In March 2020, I was working from home and I could barely save money. I was making $2,000 a month from my full-time job, and about $1,300 of that went to rent and utilities. At the time, I only had $6,000 in my bank account. I felt like I could never get ahead.
President Trump had signed the first round of stimulus checks ($1,200) and the Education Department announced it would suspend payments and waive interest on federal student loans. The market had just taken a nosedive and looked to be in a V-shaped recovery. With the pending stimulus check, I thought now was the perfect time to invest $1,000 dollars into the stock market.
My previous attempts to buy individual stocks were in college and I failed miserably. Little to no research was done and most of my decision-making was based on the hype. I remember losing $200 shortly after the Snapchat IPO and selling my position because I couldn’t afford to lose any more. I was a broke student trying to make a quick buck. This time around I promised myself that I would do the necessary research to purchase an individual stock without a shadow of a doubt.
When it came to choosing a stock, my first thought was to start with the apps on my phone. I looked at companies like Splice, Squarespace, Thredup, and Medium. All of which were private companies. As it would turn out the only app that had gone public was Fiverr.
Before the pandemic, I was using Fiverr to purchase digital products for my website. I was so obsessed with this platform that I purchased 23 digital products in the span of two months. I noticed that the shopping experience was extremely easy. I started researching the company and realized that I had come across a platform that could help millions of people. The freelance market was about to explode. Here is the article I wrote.
On May 8th, I bought $1,000 of Fiverr at $48 a share. The stock price rose to $65 and then fell back to $55. I got scared and sold all of my shares. Soon after, I took a walk along the Willamette River and came to the conclusion that I needed to put my money where my mouth is. I had to accept losing everything. I didn’t do all of that research just to be afraid and to sell. I told myself that I needed to hold the stock no matter what. If the stock goes to zero at least I was proven wrong and that was better than getting scared.
So on June 1st, I reinvested another $1000 into Fiverr at $60 a share.
In the following months, I kept buying as many shares as my budget would allow. The stock started to grow fast. I kept buying shares of Fiverr all the way up until December 20th when I bought my last share at $220. By then I had accumulated 25 and a half shares a Fiverr.
I took a break from investing during the holidays and went home to Green Bay. I was sitting on the plane in Minneapolis trying to consume my last bit of internet when I came across this post on my Instagram explore page.
Subconsciously this was exactly what I was looking for. I always imagined some sort of index fund that was dedicated to Internet companies. By late 2020 I was convinced that we had entered what I like to call “Internet 2.0”. Essentially I believed the internet had finally matured.
Throughout the 2010s I considered the internet to be in its adolescence. The advancement of cellular phones along with the growth of social media and Amazon’s impact on direct to consumer-led to this transformation. It wasn’t until Covid-19 came along that forced the hands of many companies to digitize or die. Talk about a catalyst! Covid-19 also completely changed consumer behavior forever. Now was the perfect time to invest in ARK’s Next Generation Internet ETF.
I did some more research on Ark Invest and realized I had heard of them before. Earlier that summer I was tuning into Gary Vaynerchuk’s daily YouTube show called Tea with Gary Vee. For the most part, Gary’s message revolves around overcoming insecurities but every once in a while he talks business. I remember one video in particular that caught my attention.
Ark analysts Tasha Keeney and Nicholas Grous interviewed Gary to talk about the digital economy. I recall that being one of my favorite videos from the past summer. I love it when Gary starts throwing his opinion around on businesses outside his own.
After doing more research I was introduced to the incomparable Cathie Wood. She is the founder, CEO, and CIO of ARK Investment Management LLC (Ark Invest). In 2018 Wood sent a letter to the Tesla board that she believed the valuation of Tesla would reach $4,000 in five years. People called her crazy. Wood’s prediction became true within three years.
When it comes to index funds many people choose ones that mimic the S&P 500. The average annual returns for the S&P 500 are approximately 10%. In my opinion that is too low. It’s not hard to find better options.
Here’s how Cathie Wood and Ark Invest’s ETFs performed in 2020
- Ark Innovation $ARKK: +158%
- Ark Next Gen Internet $ARKW: +160%
- Ark Genomic Revolution $ARKG: +189%
- Ark Fintech $ARKF: +109%
- Ark Autonomous Tech & Robotics $ARKQ: +108%
Safe to say 2020 was Cathie Wood’s year.