cmsellers wrote:3. I had a conversation today with a fellow who has made and lost multiple fortunes in tech. I was talking about 3D printing, and how the 'rona has demonstrated a lot of new potential uses for it. He mentioned that he also expects it to do well, which is why he's invested (among other things) in a 3D printer ETF. It's so far performed rather poorly, and investing in sector ETFs is generally a bad idea, but in this case, I think it's worth investing maybe 1-1.5% of my portfolio in, because I've seen what I can do, and in researching other disruptive technologies with an eye to having perhaps 5-10% of my portfolio eventually dedicated to disruptive technology ETFs.
I don't know why I didn't think of this before, but I looked at what other ETFs the company (ARK) offers. There's six others, all of which seem like they
could be promising. The problem is that the stock market growth during the 'rona has been driven by tech companies, and I think there's a lot of overvaluing going on here. It's easy in the case of Tesla, whose 300% surge I think is due for a correction. However in other cases, it's more that I think the whole tech sector in general might be overvalued.
The two most promising ETFs, I think, are the Israeli tech ETF (IZRL) and the "Genomic Revolution" ETF (ARKG). The Israeli tech one is easy. I've seen how widespread Israeli-origin tech is, and I think that Israel has a culture which will encourage this to continue, plus it hasn't gone up nearly as much as US tech stocks have. It does fall in the small-cap growth category, and globally small-cap growth stocks have done so poorly they nearly wipe out the size premium, but I'm going to gamble, without any evidence, that Israeli tech stocks will defy this pattern.
The "Genomic Revolution" one is trickier. I know biotech is supposed to be the next big thing, the problem is everybody knows that and has for years. (I'd actually looked for biotech ETFs earlier, but the ones I found seemed to be over-invested in established players, and I somehow overlooked this one.) It remained fairly flat until the rebound from the rona crash, when it basically followed the same trajectory as other US tech stocks and nearly tripled in price. So, I think it's overvalued, but I kind of want to buy in at least one share anyways, so I can see the moment it crashes and buy more. But at $70/share, that's potentially a rather high price to pay for my laziness.
The other ETFs have a combination of large size (and I think large-cap stocks have been severely overvalued since the recovery, due to the influx of new investors who only know the household names), high prices, drastic recent increases, and a high investment in specific companies I think are overvalued, so for now I'm not going to consider them. But they include a "Next Generation Internet" ETF (ARKW), a "Fintech Innovation" ETF (ARKF), an "Autonomous Technology & Robotics" ETF (ARKQ), and a general "Innovation" ETF (ARKK) which appears to cover all their investments, or at least their US investments.
I may consider investing in some of these other products in the future. All of them have outperformed tech as a whole, but it's not clear to me how much of this is due to the fact that these are growth stocks, and growth has outperformed value for the last decade, though value has outperformed growth in every 20-year period since we've started recording this stuff.