Cathie Wood's flagship innovation fund fell 23% in 2021 and 67% in 2022, and it has returned about 22% a year since — roughly what the market itself returned. She is now telling the Australian Financial Review that share markets are at the start of a golden era.
Oil is back above $100 a barrel, bond yields are at their highest in nearly two decades, and the textbook says both should be pulling equity valuations down. US share markets are near record highs anyway.
"I would argue that if oil and diesel prices keep rising and pressure on central banks like the Fed and the RBA keeps building, this AI force field that is shielding investors will eventually have to crack."
Alex Gluyas covers markets for the Financial Review and conducted the Wood interview himself, pressing her on the two years her funds lost most of their value and on what she thinks could break the artificial-intelligence trade.
The full episode is covered here so you can skip it. 27 minutes of audio, 16 minutes of reading.
Here are the 11 insights that matter.
👤 Guest: Alex Gluyas, Markets Reporter at The Australian Financial Review, who interviewed Cathie Wood for the paper
🎙️ Host: Lisa Murray, who hosts The Fin, the Financial Review's weekly podcast on the biggest stories in business, markets and politics
📰 Published: 16 September 2026 on the Financial Review's YouTube channel and the show's own feed
🔴 YouTube | 🟣 Apple Podcasts | ⏱️ 27 min | ✅ Time saved: 11 min
Key Takeaways
Wood's own fund lost 23% and then 67% in consecutive years, and has since returned about what the index did
Her defense is that her companies need five years to show how their software reaches earnings
Bond yields are at 20-year highs and US equities are near records, which Gluyas says only the AI trade explains
US government debt has reached $40 trillion; Australia's has reached $1 trillion
Australia's market is flat for the year because it owns almost none of the AI trade
SpaceX and Tesla together are about 16% of Wood's fund, which makes her thesis a bet on one man
Wood's forecast is that AI doubles global GDP growth to more than 7% by 2030 and pushes the US into deflation she calls benign
She reads the AI-safety warnings as politics and commerce rather than risk, and expects fear to raise demand for AI
The one risk she named is the US political backlash against data centers, which she suggested a foreign power may have started
Her Bitcoin base case is $500,000 by 2030, from about $80,000, with a bull case of $1.5M
The reporter's own view is that the AI trade cannot shield equities from rising yields indefinitely
1. Bonds at 2-Decade Highs
Murray opened on the past few weeks in global markets, telling Gluyas he had been "one of the busiest people in the newsroom." His answer started with the oil price and worked forward to the bond market.
"We've had oil go back above $100 a barrel." That is reigniting inflation concerns, which he said is part of the reason bond yields are climbing to multi-year highs.
The move is not an Australian story. He said the same thing is happening in the US, in Japan and in Europe — across developed markets.
Murray asked for an explainer, and Gluyas gave one. A bond is debt: buy one and you are lending to a government or a company, and the interest you are paid is the yield. "So when yields rise, it means there's an expectation interest rates will go higher in the future." Prices and yields move in opposite directions.
Government bonds, and US Treasuries in particular, are treated as the safe asset — and the amount outstanding is what is testing that. "But lately, there are more concerns because government debt is rising. And we recently saw in the US that it actually hit $40 trillion."
The Australian figure came next: "We had Australian government debt hit $1 trillion as well." He tied both to worries about government spending feeding inflation.
Yields are now at the highest level in nearly two decades, a level at which a traditional investor would expect share valuations to suffer. Gluyas said that is not happening yet.
2. The AI Force Field
The reason the bond market has not dragged equities down, on his account, is a single trade.
"And that's because of the other dominant theme that we're seeing in markets, which is this AI trade," which he said is propping the market up and shielding it from what is happening in bonds.
The earnings back it. "The US just had one of its strongest earning seasons on record," driven by companies such as Nvidia, alongside a large rally in the semiconductor stocks that make the chips inside AI data centers.
Australia has none of it. "In Australia, we haven't seen the same gains. We're pretty much flat for this year and that's just because we simply don't have the amount of exposure to these AI companies."
Even so, he said the market is holding up better than most people would expect given how far yields have risen.
3. Titans Call a Slowdown
Murray raised the previous weekend's news: the leading figures in AI had all called for development to slow.
Anthropic's chief executive, Dario Amodei, published an essay urging the industry to slow the pace of AI development so that safety measures could be put in place, including third-party evaluation of models and of safety risks.
OpenAI's Sam Altman and Elon Musk both endorsed the message. Gluyas's point was who they are: "Keep in mind these are all competitors and don't often agree on things." His verdict: "It was really a rare sign of coordination."
Donald Trump has pushed back. "Interestingly, Donald Trump, perhaps it's no surprise, he's pushed back on this since then, and he's clearly concerned about falling behind in this AI arms race with China."
Gluyas said that judging by what Trump said last week, it is hard to see the US slowing down and letting China take the lead.
Murray brought her own reporting into it. She had run a question-and-answer session with former Australian prime minister Kevin Rudd at the Asia Summit that week and put the AI warnings to him. Rudd's answer, as she relayed it, was that a real-world crisis is not far off, that the debate is now deadly serious, and that anyone running a newspaper, a think tank or a government has to work out where it goes next.
4. Who Cathie Wood Is
Murray asked who Wood is and how she built what she called a cult following. Gluyas's framing was that Wood is a futurist, making assumptions about where technology lands 10, 20 and 30 years out.
She oversees more than $20 billion across a suite of funds, exchange-traded funds specifically, and has become a polarizing figure by making bold calls on high-profile companies.
"She paints a much rosier picture of things and she's not afraid to make crazy outrageous calls and she's made a name for herself doing that." He was explicit that the record cuts both ways: some of the big calls were right and some were wrong.
The Tesla call
The call that made her name came in 2018, with Tesla trading around $300 a share and Wall Street analysts asking whether it was a concept stock. "And her call was that the share price would reach $4,000 within 5 years."
It got there in less than five years, and the money she made on the trade set up 2020. Her flagship innovation fund was up 360% in 11 months at one point. "It ended the year returning more than 150%."
Gluyas's own gloss on those numbers is that they are insane and very hard to sustain.
The two bad years
"Her fund fell 23% in 2021 and then 67% in 2022." He asked her directly what went wrong and what she could have done better.
Her answer, he said, was that she completely underestimated how long the pandemic would disrupt supply chains — which raised the price of almost everything and slowed sales at the technology companies she owned.
Wood acknowledged she should have stayed longer in the larger technology companies, the Magnificent 7 group that includes Apple, Microsoft and Meta, rather than rotating into unprofitable and speculative stocks that were hit hardest once the Federal Reserve started raising rates.
Performance since has been ordinary rather than bad. "She has an annualized return of about 22% over the past 3 years, which is still decent. It's about in line with what the markets returned."
On the following: "They look at her as the oracle of our time in a way, and she feeds into this and speaks very passionately about her portfolio." His caution to listeners: "So, like with a lot of these high-profile fund managers, it's important to take everything with a grain of salt." The risks and the downside case, he said, rarely come up.
5. A Big Bet on Musk
Murray observed that the picture Wood paints is all very positive. Gluyas agreed, and said that is nowhere clearer than in her view of Elon Musk.
"Her two largest positions are SpaceX, the rocket company that recently completed the biggest IPO in history, and of course Tesla," where she has been an investor for close to a decade.
"And together, those two companies make up about 16% of her entire fund. So, it's an enormous bet on Musk, who is of course a volatile individual."
Gluyas's explanation for the concentration is that Musk and Wood share a time horizon: both are looking 20 and 30 years out rather than at the current quarter.
6. The Golden-Era Thesis
Murray asked what the golden-era prediction actually rests on.
Wood's argument is that AI is transforming a set of platforms at once — Gluyas named robotics and energy storage — and that the productivity gains flow through the whole economy.
The growth number is the headline. Gluyas said her expectation is that the AI boom creates an environment in which global GDP growth at least doubles, to more than 7%, by 2030.
She also expects the US to slip into deflation, and treats that as good news rather than bad. In Gluyas's words: "She also thinks the US economy, which is the largest in the world, could actually slip into what's called deflation or negative inflation." Falling prices normally signal weaker demand, employment and growth. Wood's case is that this deflation is positive, because the productivity gains from technology companies cut the cost of producing and distributing goods and services across the economy.
Her historical parallel is her own start in the industry. She joined the New York investment manager Jennison Associates out of the University of South Carolina in the 1980s, into a market hitting new highs while investors worried about inflation, interest rates, wars and the possibility of a financial crisis. The new technology then was the personal computer, and later the internet.
"But the way she described it was the market and investors kept climbing this wall of worry" — and, on her reading, that period turned out to be the start of a generational bull market. Gluyas noted the same period ended in the dot-com bubble bursting, and that Wood nonetheless thinks today's rally is at its very start.
7. The Bear Case
Gluyas did not leave the thesis unchallenged, and said there is no shortage of journalists, analysts and fund managers who doubt a decade-long AI boom.
The whole case rests on delivery. Wood presents a utopian view of the world, he said, and it comes down to whether AI delivers on its promise and produces a productivity gain across the economy.
"It does ignore some of these concerns around the level of AI investment and the uncertainty around what the business model is and what the scale of job losses might be."
The structural worry he singled out is circular financing. "One of the other big concerns is what they call circular financing or the circular flow of money." Nvidia, he said, is no longer only the most important supplier to the AI infrastructure build-out: "It's actually becoming the bank of AI. So it's providing finance guarantees and it's doing deals with customers, suppliers and other key parties involved in this."
The safety debate is itself a market risk, in his view, because it raises the odds of regulation and guardrails that slow the technology down, and because the warnings themselves cause volatility.
8. Her Answer to the Bears
Murray asked what Wood says to all of that. Gluyas said he put every one of these concerns to her and she had an answer for each.
"Well, Lisa, to put it bluntly, she just doesn't think it's an issue at all. She thinks these warnings are politically motivated." He said her view is that there is a large amount of politics around AI in the United States and some groups do not want it to happen.
She also reads the warnings as commercial. "She thinks they're commercially motivated and she thinks the concerns around safety will actually drive demand for AI, not slow its development." Gluyas's illustration, following her argument, is demand for what large language models can do — identifying and fixing vulnerabilities in software.
She questions whether Musk is genuinely behind the warnings, and does not expect much new regulation. "She thinks it's gone too far to stop it now."
On the length of the run: "Many people are talking about the end of the AI trade and the bursting of this bubble, but she thinks it's going to last for 10 to 15 more years."
Gluyas pushed back with her own performance record. Her fund peaked in early 2021, five years ago. "So, if you'd invested at that point, you've lost an enormous amount of money." Her defense was the five-year time frame she often cites: that is how long it takes for the companies she owns to show how the software develops and how it reaches earnings.
On the US and China: "When it comes to competition between the US and China, she says competition brings out the best in America." She also told him US chips are well ahead of China's, which preserves the American advantage.
Asked about big technology companies slowing their AI spending, Wood's position is that they are not spending enough. She told him she is glad people are worried, comparing it with the period just before the dot-com bubble burst when nobody was — which is why the meltdown caught everyone off guard. "So one of her favorite lines is half the solution is knowing the problem."
9. The Data-Center Revolt
Gluyas said one thing does keep Wood up at night, and that it is flying under the radar: the political movement in the US against data centers, which he expects to intensify into the November midterm elections.
The complaint is a household bill. "So voters in the US are really concerned that the massive power demand for data centers will actually cause residential electricity prices to spike and it will force taxpayers to start subsidizing upgrades to the grid" — at a time when diesel prices and the price of goods are already high.
The local objections stack on top: pollution, the light glare from the sites, and heavy consumption of local water.
Wood's explanation for the backlash is not domestic politics. Gluyas said she suggested China may have infiltrated the US and started the movement to gain an advantage in the AI arms race. "A really powerful line she said to me was the population has been infiltrated by an outside force."
10. Bitcoin at $500K
Murray turned to Wood's other headline forecast.
"Her base case, which is essentially her central forecast, is that it will go to 500,000 from about 80,000 at the moment, but her bull case, which is best case scenario, is that it will reach 1.5 million by 2030."
The reasoning is defensive, not technological. "She really sees Bitcoin as like an insurance policy against the loss of purchasing power, the devaluation of currencies like the US dollar, and wider issues in the banking system."
It connects back to her disruption thesis. Gluyas said she expects the disruption caused by new technologies to trigger a wave of bankruptcies and a rise in counterparty risk — one side of a transaction failing to meet its obligations — and sees Bitcoin as a monetary system that operates outside banks and could hold confidence if conventional institutions deteriorate.
Her position is old. "She first bought about $100,000 worth of Bitcoin in 2015 when it was trading at just $250," and she has been a believer for more than a decade, including in the underlying blockchain technology.
Gluyas added the caution the forecast leaves out: Bitcoin trades in cycles. It traded sideways for several months earlier this year. "It entered what people call a crypto winter which is essentially where trading volumes fall and prices just stagnate and trade sideways." Then it rallied from about $60,000 to about $80,000 in a matter of weeks.
He attributes that move to a policy decision rather than to adoption. "So what kickstarted this huge move was Scott Bessent, the US Treasury Secretary, he announced that he was actually going to intervene in the bond market and buy back government debt." That restarted the debasement trade: "Investors essentially buy assets that are scarce like gold" and Bitcoin, he said, because the supply is limited, as protection against the US deficits and debt that are eroding the value of the dollar.
11. If the Force Field Cracks
Murray's last question was the one she said people are starting to ask: at what point the reckoning in the bond market hits the share market.
Gluyas called it the million-dollar question the fund managers he speaks to are watching every day — the disconnect between the equity market and the bond market. He noted the stake for Australians specifically, whose superannuation carries large exposure to US shares.
The profits are still arriving. "So, we saw earnings across the S&P 500 grow 40% in the first half alone, and they're expected to grow another 25% in the second half of this year, and we've got long-term profit expectations that analysts use at record highs."
"So, investors are happy to brush off the prospect of higher bond yields for now."
His own call closes the episode: "I would argue that if oil and diesel prices keep rising and pressure on central banks like the Fed and the RBA keeps building, this AI force field that is shielding investors will eventually have to crack." He expects the Federal Reserve to raise rates again this week, with more to come, and the Reserve Bank of Australia to follow.
Bonus Insights
Murray put a disclaimer up front, before any of the market talk: the discussion covers equities, markets, Bitcoin and the AI trade, and is general rather than financial advice.
Murray asked for the bond explainer rather than assuming the audience had it — "I think we need that" — and Gluyas built the rest of the conversation on it.
Gluyas's framing of Wood's followers is that ARK's research is read intently and obsessively, which is part of why he thinks a listener should discount the confidence rather than the analysis.
The bottom line from Gluyas is that Cathie Wood's golden-era case and the bond market's warning cannot both be ignored: US equities are being held up by AI earnings while yields sit at 20-year highs, and if oil prices and central banks keep pushing in the same direction, the AI trade stops being a shield.
Products, Companies & Tools Mentioned
ARK Invest (Wood's firm, which Gluyas said oversees more than $20 billion across a suite of ETFs and has a following that reads its research intently)
Tesla (The 2018 call that made her name — $300 a share at the time, a $4,000 target within five years — and still one of her two largest positions)
SpaceX (Her other largest position, described as having recently completed the biggest IPO in history; with Tesla it is about 16% of the fund)
Nvidia (Named both as the driver of a record US earnings season and as the center of the circular-financing worry — "the bank of AI")
Anthropic and OpenAI (The two companies whose chief executives called for the industry to slow down; Gluyas called the agreement between competitors a rare sign of coordination)
Apple, Microsoft and Meta (The Magnificent 7 names Wood conceded she should have held for longer instead of rotating into speculative stocks)
Zoom (One of the stocks behind her 2020 run, when the flagship fund was up 360% in 11 months)
Jennison Associates (The New York investment manager where she started out of college, and the source of her 1980s and 1990s market parallel)
Bitcoin (Her $500,000 base case by 2030, held since a $100,000 purchase in 2015 at $250)
Books & Resources Mentioned
Cathie Wood declares 'golden age' for equities after bumpy ride – The Australian Financial Review (The first article in the episode's own further-reading list, and the piece behind the interview)
Investors see their own threats in push to slow AI development – The Australian Financial Review (Show-notes reading on how fund managers read the slowdown call commercially)
The market's biggest fear is no longer the AI bubble. It's this – The Australian Financial Review (Show-notes reading on the bond-market disorder that closes the episode)
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