Scottish Mortgage opinions

valiant24

I bought SMT at the beginning of the year.   Have lost about one-third of the value as it has had a terrible year.  Thinking of bailing.

What do people think?  Might it come back in the end?

I suppose the correct question I should be asking myself is: would I buy this, or something else, today?  I think the answer is the former but maybe I am just kidding myself!

Alistair31

Alternative view, the same thing you purchased previously is now a third cheaper, why not buy more? 

DeLaSole

Hi valiant,

Ultimately, SMT is high-risk with its own literature suggesting 5+ timeframe for investing into it. I invested in SMT in 2014 when my child received a gift in Bare Trust. I did so always with a minimum 5+ year timeframe in mind, and have reduced the holding over time away from such high risk to meet the requirement (a secured uni fund).

You're basically touching upon the right question, I believe: what it is about SMT now that you don't like that you did like when you invested? Or is it that the (so far) paper loss may have highlighted that your risk tolerance is not suited to such an investment? If you saw a 50% drop from here, would that cause incredible stress? Were you going to be wanting to sell the investment soon? All these things hopefully help arrive at an answer as no-one knows how the fund is going to do. As I'm still in with a small amount, I obviously hope over the next 5 years it will see an upwards trend but it may not.

If it's of any comfort, it's not just been the obvious high-risk investments that saw large falls in the relatively recent past.

SMT's performance from Trustnet:

YTD 2.2%

2022 -45.7%

2021 -10.5%

2020 +110.5%

2019 +24.8%

Best wishes with whatever you decide.

dunstonh

valiant24 said:

I bought SMT at the beginning of the year.   Have lost about one-third of the value as it has had a terrible year.  Thinking of bailing.

What do people think?  Might it come back in the end?

I suppose the correct question I should be asking myself is: would I buy this, or something else, today?  I think the answer is the former but maybe I am just kidding myself!

SMT is one of the highest risk conventional funds you can purchase.    One assumes you knew that before purchasing.   That means gains and losses will look more like a roller coaster ride.    Nothing has changed.   You cannot get 110% gains in a year without accepting that you can lose more than half in a year as well.

Effectively, we had a dot.com mk2 happen from 2020 to 2022.  A boom in 2020 when everyone seemed to believe work from home was the new thing and tech would sky rocket.  Then a complete unwinding of that in 2021/22 when everyone seemed to believe that work from home wasnt going to be the new thing and tech was not going to sky rocket.

SMT is still viable and its reasons for the gain and the loss are clear to see.

Albermarle

Ultimately, SMT is high-risk with its own literature suggesting 5+ timeframe for investing into it.

As far as I know, a lot of  investment fund data info sheets says the same, regardless of whether high or low risk.

valiant24

Alistair31 said:

Alternative view, the same thing you purchased previously is now a third cheaper, why not buy more? 

Well, um, yeah .... I'll get back to you on that one ;-)

valiant24

DeLaSole said:
 If you saw a 50% drop from here, would that cause incredible stress? 

Were you going to be wanting to sell the investment soon? 

1. No.  It's less than 10% of my overall portfolio.
2. No.

brasso

I'm in the same position. I did at least get some gains from SMT before the very poor recent year or two. 

It's very easy to say "the same thing you purchased previously is now a third cheaper, why not buy more?" That sounds like a glib cliché you hear on investment forums. It's just as likely that you'll hear someone saying: "What? Its value dropped by a third yet you kept buying it? You're mad!"

I'm not criticising the former statement/question but it's really not very helpful.

InvesterJones

Well it kind of is - if you pick a fund for good reasons and now the same reasons apply but it's a third cheaper of course you should consider adding more. The only reason to change would be if something else changed, like your investment strategy moving from long term equities to something more short term. Unless of course you decide that it was a mistake and that you shouldn't have bought it in the first place, even discounted by a third.

valiant24

InvesterJones said:

Well it kind of is - if you pick a fund for good reasons and now the same reasons apply but it's a third cheaper of course you should consider adding more. The only reason to change would be if something else changed, like your investment strategy moving from long term equities to something more short term. Unless of course you decide that it was a mistake and that you shouldn't have bought it in the first place, even discounted by a third.

Not totally convinced.  You might judge that the macro-economic environment has altered to SMT's detriment, or things have changed to the detriment of things that SMT usually invests in.

That said, as a Lars Kroijer disciple, I shouldn't consider myself competent to judge these things!