Invest, Wood’s investment management firm, is the leader in the growth investing space.
The idea behind Ark Invest is to focus on disruptions and their addressable markets. Wood pinpoints a range of innovations – any of which could be the next big thing – and bets on them.
This is forward-looking investing.
It’s a play on the only predictable force in the universe: change.
And it works.
Ark Invest’s flagship exchange-traded fund (ETF), Ark Innovation ETF (NYSE: ARKK), has obliterated Buffett’s Berkshire Hathaway (NYSE: BRK-A) since its inception.
Don’t get me wrong…
Berkshire Hathaway’s share price has almost doubled (almost…) in the past six years. If you had taken that route, you would have still made money.
But the Ark Innovation ETF diverged from Berkshire’s stable path in early 2017, well before the pandemic sent technology stocks to the moon.
So while Berkshire Hathaway toddled along, one slow step at a time…
Ark Invest was tower running its way to the top.
Here’s something that many old-school investors don’t understand…
The markets have changed. The rules have been rewritten.
You can’t make money in 2021 the same way you did in 1981.
You can try, but you’ll be disappointed.
The way I see it, growth investing encompasses value. If you get in on an idea or an innovation early enough, you’re going to get the best entry price. And you’ll reap those rewards for decades.
But with value investing, there’s only so much upside. Slow and steady is still slow at the end of the day.
So you tell me…
Whose team would you want to be on – Buffett’s or Wood’s?
Let me know in the comments.