Almost A Correction In Small Cap Growth

ARK Genomics

ARK’s genomics fund ARKG took a big hit on Tuesday as a holding that has a 2.17% weighting fell 54.17%. The decline in Arcturus Therapeutics ARCT was even bigger than the after-hours move on its vaccine data release. As you can see, the ARK genomics fund had one of its worst days ever as it fell 6.64%. It’s down 10.8% in its recent 4-day losing streak. We won’t declare victory in any bearishness because everyone expects volatility in biotech stocks that are not profitable.

This needs to fall well over 50% and we need to see retail outflows before we can say this euphoria is over. Some are bearish because retail investors who don’t know anything about biotech are banking on Cathie Wood’s success in stocks like Tesla to predict a winner again. 

The logic behind investing in this fund over the others is stronger because it’s easier for retail traders to understand what Roku does than genomics. However, this is a high stakes game because these are profitless stocks with a lot of hype. That usually ends in disaster.

Bitcoin Crash Incoming

Bitcoin is an extension of the speculation in risky stocks without profits. Amazingly, bitcoin is up 51.7% since December 11th. It now has a market cap of $521 billion which is almost as much as Tesla. The entire crypto space has a market cap of $744 billion. This reminds us of late 2017 when crypto and stocks were seeing euphoria. We had a peak in both in early 2018. 

This time bitcoin makes up a bigger share of the crypto space especially with Ripple’s recent crash. However, that doesn’t matter much. The point here is we likely see an over 50% correction in this space early next year. It is like an out of the money call option on the triple leveraged Nasdaq 100. It is the ultimate “risk on” trade. 

Cramer’s Top Internet Stocks In 2000

This is not to criticize anyone’s stock picks in hindsight because there’s no point to that. However, it's good to look at Jim Cramer’s top internet stock picks to show how the bubble stocks did after the Nasdaq peaked. The results are not pretty. As you can see, these 10 stocks are down an average of 81.55%. The Nasdaq eventually came back, but stocks like JDSU and Yahoo didn’t.

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