Scottish Mortgage Trust

AnotherJoe

csgohan4 said:

OP if you want to gamble and hope SMT keeps rising, then go for it, but if your strategy is long term investment, do you not have a plan/goals for each fund? Or are you winging it?

but if SMT tanks your 25% fund will look pretty painful, which is why you diversify to mitigate those losses. 

OP are you going to stick to you plan, assuming you have one, or are you going to hope for the best??

I thought about buying SMT yesterday, but decided against it, too high a premium and the hallmarks of a bubble, I don't want to gamble too much on my money, I am in it for the long game

When i bought Apple it was at or near an all time high, many said a bubble and ridiculously overvalued. Its now 10x higher. Good stocks will always be, by definition, at or near all time highs. And for the long game SMT is an excellent place to put your money, because they themselves are playing a long game by getting in early.

Yes its certainly jumped up recently but I think they will be taking some of that Tesla money off the table soon (n inside knowledge just that for a fund that seems like a prudent thing to do) and so it should be far less of a bubble than Tesla, though I personally expect that to double in the next year or three (with some wild swings along the way).

Anyway point being the current valuation of SMT should be more secure than that of Tesla.

Good luck whatever you do anyway.

Harry99

In my early years of investing in the 1990’s I held a couple of investment trusts that doubled in a short period of time, after congratulating myself on my perspicacity, I sat back and awaited further outstanding gains...they halved. They were just a modest part of the portfolio and the overall result was good, I understand that letting winners win can be fabulous, but sometimes it’s just a brief moment in the sun. (That time it was Far East stocks)

25% of the portfolio in one area is showing confidence, but perhaps it’s worth considering the overall portfolio size ?

25% of 100k is one thing, 25% of 10,000,000 is a significant sum to have that share fall by half, ie wealth preservation against creation.

dd95

SMT down 57% on HL

Username999

dd95 said:

SMT down 57% on HL

Really...
Sell:892.00p Buy:892.50p  15.50p (1.71%)

bowlhead99

AnotherJoe said:

I think rebalancing works fine if you want a specific allocation of equities and bonds, or types of equities, or misguidedly (IMNSHO) think that geographic diversification gives you diversification, but if you buy Tesla or SMT or Apple or Amazon or SUPP because you think its going to be a 10-bagger, then rebalancing fights against that and the only argument that perhaps works there is after its doubled, you take your initial "stake" out so that you are gambling with free money and can psychologically tolerate bigger swings easier.

I think that's fair enough if you're punting on individual stocks and have the '10x' or whatever as a long term goal or dream - people didn't get rich in Tesla or Amazon or Ocado or Fevertree or ASOS by halving their position each time it doubled. 

When looking at collective investments though - whether that's SMT or (less advisedly) WPCT/SUPP - they're portfolios of investments and you're not generally expecting a moonshot with everything coming to fruition for those high IRRs or 10x cash multiples, as an individual company might achieve from its singular goal in a specific market or two.

When you build a fund-based portfolio to grow your wealth (perhaps separately from a 'fun money' pool of capital where you play with individual investments to speculate on potential or take contrarian positions) it's a reasonably standard approach to think that every piece of the portfolio has a job to do or is contributing to the overall strategy. For example going by region, one wouldn't normally want a Europe fund and a US fund without also an Asia or Emerging fund, or if going sector by sector people would not generally look at 'just' tech or healthcare or energy or consumer staples etc. So it is about creating some sort of balance between the roles that each component has, and figuring how to blend them. 

If you look at what role something like an SMT is playing in a fund-based portfolio such as the one that the OP might hold, people holding that fund will generally have other components with different strategies which come together to create some overall balance. Bond funds might provide some income and capital protection, a Lindsell Train Global or Fundsmith fund might look to give a combination of value and growth from big name / leading companies in the developed world, a Russia or China fund might provide diversification away from the economic cycles of traditional developed markets, a real estate fund could provide income and growth from commercial property without the same correlation to equities or bonds (while still being influenced by both markets), and so on.  SMT's role is very much focused on providing growth. 

To use a clumsy analogy, for a fund based portfolio, SMT can be like an engine of growth on your portfolio just like you get in the engine room of a big old battleship or cruise liner or something. You have people working in the kitchens and people looking after medical stuff or lifeboat safety and people taking care of the guests or providing security against terrorists or pirates, or shooting at the enemy, and you need all of those things. In my convoluted analogy you maybe also have some other means of propulsion like a sail or oarsmen or something so you can still make some sort of progress even if the engine is not doing a great job.

As you can see that a lot of your potential 'progress' for a successful journey is from the engine, and you realise that more people shovelling coal into the engine and bellowing oxygen is a good thing and can get you better progress, it is not a problem if some people join the engine room crew after popping in to help out and never really end up going back to their old job elsewhere on the ship.  So maybe you end up with really great progress because now 25 of the 100 crewmen are shovelling coal into the furnace and getting you more and more steam which helps you go faster and faster. Though there is not much focus on the other areas like health and safety/ medical, fending off attackers or pirates, making the dinner, etc. Your crew is not very well 'balanced' even though you are making lots of forwards 'performance'. 

The engine room will be a popular place to be and as you go faster and faster the engine room becomes the highlight and darling of the ship - maybe more and more people will like the idea of being a coal-shovelling hero and gravitate towards working the engine with half your crew eventually doing it, abandoning their posts in the kitchen or medical crew or security team. It's a long term voyage and maybe people have kids and they grow up and are sent to work in the engine room. The engine becomes a singular focus, much as SMT may conquer 20%, then 25%, then 30 or 40% of your portfolio while helping to propel it.  Then at some point, disaster as the engine overheats from taking on more and more fuel and burning hotter and hotter. The ensuing explosion wipes out half the people working there. Losing half the crew who were in the engine room, when the engine room crew represented half the ship's crew, is a bit of a disaster, as you had neglected to 'top up' your workforce in the kitchen, medical, security or oars department.

Some wisecracker will note that the ship would never have made it all the way to the middle of the pacific if we hadn't been going faster and faster helped by that great engine. But actually you didn't need to go faster and faster, you just needed to plod along 'fast enough' and get safely to your destination.  It would have been fine to have a lot of the crew providing kitchen, medical, security skills or training how to use oars in the event of the engine packing in... because now the engine has broken and will take a while to fix and the lack of food and medical and security services will be thrown into sharp relief.    Likewise it would have been fine to have a lot of the funds in a portfolio providing stability, capital protection, volatility reduction, absolute return, generalist global equity growth and income, while maintaining 'just enough' exposure to the SMT growth strategy which kept feeding you with a solid level of growth in the background.

I think it's fine to use SMT as the sort of thing that keeps pumping out growth and propelling you towards the objective but you do not need to turbocharge it and compound it up and up until it dominates your whole portfolio, because that has the potential to end in tears when it's suddenly taken away from you.   So I would be happy to set a threshold at which I cut it back. 

In my own portfolio I have Tencent in my SIPP and ISA and I keep periodically paring each of the holdings back to around £10k when they go two to three grand over. I would have better compound return if I had just let it all ride, but I don't want £20-30k in a single stock in a single account because of the potential pain if disaster strikes.  Obviously if I had already got more money than I needed, I could take bigger risks and let things ride, but meanwhile it's already grown to be a big conviction play which is big enough.

AnotherJoe

dd95 said:

SMT down 57% on HL

Ask your carer if you can have a nap now.

csgohan4

Username999 said:

dd95 said:

SMT down 57% on HL

Really...
Sell:892.00p Buy:892.50p  15.50p (1.71%)

And it begins....

I guess there is no right strategy, even those who want to take a punt, knowing it was to get on the gravy train. You can see the varied opinions, the point is to do what you think is best on your money,  the risk appetite only you will know. 

sg1000

I really have tried to learn from this forum over the last ten years (and a day) as that's when I decided to start "investing"...I'm obviously not very good at it.  I put up a fairly defensive post last night, thought better of it this morning and deleted it.  As I have said previously, we cannot all have expertise in all areas and mine is clearly not in investing.

I will shut up now and am off to play some piobaireachd.  If anyone has some pipes and needs some guidance on it, I'd be happy to offer some views (not advice, obviously).

Thanks for the input and everyone's views :-)

dunroving

sg1000 said:

I really have tried to learn from this forum over the last ten years (and a day) as that's when I decided to start "investing"...I'm obviously not very good at it.  I put up a fairly defensive post last night, thought better of it this morning and deleted it.  As I have said previously, we cannot all have expertise in all areas and mine is clearly not in investing.

I will shut up now and am off to play some piobaireachd.  If anyone has some pipes and needs some guidance on it, I'd be happy to offer some views (not advice, obviously).

Thanks for the input and everyone's views :-)

I read your post late last night, and wondered where it had gone today. All I can say is that many people on here put a lot of time trying to "guide" (not advise, as you point out) people with less knowledge than they have. I find they have a lot more patience than I do when somebody posts a naive question, especially when the OP doesn't really seem willing to do just a little of the work themselves, and gives almost no background information  ("I've got £10,000; what should I invest in?" is a pretty common example).

Occasionally, I find a reply is just plain rude, in fact there's one very regular contributor whose fee for giving his opinion seems to be the expectation he can belittle the OP. I don't even bother reading his posts any more. But on the whole, I think it's a great community - and I'd single out Bowlhead as an example of someone who gives very detailed information and guidance on a regular basis. I have lost count of the number of valuable lessons I have learned from his posts.

[On a side note regarding piobaireachd, I used to work in Glasgow city centre and around this time each year, would hear expert pipers all day outside my window, practising for the world championships. Very stirring stuff!]

bowlhead99

sg1000 said:

 I put up a fairly defensive post last night, thought better of it this morning and deleted it.  As I have said previously, we cannot all have expertise in all areas and mine is clearly not in investing.

I will shut up now and am off to play some piobaireachd.  If anyone has some pipes and needs some guidance on it, I'd be happy to offer some views (not advice, obviously).

Thanks for the input and everyone's views :-)

I saw your post while it was up and I do understand your point of view. Apologies if I've sounded overly critical. A lot of investing is about opinion, but there should be some sort of method behind the madness. I'm not really looking for guidance on pipes but I expect you could play them rather better than I could properly spell peebaerock...