How I Made $5,000 in the Stock Market - Fiverr & Ark ETFS
In the early days of the pandemic, I was struggling to make ends meet while working from home. Despite earning $2,000 a month from my full-time job, a significant portion of my income went towards rent and utilities, leaving me with only $6,000 in my bank account. At that time, I felt as though I was stuck in a rut.
However, the announcement of the first round of stimulus checks ($1,200) by President Trump and the suspension of payments and interest on federal student loans by the Education Department, combined with the market's V-shaped recovery, gave me a glimmer of hope. I saw this as the perfect opportunity to invest $1,000 in the stock market.
In the past, I had made the mistake of investing in individual stocks without proper research, resulting in financial losses. This time, I promised myself to approach the process differently, conducting thorough research before making any decisions.
As I scoured the stock market, my attention was drawn to the apps on my phone. After considering companies like Squarespace, Splice, Thredup, and Medium, I discovered that only one, Fiverr, was publicly traded.
I was already a frequent user of Fiverr, having purchased numerous digital products from the platform for my website. I was impressed by the platform's user-friendly experience and saw the potential for its growth in the expanding freelancer market.
I bought $1,000 worth of Fiverr stock at $48 a share, but after its price rose to $65 and then fell back to $55, I made the mistake of selling all my shares out of fear. However, after some reflection, I realized that I couldn't let fear guide my investment decisions. I reinvested $1,000 into Fiverr at $60 a share on June 1st and held onto it, continuing to purchase more shares with my budget.
Over the next few months, I consistently purchased shares of Fiverr within the constraints of my budget. As the stock price rapidly increased, I continued to invest in it until December 20th, when I acquired my final share at a cost of $220. Ultimately, I had amassed a total of 25 and a half shares of Fiverr.
During the holidays, I took a respite from investing and traveled home to Green Bay. As I sat on the plane in Minneapolis, trying to make the most of my remaining internet connection, I stumbled upon a post on my Instagram explore page. This discovery was exactly what I had been searching for, without even realizing it.
I had always envisioned an index fund dedicated to internet companies, and by late 2020, I believed that the internet had finally reached maturity, or what I refer to as "Internet 2.0". The advancement of cell phones and the growth of social media and Amazon's direct-to-consumer approach had transformed the internet throughout the 2010s. However, it was the COVID-19 pandemic that forced many companies to embrace digitization or face extinction. This event not only served as a catalyst but also permanently altered consumer behavior.
It was then that I knew it was the perfect time to invest in ARK's Next Generation Internet ETF. Upon further research on Ark Invest, I realized that I had heard of them before. I had tuned into Gary Vaynerchuk's daily YouTube show, "Tea with Gary Vee", earlier that summer and remembered a particularly impactful video featuring Ark analysts Tasha Keeney and Nicholas Grous interviewing Gary to discuss the digital economy. That video remains one of my favorite moments from the summer, especially when Gary shares his opinions on businesses outside of his own.
After further investigation, I stumbled upon the remarkable Cathie Wood, the founder, CEO, and CIO of ARK Investment Management LLC. In 2018, she sent a bold letter to Tesla's board of directors predicting that Tesla's valuation would reach $4,000 within five years, a prediction that was met with skepticism. However, to everyone's surprise, Wood's prediction came true in just three years.
When it comes to investing in index funds, many individuals opt for those that track the S&P 500, which has an average annual return of around 10%. In my opinion, this return rate is inadequate and there are certainly better options available.
Here is a look at how 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%
It's safe to say that 2020 was a banner year for Cathie Wood.