My interview with legendary US fund manager Cathie Wood revealed that she thinks a big boom for stocks is on the cards, but how is this possible after US stocks have surged since October 2022?
It’s 9.07 pm in York in the UK and I’ve just interviewed one of the most well-known fund managers in the USA. Her name is Cathie Wood and yesterday I explained that I was planning to chat with her on Wednesday about her Ark Venture Fund that is coming to Australia.
To give her some context, let me share my introduction to the podcast that will soon be on this website. It went like this: “Cathie Wood is arguably one of the best-known fund managers in the USA. She is a fearless believer and investor in tech stocks and is always looking for the companies that will define our business future. She has flown the flag for Elon Musk, Bitcoin and many other ground-breaking businesses and she is now bringing her ARK Venture Fund to Australia.
“I want to understand what kind of companies will be in this fund and why Cathie will be selecting certain companies but rejecting others.
“In her very well-known ARK Innovation ETF her major holdings are Tesla, SpaceX, Coinbase, Shopify, Robinhood, Palantir, Amazon and even Block which bought out the Aussie business Afterpay, where the founder Anthony Eisen, was taught by yours truly.”
If you want to get her insights on how she picks the future Teslas, Nvidias and Amazons of the future, and why bitcoin is set to go sky high, you will have to check out the podcast.
But one of her views I will share with you is about the big picture and what US stocks are likely to do.
She thinks the US economy is on the edge of “a boom”, driven by AI, which will create disinflation — “good disinflation” — coming out of productivity, which will then set the scene for interest rate cuts.
On the curve ball, that is Donald Trump, she sees his benefits outweighing his costs and in fact sees parallels with the 1980s era with Ronald Reagan, while admitting there are some glaring differences.
We didn’t talk about Iran but that makes sense because it is guesswork until something concrete comes out of the Middle East negotiations.
Right now, stock markets love what came from Treasury Secretary, Scott Bessent’s lips this week, who suggested that Iran-Trump talks were promising.
An agreement to open the Strait of Hormuz is tipped for this week and so oil prices fell, inflation expectations did too, along with a positive view for interest rates, which helped the gold price to pop higher. Of course, stock markets lapped this up and Cathie Wood says this is good for optimists as share prices should head higher
“We are in talks with the Iranians,” Bessent told CNBC. “There is a chance we may have a deal today or tomorrow to open the strait and move towards a more normalized position in this conflict.”
This follows a very good reporting season in the US and now tailwinds for stocks look to be outnumbering headwinds.
“It seems like animal spirits are really back with a gusto,” said Baird investment strategist Ross Mayfield to CNBC, adding that the size of the moves seen throughout the last few days is “pretty rare historically.”
Finally, on Tuesday, CNBC told us that the three major averages notched their best four-day performance since April 2025, and the Dow Jones Industrial Average finished at record levels on Wednesday. The blue-chip index climbed 263.24 points, or 0.49%, to finish at 54,349.12.
And on the Dow, here is some interesting analysis about this closely watched index.
Recently, as Iran anxiety peaked, the Dow fell by more than 1,000 points on one day. Oil price rises due to Iran war escalation fears and Fed rate rise talk caused the sell-off.
For those who like stats, excluding the most recent slide, the Dow has dropped by four digits nine times in the past five years. But get this, CNBC research found that after the declines, the index has typically struggled in the subsequent days before rebounding in the one-month and three-month periods that follow.
If peace can happen and the Strait of Hormuz is opened, then the Dow could follow the script that a 1000 points down, can set the scene for a good bounce back, which I think we are in the process of seeing.
The table below shows how 1000-point falls can be good news for US stocks, which adds credibility to Wood’s boom story, albeit hers is more based on more the future than the past.
Clearly, history does not always repeat, and corrections and pullbacks are always on the cards after a strong run for stocks, and this one for US shares has been on solid uptrend since October 2022. However, I think there is a lot of merit in Wood’s boom market ahead expectation, but Donald Trump has to secure a Middle East peace deal. And if he does, stocks that like lower interest rates and oil prices will be winners and could easily underpin another strong leg up for stocks.
P.S. I have an interest in the company bringing Wood’s private ARK Venture Fund to Australia, but it is still a newsworthy event worth talking about.
