Transcript
Well, everybody, welcome to Monday, the S&P 500 had a pretty wild ride today actually opened up quite a bit down a really, you know, locked in on the virus situation in the UK, and what’s going on with there with this new mutation. So I read quite a bit about that. And I guess the best thing that I can say about it so far is that the expectation is that mutation will still be handled by the current vaccines. So it’s not an issue for that. It just depends on how contagious it is. And they’re still trying to actually figure that out.
But in the interim, the Congress here passed the stimulus package, which we’ve been talking about since, you know, the summertime, and the market rallied up really strongly, you know, from about halfway through the day, and ended up you know, at just a little bit less. But for us, most of our targeted indexes, and individual stocks did better than the S&P 500 today. And we had a couple pieces that did really, really well. And I want to highlight one of those today.
So there’s three different types of indexes that that I like to use. Number one is kind of that passive index, like the Vanguard Total Stock Market index, and basically buys all of the stocks that are out there. And then you’ve got these targeted indexes where the like innovative technology or you know, the online retail, or the using some kind of a screen or an algorithm to pick those out. And then they’re usually kind of rebalanced, you know, to keep up with the changes that are happening in that category. And then the last one is a managed, Exchange Traded Fund. This is where there’s a human.
In this case, we’re going to talk about a company called ARKK. And the manager, there is Cathie Wood. And she’s been doing really great job. And so she and her team are selecting the stocks that are in there. And they’ve been doing a pretty fantastic job. It’s why we hired them. So let me show you a couple pieces on this, I think I find it interesting. So this is the chart for ARKG, which is the ARK Genomic Revolution. We’ll talk about you know what they’re doing here. But you can just see, I mean, it’s a fantastic chart, it’s really done well. Big day today up 6.1%. And really, really fantastic return. This isn’t the top 1% of all Exchange Traded Funds. So they’ve done a really great job with this so far. And so what they’re focusing on this, these two charts, I’m going to show you an extra coming out of an article here at Seeking Alpha. This is a really great article. But first of all, is this next generation sequencing. So it used to cost $3 billion to sequence your genome in 2003. So obviously, it wasn’t going to happen very often. But now it’s down to $1,000. So they can theoretically go in sequence your own personal genome, and then find targeted therapies at some point in the future that would work for you or people that are a lot more like, like you. And this is creating a really amazing scenario. So if you can’t, you have to be able to drive down that cost. And so that is helping, again, gives targeted treatments. But it also improves clinical trial selection. So this is a big deal. I’ll show you what that means in a minute. But so once they’ve kind of got the sequence, they can use this CRISPR gene editing to create different therapies. So they go in and actually edit the genes might be in a T cell or what have you. It creates an easier, you know, experimentation, and maybe some of the chronic conditions, we can have potential cures. And then on top of this, we’ve got artificial intelligence where the computer is going in and looking at all the different options, and really can kind of accelerate the discovery of the different drug candidates, which ones would be the best to use in this situation. And it also helps to figure out the clinical trials, pieces of it, which can lower the cost of, you know, the trials and the sequencing and analysis.
So altogether, this is like a triple, hitting a triple inside the medical arena. And here’s what you know, Ark projects for, you know, market capitalization of the types of firms that are in this investment. So if you look at the total projected therapeutic market capitalization by 2024. So first of all, that total capitalization right now is about 2 trillion in 2019. They’re basically making a projection by 2024. If you didn’t have these disruptive technologies that we’re talking about, it’d be worth $3 trillion, based on a 7% return on R&D, which is sort of an average for what you see now. But using these disruptive technologies, first of all, DNA sequencing, the be able to possibly reduce the failure rate of new drugs by 10%, which has a pretty massive impact on R&D, it goes up to 15% return, which could add $5 trillion to the value of these firms. And again, the value is what we’re buying. And so if that happens, that would be great. Then also the time-to-market reduction by using artificial intelligence and these other technologies might increase R&D up to 22%, again, from seven projected. Which would again, on a projected basis, add another $4 trillion.
Again, I’ll say projected over and over, because there’s no guarantees, but this is what they’re talking about. And this is why there is excitement about this. There’s just a lot more money to be made. And all of us gain, you know, better therapies, more targeted therapies, things that they can use, you know, towards fighting the vaccines like we’re dealing with, right, sorry. So fighting viruses, creating vaccines, creating therapies, in the environment that we’re in right now, you can see why this is a popular area, because there’s a lot of interest there. So, anyway, this is what’s going on. It’s been a really fascinating day all together. Really had some huge winners today within the portfolio.
Overall, I think we were up across the board. Not everybody has everything but it’s still turned out to be pretty decent day. So look forward to talking to you tomorrow and see what’s going to happen. Thank you very much.