In this episode, I look at one fundamental law ARK Invest follows to pick innovative companies like Tesla (TSLA) way before Wall Street buys in. Their biggest portfolio, ARKK, is filled with companies like these, and ARK Invest's investment process is outlined here: https://ark-invest.com/investment-process/

Using Tesla as an example, we can clearly see that ARK bought in at the perfect time, not because they were timing the market, but because Tesla entered the trough of disillusionment and the market was clearly pricing Elon's visionary electric vehicle company incorrectly. Wall Street cares about profit while Cathie Wood understands that exponential growth tomorrow comes from constant reinvestment today.

I'm talking about the Law of Diffusion of Innovation, which is a framework for understanding how many people need to buy into an idea or technology for it to go mainstream (e.g. buy-in from Wall Street).

Finally, I talk about an additional framework, the Gartner Hype Cycle, which talks about market sentiments depending on where a technology is in its adoption cycle. I'm confident you can use this framework to validate any innovation or disruptive technology Cathie Wood puts money behind, as well as use it to predict her future picks!

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Sources & Further Reading:
The majority of this video is inspired by Simon Sinek's wonderful TED Talk, titled "How Great Leaders Inspire Action", found here: https://www.ted.com/talks/simon_sinek_how_great_leaders_inspire_action

Malcolm Gladwell's book, The Tipping Point, which covers much of the same topics, is also an awesome resource: https://www.amazon.com/Tipping-Point-Little-Things-Difference/dp/0316346624/

Gartner's Hype Cycle for Emerging Technologies 2020: https://www.gartner.com/en/newsroom/press-releases/2020-08-18-gartner-identifies-five-emerging-trends-that-will-drive-technology-innovation-for-the-next-decade

Good article that connects the Law of Diffusion of Innovation with the Gartner Hype Cycle: https://blog.octo.com/en/accelerate-innovations-by-blending-the-best-practices-of-three-models-of-innovation-diffusion-gartner-g-a-moore-c-christensen/

I am not a financial advisor or affiliated with ARK Invest in any way.

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