Brief Summary
In this episode of The Diary Of A CEO, Cathie Wood shares her insights on future investment opportunities, focusing on disruptive technologies like AI, robotics, and blockchain. She highlights the importance of adapting to technological changes and identifies key companies poised for significant growth. Wood also discusses the potential impact of these technologies on employment, economic growth, and societal structures, offering a comprehensive guide for investors looking to navigate the evolving landscape.
- Investing in disruptive innovation is key to future wealth.
- AI, robotics, and blockchain are transformative technologies.
- Adaptability is crucial for both investors and job seekers.
Intro
The host introduces Cathie Wood, highlighting her success in building a multi-billion dollar fund by identifying trends early. Wood aims to share insights on how and where to invest, particularly in the context of AI as the biggest technological disruption in history. The discussion will cover top public stocks, investment philosophies for wealth creation, and strategies for investing in AI, with the goal of identifying investments that could increase tenfold in the next 5 to 10 years.
Investing in the Most Disruptive Industries
Cathie Wood manages nearly $30 billion, investing in technologically enabled companies poised to transform the world. Her focus areas include robotics, energy storage, artificial intelligence, blockchain technology, and multiomic sequencing in the life science space. Wood emphasizes the importance of understanding these innovation platforms for the average person, as they will impact decision-making and career choices in a rapidly changing world. She advises getting on the right side of change to avoid disruption from the traditional world order.
Big Companies Will Crash If They Don’t Adapt Quickly
Wood expresses concern that Apple, despite its large cash reserves and successful smartphone business, may be disrupted by artificial intelligence. She points out Apple's struggles with developing an autonomous vehicle, an ultimate mobile device, as an example of not getting AI right. While Apple will likely remain a mature cash cow, Wood's investment strategy focuses on technologically enabled disruptive innovation, making companies that fail to adapt to AI less appealing.
Where to Invest to Be Rich in the Next 10 Years
Wood advises that while many initially invested in AI through Nvidia, she believes there will be many more winners. Her largest position is Tesla, which she considers the largest AI project on Earth. She also mentions Palantir, a software provider, as another key player in the AI space. Wood estimates the autonomous taxi network ecosystem will be worth $8 to $10 trillion in revenue in the next 5 to 10 years, significantly impacting the global GDP.
The Biggest Employer in the World
Transportation, broadly defined, is the single biggest employer in the world. Wood believes autonomous taxis will dramatically reduce transportation costs, potentially to 25 cents per mile, leading to increased road congestion. This shift has led her to study electric vertical takeoff and landing vehicles (EVTOLs), like those developed by Archer, to address mobility in the air.
Flying Cars and EV Tools Will Shape the Future
Wood's firm owns Archer, an EVTOL company, and sees AI playing a crucial role in both mobility and defense. Autonomous mobility is expanding from ground to air and eventually water. Tesla is considered the biggest AI application in the short term in terms of revenue generation.
Investing in AI Companies in the Health Care Industry
Wood identifies healthcare as the most profound application of AI, highlighting advancements in diagnosing cancer with a blood test in stage one. This is enabled by the convergence of DNA, RNA, and protein sequencing technologies, along with CRISPR gene editing. Companies like CRISPR Therapeutics and Vertex are already generating revenue with therapies for diseases like sickle cell anemia and beta thalassemia.
Why Tesla Will 10x in the Next 5 Years
Wood was bullish on Tesla early on, predicting in 2015 that the stock would surpass $4,000 (pre-split), a prediction that proved accurate. Despite production challenges in 2018 and 2019, Wood maintained confidence in Elon Musk's ability to scale production. Her current prediction is that Tesla's stock will reach $2,600 in five years, with 90% of that valuation coming from its robo-taxi platform, not just electric vehicle sales.
Your Autonomous Car Will Make You Money
Autonomous vehicles will allow owners to generate income by using their cars as robo-taxis while they are not in use. Consumers will be able to hail these autonomous cars via an app. The recurring revenue model will likely involve subscriptions or a la carte options. While regulations in Europe currently hinder the full deployment of full self-driving (FSD) technology, Wood believes this will change, with federal regulations eventually enabling faster adoption.
How Humanoid Robots Will Free Our Time
Tesla is also making significant strides in humanoid robots, which Wood believes could eventually dwarf the robo-taxi business. Humanoid robots are the convergence of robotics, energy storage, and AI. While robo-taxis are expected to generate an $8 to $10 trillion market in the next 5 to 10 years, humanoid robots could create a $26 trillion revenue market further down the line.
No Code Will Be Written by Humans
Wood discusses the implications of humanoid robots for human employment, noting that while technology has historically created jobs, these robots are getting closer to performing human tasks. She emphasizes the importance of creativity and ingenuity. The rise of natural language programming, or "vibe coding," will allow people to use tools like ChatGPT to customize software, leading to more personalization and creativity.
The Companies That Will Make Money in the AI Era
Wood believes that to earn a place in the new world, individuals must add more value than a machine can. Her firm focuses on original research to identify companies that will transform the world. She identifies three characteristics of an innovation platform: adherence to Wright's Law (measuring the learning curve), applicability across multiple economic sectors, and serving as a launching pad for new technologies.
Will Unemployment Be Higher in 5 Years?
Wood predicts that unemployment will be the same or lower in 5 to 10 years, mainly due to retiring baby boomers. She suggests that robotics and AI could fill the productivity gap caused by a shrinking workforce. Wood estimates that real GDP growth could accelerate to 7.3% in the next five years due to the five innovation platforms her firm focuses on.
Meeting Elon Musk
Wood recounts how she first met Elon Musk after he liked a piece of research on autonomous vehicles. She describes Musk as the Thomas Edison of our age, praising his innovative ingenuity and his desire to transform humanity for the better. Wood highlights Musk's focus on environmental sustainability with Tesla and his ambition to transform life on Earth through space exploration with SpaceX.
Investing in Bitcoin at the Very Start
Wood invested in Bitcoin very early, around $250 in 2015. She recalls how people initially dismissed it as a marketing trick. Economist Art Laffer supported her research, stating that Bitcoin could serve as a rules-based global monetary system. Wood bought Bitcoin for herself personally because regulators were hesitant, and she is very happy with it.
How Much of Your Portfolio Is Bitcoin?
Wood believes Bitcoin is a good investment opportunity because it represents a new asset class, behaving differently from other assets and providing diversification for funds. She notes that institutions are increasingly considering Bitcoin, especially after the SEC approved spot Bitcoin ETFs. Wood's price target for Bitcoin is $1.5 million by 2030.
Bitcoin Mining
Institutions have only recently started considering Bitcoin, especially after the SEC approved spot Bitcoin ETFs in January of last year. There is only a hundred billion dollar of new market cap that is going to be created whereas they have trillions of dollars under management. Wood's forecast for 2030 is $1.5 million. The three biggest building blocks are institutional adoption, store of value as digital gold for young people, and its importance to emerging markets needing an insurance policy against unstable local currencies.
Why Invest in Coinbase
Coinbase is an exchange for digital assets and derivatives, with a global presence. It is regulatory compliant and wants to become part of the new payments infrastructure. Management has fought for digital asset innovation. This infrastructure is what developers did not build into the internet in the early 90s because they didn't know finance or commerce would take place.
Top 10 Public Investments People Should Consider
Wood lists her top 10 public stocks: Tesla, Coinbase, Robinhood, Roku, CRISPR Therapeutics, Palantir, Archer, Shopify, and Roblox. Roku is an operating system for connected TVs. CRISPR Therapeutics is gene editing for sickle cell disease and beta thalassemia. Archer is the EVTOL company. Shopify is a shopping platform back end using AI. Roblox is a user-generated gaming company and social platform popular with children and teens.
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Where Would You Invest $1,000?
With $1,000 to invest, Wood recommends averaging into an ETF, specifically ARK, which offers exposure to her highest conviction stocks across various innovation platforms. For European investors, ARKI focuses on artificial intelligence and robotics. ARKG is focused on healthcare applications of AI.
Investing in Other Cryptocurrencies Apart From Bitcoin
Wood invests in Ethereum and other cryptocurrencies in her US funds, viewing them as key to the financial services revolution. She is more bullish on Bitcoin's price potential than Ethereum's, as Bitcoin serves as a global monetary system, a new asset class, and the most secure blockchain technology. Ether and Solana are also considered successful.
How to Invest in Stablecoins
Stablecoins can be indirectly invested in through Coinbase, which has a deal with Circle. Circle's USDC stablecoin generates revenue that is split 50/50 with Coinbase in the US. Circle itself has announced that it is going public.
The Mentality of a Good Investor
A good investor should adopt an aggressive growth strategy, averaging in over time, buying a little every month or payday, and closing their eyes as it is a long-term investment. Wood believes the technologies her firm focuses on will increase more than tenfold in the next five to 10 years. Individual investors who invest on the right side of change will be providing for themselves.
Trump’s Tariffs
Wood discusses Trump's tariffs, noting that the stock market initially reacted positively to his election due to the promise of deregulation. While the process has felt chaotic, Wood believes Trump is trying to lower both tariff and non-tariff trade barriers. She acknowledges his unconventional style but believes it is necessary for him to be taken seriously.
What Keeps You Up at Night in the Current Situation
Wood is concerned that some people will be caught out by new technologies and unwilling to adapt. She emphasizes the importance of learning and imagination. She highlights the inequality of education and initiative, noting that those who lean in and experiment with disruptive technologies will be the ones to succeed.
How to Hire in the Era of AI
Wood discusses how AI is changing the roles businesses need to hire for. She references the ancient game of Go to illustrate how humans can learn from and compete with machines. While AI and robots will increase productivity, humans still value human error and the ability to relate and aspire.
Advice to Young People
Wood advises young people to make their boss look brilliant, learn about technology and economics, and have confidence in their understanding of the world. She emphasizes the importance of continuous growth and seeking opportunities where one can make a significant impact.
Gratitude Letter From Cathie’s Mentor
A letter from Art Laffer is read, praising Wood's ambition and success. Wood expresses her gratitude to Laffer, revealing that she gave him 1% of her company when she started it. She notes that Bitcoin has rejuvenated Laffer, who is now actively spreading the word about stablecoins and has even started an account on X.
If Elon Dies, Will It Impact the Progress of Human Evolution?
Wood reflects on the craziest idea she ever had that turned out to be right, recalling when she realized that autonomous vehicles are robots. She also shares a recent brainstorming session where she envisioned transformer robots. Wood acknowledges the potential impact of Elon Musk's death on the progress of space exploration, electric vehicles, and humanoid robots, but believes he has created a runway for years to come.
