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I'm absolutely the type you're talking about here!
I moved towards SMT because I realised I didn't have a clue with stock picking. Now look! I'm 28% down on my position, and I think looking to buy more? Though how long could this go on for... Might it be 2+ years to recover? I'll probably drip feed some buys in, but good lord I thought SMT would be a stable investment. I thought i was being sensible... A good lesson though, I suppose.
it’s good for the young uns to see these kind of market moves.
hopefully helps folk understand that equity ain’t just easy money.
NAV at 21 Jan (published this morning) was £11.14. Today's NAV will undoubtedly be lower. But not 8.5% lower, which is the current gap between SMT's share price & Friday's NAV. Looking back over the past 10 years, that's an abnormally high discount: hTTps://www.hl.co.uk/shares/shares-search-results/s/scottish-mortgage-it-plc-ordinary-shares-5p/share-charts. Whilst value stocks are winning out over growth just now, I'd be surprised if this trend lasted more than a year or two. Which is why I've a couple more SMT limit buy orders in place at roughly £1 decreasing intervals from today's level. It's a risky call. But I'm fairly relaxed about it (for now at least!), even though my initial top up is currently around 9% underwater.
For the record, my 2nd SMT buy limit order was triggered earlier today at a touch above £10.20.
Phyl - as you say, the trouble with selling loss-makers in a falling market is knowing when to get back in. Sitting on cash (currently not earning much/any interest) is in itself loss-making in real terms. Over the years, I've tried to set limit buy & sell orders when markets were relatively calm & stable. Given time, what looks like a decent buy/sell proposition often still looks a decent call a few years later. That's not to say you couldn't have timed your buys/sells better. But volatility - in falling markets especially - often leads to panic. And panic buying/selling is rarely smart, as it's triggered by short term emotion (fear of missing out/losing more) rather than long term strategy.
Well said sir! I read it takes 3 months on average to recover from a 20% correction. Although they didnt specify which index.
Completely agree Spikeyj. SMT is considered an adventurous trust so really important to have some defensive stocks particularly right now to balance a portfolio. As you say, diversification is the key albeit almost everything today is taking a hit. It feels like we've been in a spiral for weeks now with some trusts & funds already down by more than 20% and that's before today's tempest! Some commentators are predicting a further 20%-30% drop but of course they don't really know for sure. One thing's for sure, after a market crash the market recovers and more than makes up lost ground. History suggests that's happened 100% of the time so perhaps we can draw some comfort from that? Some of my friends have or are about to sell (crystallise) a number of loss making stocks (their choice) in order to amass some dry powder. I'm not sure this is a good strategy but having some dry powder to spend on a rainy day I believe, certainly is although you can never ever second guess the bottom of the market as it seldom is. Same goes for what you consider to be the top. I should know, I've suffered both!
brutal times for poor SMT, a very good reminder indeed of
importance of diversification in portolio - don’t put too many
eggs in one basket! - although even some of the ‘boring’ value
stocks are now down quite a bit compared to 7-10 days ago.
gl all honest folks.
One could easily argue we're in a perfect storm. Higher than expected inflation, (not transitory) a likelihood of increasing interest rates not to mention equity over valuations. Small wonder then we're seeing what we are seeing. A 20% drop would take the SP down to circa £8.36 which is more than £1 adrift of their 52 week low. Quite possible of course and this is the reason I believe drip feeding (small amounts) could prove the best strategy here. Today's NAV suggests a discount in excess of 6.5% so one could be forgiven for believing the current SP is of good value for its bucks as it stands right now. Don't invest unless you have nerves of steel!
I’m holding for £8-£8.50 then hoping for bounce
I'm expect maybe another 20% drop. How long before it recovers though.
Now at -6,22%
I sold my SMT holding last year at £13.00 not knowing if the SP would rise further. (it did) I guess that's the point. Nobody knows what's going to happen. We can only hypothesise how deep the crash will go. It may go down to £9.50 and beyond. It might not. It might stabilise from here? It might not. For any existing investor sitting on a substantial loss I'd probably look at drip feeding any spare cash that can be afforded to help bring down the average unless of course you think the SP might continue to dive. Otherwise, for new investors, it might be wise to drip feed on a regular basis ( as I am) to help capture the lows & (hopefully) highs. But only if you were considering buying into SMT and you think it would be a good investment for the future as I do. Good luck with whatever you decide. PS: down almost 5% on the day
Wondering if this is th time to top up....or wait til it hits 9.50