TSLA - Why Cathie Wood Is Betting On Small-Cap Stocks Triumphing Over 'Magnificent Six' Amid Restrictive Fed Policy | Benzinga
Cathie Wood, the CEO of ARK Invest, has predicted a potential shift in the equity market, favoring small-cap stocks over large-cap tech companies. This forecast is based on the current “restrictive” monetary policy of the Federal Reserve, as outlined in a recent investor letter on Wednesday.
What Happened: Wood highlighted the potential impact of the Fed’s current policy, which is aimed at curbing inflation following the COVID-19 crisis. She pointed out that previous instances of market concentration, such as in 1973 and 2000, were followed by significant market downturns.
In contrast, periods of broader market concentration, such as in 1932, 1964, and 2009, signaled the beginning of broader-based equity bull markets.
Wood suggested that the current risk is a result of the Fed’s “restrictive” policy, which is in stark contrast to the “easing” policy of 1973 and 2000. She believes that this could create an opportunity for smaller-cap stocks to outperform the mega caps currently dominated by the “Magnificent Six.”
Wood wrote, “In our view, having ...