In this Stockhead series, investment manager James Whelan from VFS Group offers his insights on the key investment themes and trends in domestic and global markets. From macro musings to the metaverse and everything in between, Whelan offers his distilled thoughts on the hot topic of the day, week, month or year, from the point of view of a professional money manager.

For reasons completely beyond me, the good folk at Stockhead have decided to offer me a soapbox upon which to make noises vaguely about the market.

“James run with it. Slip into it and walk around in it for a while. Try not to be too controversial.”

Right, let’s keep this first one low-key and see how we go.


What? It’s the First Commandment isn’t it?

I’m not a religious person by any stretch. Usually my only trip to church is for weddings, and even then I’m often running through my material in my head because I usually have to MC (yes I do weddings as well – send me a message).

However, despite not getting the water sprinkled on my head I know the basic instructions and if you think about it, there’s probably a pretty good reason why that Commandment was put at the top of the list.


Speaking of which, we come to ARK Invest…

I’ve railed about not jumping onto whatever hot new thing is running in my own newsletters, and on the talking box too.

It’s even become my mantra for 2022: “Don’t do what Cathie does.”

(Ed note: ‘Cathie’ is Cathie Wood, who founded the ARKK ETF in 2014).

These pieces of commentary aren’t meant to be boot-sinking. I’d hate for someone to take the hatchet to me, and I hate the people who crow loudly when others do badly. Bad juju all round.

No — what they are is an opportunity for me to pick apart what’s going on and what’s the ‘trade that paid’.

Basically, how to separate the wheat from the chaff.

ARK Innovation ETF (ARKK)

I’m not an analyst, and nor do I pertain to be one.

I’m the perfect representation of the person who can’t read not needing to be able to read to find the bathroom.

They’re right over there where all the guys head, next to the door where all the girls head. Don’t overcomplicate it.

But I can tell you that as money gets more expensive (and bond yields go up), then tech gets revalued.

Note I didn’t say “sold off” because that jump doesn’t necessarily happen.

Lots of folks out there are making the straight jump from “money costs more so high-growth tech stocks with lofty valuations get sold” — and they maybe need to pump the brakes on that.

What gets sold is crappy tech. Tech that may have been running on spit, grip, duct tape and a shed load of good will.

You might know it as names that would appear in a portfolio that was the perfect representation of over-exuberance, run by the sort of person the First Commandment was put at the top of the list for.

This was the warning bell we received in December and if you didn’t listen, maybe turn off your Kenny Loggins Best Of mixtape and pay attention:

Stocks don’t just flick in and out of a bear market (actually they do since 2020 but who’s counting) and these names had already seen dramatic rallies, so a loose 20% here and there doesn’t blow too big a hole in the pocket.

However, it does also show that there’s as much room to the downside as there was to the upside.

Now, we have a new twist in the ARKK saga (courtesy of the FT).

Across all the stocks in the Ark ETF portfolio, company insiders sold down US$13.5bn of shares as 2021 drew to a close (and bought just US$11m).

The discrepancy was distorted somewhat due to a highly publicised US$10.7bn stock selldown by the tech overlord himself, Tesla’s Elon Musk.

But I have a question I ask in investing: Is it a thing? (It might not be.)

Tech company insiders selling stock at a much healthier clip than what they’re buying it at? That’s a thing.

A big surge in insider selling for stocks, owned by Wood’s ARKK ETF. There’s a stat you can take to the bank. The bank!

I don’t need to be able to read to find the bathroom.

I don’t need to be able to read to find the exits either if there’s a fire.

It’s where all the people are running to. Amen.

Stay safe and all the best.

The views, information, or opinions expressed in the interview in this article are solely those of the writer and do not represent the views of Stockhead.

Stockhead has not provided, endorsed or otherwise assumed responsibility for any financial product advice contained in this article.