Scottish Mortgage heading for where

[EthicsGradient]

I'm not drawing a direct comparison between the two businesses. I am drawing a comparison between the way that they have, for reasons that are similar, become darlings of retail investors, many of which are new to the game. The similarity, admittedly via different means, is the ability to generate huge gains very quickly. You only have to look at the SMT chat board on LSE to gauge that there are many people treating SMT as a speculative play and they are nervous. All I'm saying is that this might cause SMT to become oversold and it could become a good entry point for investors.

But SMT's premium/discount stays within reasonable limits; there may be a few percent of "enthusiasm" or "dislike" involved in the price movement over a week or two, but in the long term its price reflects the NAV, rather than being a speculative play dependent on enthusiasm for SMT (and the NAV is determined by far larger trades in its holdings). And there's been no huge rise in the volume of SMT traded: https://www.londonstockexchange.com/sto ... ap?lang=en

[Dod101]

At the margin there are of course always going to be those who use the likes of SMT as a speculation. That helps liquidity in the shares but most of us here I guess will be looking at the fundamentals and that depends on the investments held and these in turn depend on the managers. Baillie Gifford is not an investment house addicted to speculation and given their record they clearly know what they are doing so I am very happy to continue to hold for the long term. I am primarily an income investor though so am more than happy to take profits when they are offered but equally, I am perfectly happy to hold through volatility . I doubt though that I will be buying more even if we see a substantial drop. It is already off its peak by around 20%.

Dod

[Urbandreamer]

It's not just SMT that has fallen.

For example PHI was down 5.5%, ULVR (Unilever, soap) by 2.3% indeed everything's down. The pundits that I sometimes enjoy listening to are putting this down to a significant change in US bond yields. They argue that a significant change in the rate of "risk free" return naturally causes people to reconsider the value of equities.

Me? I'm sitting on my hands at the moment. I have said that I'll top up SMT if it shrinks to 8% of my portfolio, but that's not happened yet.

[unperplex]

Well, I used up my spare cash over the last few days buying more SMT in 4 blocks, all at different prices but averaging out at 1258p.
Yes this is only about 11% below the most recent high (of about 1410 reached on16.02.21), and (inevitably) they dropped further, to a low of about 1103, or by another 11%.
However I am happy with my purchases and hopeful they will soon rise back to 1410 and beyond.
For what it is worth (and I know past performance is no guarantee of future performance), the “peak” of about 1410 was, in one way of looking at it, just the latest in a long series of such “peaks”, each one of which was substantially higher than the previous one.
Of course it may not rise as quickly as it has done in say the last year, but I am reasonably confident of significant rises over time.
I am not looking for a huge immediate increase.

[AndrewSmith259]

I’ve held SMT for many years. At the moment I’m very happy holding it. I’m also in MNKS but this is a slightly different structure to SMT although MNKS does seem to like a little bit of tech too.

No sign of Tesla in MNKS top 10

[Padders72]

I’ve held SMT for many years. At the moment I’m very happy holding it. I’m also in MNKS but this is a slightly different structure to SMT although MNKS does seem to like a little bit of tech too.

No sign of Tesla in MNKS top 10

Tesla is Monks 9th biggest holding or at least was when the link below was compiled. Many BG funds hold a chunk.

https://www.bailliegifford.com/en/uk/in ... ent-trust/

[Adamski]

I realise I am guilty of cherry picking data to prove a point, however it is interesting to see the 3 month performance to 28.2.21 of some of the popular BG funds:

BG US Growth 13.7%
BG Pacific B 12.1%
BG British Small cos 11.6%
BG American B 10.5%
BG Positive Change 10.3%
BG China B 9.7%
BG UK Growth 7.9%
Monks 7.9%
BG L/T Glb Gr 6%
SMT 3.6%
BG Japan Small cos -6.9%
BG Shin Nippon -9.3%

Also interesting how well UK Growth and British Small cos have done given the gloom in UK investing. Admittedly this is after a one week correction to SMT of 15.7%, so looked very different over one week ago, and expect may look different after this week, if we get a bounce back.

However, could this be an indicator that SMT will struggle to outperform other BG funds going forward? Given that Tesla has moved sideways the past 2 months, and BG has reduced their holding in Tesla, and given that so much of the outperformance of SMT over March to December 2020 was due to Tesla's disproportion effect on the portfolio?

[Dod101]

However, could this be an indicator that SMT will struggle to outperform other BG funds going forward? Given that Tesla has moved sideways the past 2 months, and BG has reduced their holding in Tesla, and given that so much of the outperformance of SMT over March to December 2020 was due to Tesla's disproportion effect on the portfolio?

I think it perfectly possible that SMT will go sideways for the next 12 months, and that it may double in value again over the next 12 months. I think the former probably more likely though than the latter.

It is today below £11 again. I have taken a lot of money out of it over the last 12 months so am simply not that bothered and no share goes up forever without at least a pause. It is still invested in the same 'disruptors' though and I think over the long term will be fine.

Dod

[Adamski]

It is still invested in the same 'disruptors' though and I think over the long term will be fine.

I agree. I'm reminded of the pull backs in 2018, when SMT and similar growth funds were big losers during the corrections that happened then, but of course we know what happened since then.

[Vince]

Its been royally hammered recently and looking almost attractive as a buying opportunity, not sure where to assess the bottom my be, considering it was down to about 500p this time last year, maybe under 1000p might see some frantic buying and support from SMT/BG itself, It never crossed my mind to top up this holding but this series of drops has me interested.

Stepping back and looking at the meteoric rise over the last 6 months puts the falls into perspective, a lot of profit gained and subsequently lost to date, SMT is the best performing holding I have ever had, even better than Fundsmith, if the falls continue I'll be a buyer soon.

Vince

[Wizard]

Similar feeling that 1000p seems an interesting level, that would represent around the end September 2020 price. I would not be looking at a quick bounce, rather an opportunity to get in to a good fund for the longer term at a price I thought I may not be able to again. I don't like the big Tesla exposure, but the manager has a good reputation. Also considering Allianz Technology Trust, which has also been hit hard in the last few weeks.

[Dod101]

Bear in mind that this fall is mainly due to a change in the valuation of their tech shares where the discount rate has been increased because of the rise in bond yields. It seems therefore that an informed view of bond yields going forward would be helpful to gauge the likely floor. I do not have that but then I have no intention of buying or selling at the moment.

Dod

[Dod101]

Yes and in fact the last year or two is somewhat unusual for SMT because they have always been volatile. I have held it probably for 20 years or more, The trick is as you say to decide on a price worth buying in to and then just go for it.

Dod

[Bouleversee]

Alack, alas! I topped up again on 25th Feb. when they had fallen to £11.99 and my kids followed suit shortly after. So now you know why they have gone down so much.

[skewwy]

Alack, alas! I topped up again on 25th Feb. when they had fallen to £11.99 and my kids followed suit shortly after. So now you know why they have gone down so much.

I am tempted to buy in for the first time having watched with envious eyes for a few years. If I do though then I can equally guarantee it will continue to fall. So for your benefit I will get greedy and see if it falls another 10% before buying in....

[Adamski]

I bought back in just now! Not massive. 1% of my portfolio value.

This is my first attempt to 'buy in the dip'. Time will tell if there is more downside to go. Looking at the figures part of the drop is increasing discount, which to me indicate may be oversold. The discount was -5% yesterday, and expect that to increase after today. Plus we all know it is a great long term holding and could quickly reverse on a change in market sentiment.

SMT was one of my first holdings. In the Q4 2018 correction I sold it and since watched it rocket obviously from the sidelines. In Q1 2020 correction, did nothing for 3 months, then looked to lower risk after markets had largely recovered.

So attempting to break my retail investor mindset, and actually buy when prices falling.

[bluedonkey]

At 1029p, that's a 27% drop from its high. I'm no TA expert but that seems to be more than a correction, more like a trend (down).

[Bouleversee]

Going up again now.

[MusingMarket]

Tesla has gone from a 1410 P/E in February to 993 P/E yesterday, hardly a bargain. NIO is a car company whose value has fallen from $100bn in a month to $55bn, still more than Ford. Short-term Scottish Mortgage is a leveraged bet on tech stocks (its 1yr performance being between QLD (2x Nasdaq) and TQQQ (3x Nasdaq). In a crash (the Nasdaq is only down 10% from its peak and at December levels) SMT could fall very sharply. With large private equity positions SMT can't rigorously control its discount and when trying to do so it will increase gearing and leverage by buying back stock, doubling down on highly volatile underlying assets, and borrowing.

Sure, SMT could be back at 1400 soon, it could also be at 600 a share with a NAV of 700. Be careful out there.

[Hariseldon58]

Scottish Mortgage is interesting and should be a purchase to hold for the longer term...

However I must admit that I have made 14 purchases and 4 sales in 11 months, the good news is my present holding has an average cost of £2.40, the bad news is I could have done far better...

I buy in every time the price falls 5% or so below the last purchase and I increase the purchase size.

I have no idea where the market is heading, I have a diverse portfolio and when somethings go up, something else often goes down, I must admit to trading up to about 5% of the portfolio when the market is very volatile. It's only 5% of the portfolio and I only trade between things that I want to hold for the long term. The worst that can happen is the portfolio ends up out of balance by a few percentage points, the upside is you end up with the same portfolio but the average cost per share can be significantly lower.

Edinburgh Worldwide is also proving interesting...