The big risk ahead over the next five years is deflation, not inflation, and it will benefit investments in innovation strategies, according to Cathie Wood, founder and chief executive officer of Ark Invest. Robert England Innovator companies, who share prices have tumbled 30-35% from their heights earlier this year, are likely to return 25-30% in each of the next five years from their current levels, Wood is predicting. “In terms of the recent behavior of value stocks, especially those we believe are in harm’s way, compared to the severe draw down of innovation stocks, I like the set up very much,” Wood said. While the current situation is reminiscent of the runup in prices from 2006 to 2008, the bond market is signaling that may not be the case, Wood said. Instead of 10-year Treasury yields rising sharply higher as it did during the 2008 financial crisis, the bond market “has settled down” following a sharply higher move in yields earlier in the year on inflation f...
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