Investment Valuation information - what ARE all these figures and what do they mean?

wmb194

Sea_Shell said:

Just found this site that shows the P/E for the SMT fund as 2258!!!!!

Scottish Mortgage Invest... Company Financial Information (advfn.com)

Wow, is that right!?

P/E ratios rarely make any sense with investment trusts. With these you usually need to look at the premium or discount to NAV that they're trading at and look at their holdings to decide whether you're interested or not. There might be data on the portfolio's overall P/E in its reports and factsheets.

https://www.bailliegifford.com/en/uk/individual-investors/funds/scottish-mortgage-investment-trust/#Documents

Prism

One problem with using PE is that it doesn't tell you much about the future. Taking two names out of the fund, Amazon currently has a PE of 60 and Microsoft a PE of 37. However which one is more expensive? How important are the last years earnings which directly affect the PE. Surely future earnings are more important, but not just next years - several years into the future.

MK62

True......but future earnings are a bit of a guess, even if it's an educated guess......and even if that guess is right, the current share price,that the forward PE is based on, will likely change as well........

It might be wiser not to consider these indicators in isolation, but consider them all together.....or even better, let the fund manager worry about it all, that's what you are paying them for.

Bobziz

MK62 said:

It might be wiser not to consider these indicators in isolation, but consider them all together.....or even better, let the fund manager worry about it all, that's what you are paying them for.

Indeed, but is it not also important to understand where a fund currently sits against its stated objective/s and where it was when you bought into it. If it's objective is to achieve + 2% above it's benchmark over 5 years and it's currently 40% above that benchmark, then the fund can drop significantly and still achieve its objective. 

MK62

Yep......no argument there........another indicator to consider!

Thrugelmir

Sea_Shell said:

Just found this site that shows the P/E for the SMT fund as 2258!!!!!

Scottish Mortgage Invest... Company Financial Information (advfn.com)

Wow, is that right!?

Start up companies are rarely profitable. Took Amazon 14 years to become profitable. Tesla even longer, at 18 years.  The investors who make the big money are the ones that commit early stage capital.  Though along the way the majority of their investments do turn to dust. 

tebbins

Thrugelmir said:

Sea_Shell said:

Just found this site that shows the P/E for the SMT fund as 2258!!!!!

Scottish Mortgage Invest... Company Financial Information (advfn.com)

Wow, is that right!?

Start up companies are rarely profitable. Took Amazon 14 years to become profitable. Tesla even longer, at 18 years.  The investors who make the big money are the ones that commit early stage capital.  Though along the way the majority of their investments do turn to dust. 

Three things to add to that. Peter Lynch has spoken about the over-emphasis on the early bird narrative, that there is plenty of return to be made at later stages. Warren Buffett, in prior letters to shareholders and the 2021 AGM, has noted how many industries that seemed a sure thing because they are "the future" are littered with failures. Jack Bogle, in The Battle for the Soul of Capitalism, bemoaned the recurring nature and allure of this myth, while so many established companies in "dying" industries seem to chug on through all sorts of different times. The quality of the company and its management matters far more than whether it is in the "right" sector, or what you think the prospects of that sector are.

Sea_Shell

Reminds me of Forrest Gump buying some shares in a "fruit" company!!

🤣🤣

tebbins

Example of buying the sector vs buying the company, here is the FTSE 100 and MSCI World from 1/1/2000-1/1/2010, you can get this up using this link: https://www2.trustnet.com/Tools/Charting.aspx?typeCode=NM990100,NUKX

These are all in £, total return basis (including dividends as if all reinvested immediately).


Add in the two big stocks the market thought were bound to do well from the internet revolution, Vodafone and BT:

Well how did they do compared with a boring, old world company like a supermarket?

...how about vs tobacco, and food takeaway. Surely these boring old world industries cannot compete with the internet?

Thrugelmir

Add Amazon to the chart.