Scottish mortgage trust: a buy or a trap?

Thrugelmir

Bravepants said:

Thrugelmir said:

Bravepants said:

Can someone please explain to me the attraction of SMT?

A belief that the management team will identify the next Tesla at a very early stage. 

So it's not really a long term hold, with such a low yield there is little benefit of compounding by the re-investment of dividends.

Early stage companies and those focussed on expansion tend not to pay dividends. As any cash generated is required by the business to fund it's growth. 

george4064

Bravepants said:

Thrugelmir said:

Bravepants said:

Can someone please explain to me the attraction of SMT?

A belief that the management team will identify the next Tesla at a very early stage. 

So it's not really a long term hold, with such a low yield there is little benefit of compounding by the re-investment of dividends.

The re-investment of dividends is not the only source of compounding (what your posts suggests), even if companies don’t pay out dividends the compounding can occur within the companies themselves via re-investing profits rather than distributing cash, therefore increasing the value of the portfolio NAV and therefore (not guaranteed) the share price of the IT.

jimjames

Bravepants said:

Thrugelmir said:

Bravepants said:

Can someone please explain to me the attraction of SMT?

A belief that the management team will identify the next Tesla at a very early stage. 

So it's not really a long term hold, with such a low yield there is little benefit of compounding by the re-investment of dividends.

PIN pays no dividends either yet has compounded at over 11%pa since the late 1980s. Dividends aren't needed for compounding, annual growth does the same thing.

ChilliBob

Down by another 6% today, 13% loss for me. I have 10k which I may topup at some point, but I'm not in a rush by any means. HRI is down too, 52 week low, I may go for some more of that instead at some point

Alexland

Growth style investors were just mindin their own business when...

https://www.youtube.com/watch?v=FCSBoOcGFFE

aroominyork

Last six months. Fidelity Index US: up 4.6%. Baillie Gifford American: down 32.6%. Last year's poster boy is this year's Martin Keown.

Alexland

aroominyork said:

Last year's poster boy is this year's Martin Keown.

Hardly a surprise - over 100% return in 2020 so circa 80% chance of losing money over the next 3 years.

https://citywire.com/new-model-adviser/news/when-funds-rise-over-100-in-a-year-what-happens-next/a1453835

We were talking about that article and this kind of volatility happening to the BG style early last year:

https://forums.moneysavingexpert.com/discussion/6241853/baillie-gifford-long-term-global/p1

Cus

aroominyork said:

Last six months. Fidelity Index US: up 4.6%. Baillie Gifford American: down 32.6%. Last year's poster boy is this year's Martin Keown.

I wouldn't mess with a Martin Keown portfolio.

Linton

SM has hardly tanked - it has merely returned to the value it first reached just over 1 year ago.  That is the nature of the fund and why it should be bought for the long term only by people who can stand the excitement.  The fund is still showing a 3 times higher return in the past 5 years than a global tracke and 4 times higher than VLS100.

Thrugelmir

Linton said:

 The fund is still showing a 3 times higher return in the past 5 years than a global tracke and 4 times higher than VLS100.

Higher weighting (in particular) to Tesla than the indexes. Who until December 2020 didn't hold the stock at all.  One off event. As time passes the performance comparison will fade away.