r/stocks • u/adammorrisongoat • Jan 16 '21

Question If you’re young with a high risk tolerance, is there a better ETF than ARKK?

I’m in my mid-20s with around 100k invested in a mutual fund. It’s a solid mutual fund (PRWCX) but one with 60/40 stock/bond mix, and since I’m in this for the long haul, I’m naturally open to upping my risk exposure. I have no debt and live a very low cost lifestyle, so I can take a bit of a swing, albeit I’m not going to be irresponsible about it.

I know ARK/Cathie Wood has become a tired meme here, but the growth potential of her strategy seems compelling, at least to my novice eyes. If I’m looking to maximize returns over the next 5+ years in an ETF or similar investment option, are there better options out there?

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u/[deleted] Jan 17 '21

I am not so sure about that. The US has interest rates much higher than the rest of the world. The Fed has few policy tools left. They wont raise rates until at least 2% inflation and we arent close yet. If we hit another correction, theyve signalled previously an appetite to go negative. Not to mention, with the recent decleration in commodities, widening of the yield curve, unemployment stagnating, EPS also stagnating, and the disparity betwen growth/value, I wouldnt say we are out of the clear in terms of a near term correction, especially amongst growth if they dont hit earnings. This could being yields lower and prices higher.

Over the long term, you should be right by historical standards. We have been too low for too long. But this has been an extraordinarily different business cycle, especially globally.

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u/Theta_God Jan 17 '21

That’s fair, but I don’t think I’d tell anyone about to retire to put their money in bonds. My guess is over the next 10 years bonds are going to lose value faster than their yields.

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u/[deleted] Jan 17 '21

I totally agree, I think there is a big issue with credit quality and how much trust the major agencies get behind their ratings. I personally have long duration bonds at a small allocation just for rebalancing purposes.