Peter Schiff: The ENTIRE Ark Invest Is About To Collapse After This

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In this video, I cover how Peter Schiff recently argued against Cathie Wood and whether these arguments have any substance behind them.

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Over the past decade, Cathie Wood has proven herself to be a leading investor in today’s financial markets. Although Cathie has been in the investing space for decades, it wasn’t until recently when she started gaining traction. In the meantime, the critics against Cathie have also garnered substantial attention. Amidst the crowd of critics is none other than Peter Schiff, the founder, and CEO of EuroPacific Capital, a brokerage advisor, and broker-dealer. Peter is an outspoken man who has started wars with many prominent leaders, and one of which actually includes Elon Musk. This video will go in-depth into a heated war initiated by Peter Schiff against Cathie Wood. Welcome to Casgains Academy. If you’re new to the channel, please consider subscribing for more content like this, and let’s get right into it. Cathie Wood is extremely bullish on all five of ARK Invest’s innovation platforms, blockchain technology, genome sequencing, robotics, artificial intelligence, and energy storage. One of these just happens to be the technology behind Peter Schiff’s least favorite asset class: cryptocurrencies. Schiff is a major supporter of gold and has been touting gold as the key for the US to have a strong monetary system. As cryptocurrencies rose, and especially Bitcoin, his hatred for cryptos only grew more and more. At the beginning of January of this year, he said, “For years, I’ve argued with Wall Street economists, academics, and financial professionals that a monetary system based on gold is superior to one based on fiat. But never have I heard more preposterous arguments against #gold than the ones I’m hearing now from #Bitcoin advocates."
In other words, Schiff is calling Bitcoin advocates delusional. However, Schiff didn’t start targeting Cathie Wood until recently. In March of 2021, Cathie Wood went on CNBC to say that Bitcoin was most correlated with real estate. In Cathie’s opinion, going forward, Bitcoin may be more correlated with fixed-income assets like bonds. Peter responded to this statement on his podcast, the Peter Schiff show. He called it one of the most ridiculous statements he has ever heard.
On the surface, Peter’s argument makes a lot of sense. Bitcoin being correlated to real estate is quite strange, to say the least. However, a deeper dive shows that this argument is taking Cathie’s statement out of context. In the interview that Peter is referring to, Cathie mentioned that Bitcoin is not highly correlated to anything at all.
Based on the data, Bitcoin is definitely not correlated to the other assets in the financial markets. This is a chart showing the price of Bitcoin, the S&P 500, a bond ETF, and a real estate investment trust over six months. As you can see, Bitcoin’s price is not correlated at all to the other assets, and even on a one-month chart, Bitcoin remains an outlier from the group. Nevertheless, Peter had more to say. He explained that “All she did was load up on the most well-known, over-valued stocks in a bull market that bubbled up. Let’s see how she performs during a bear market.” I’m not here just to oppose Peter’s arguments, but there is a major flaw in this statement. Cathie Wood was actually a portfolio manager during both the dot-com bubble and the 2008 recession. From 2001 to 2013, Cathie served as the Chief Investment Officer at AllianceBernstein, where she generated an average annual return of 5.6%. This was slightly higher than the S&P 500’s return of 4.2% per year over the same time frame. Of course, this isn’t the best, but not the worst. After compounding this return on a 12-year basis, we can see that Cathie outperformed the market by roughly 28%. Clearly, Cathie Wood didn’t perform the best. This was mainly because she failed to time the housing collapse in 2008. In 2006, she predicted the housing crash and scaled back in her funds. However, in 2007, after underperforming in 2006, she reversed her fund. By 2008, her fund crashed 45%, significantly lower than the S&P’s return of 37% (Do a graph animation using the two columns here. The main criticism of Cathie Wood from Peter is that she is just investing in stocks that everyone else has. On Peter’s podcast, he explained this argument in-depth. Peter’s argument centers down on the fact that a lot of retail investors own the same stocks as Ark Invest.