The latest Investing Matters Podcast episode featuring Jeremy Skillington, CEO of Poolbeg Pharma has just been released. Listen here.
London South East prides itself on its community spirit, and in order to keep the chat section problem free, we ask all members to follow these simple rules. In these rules, we refer to ourselves as "we", "us", "our". The user of the website is referred to as "you" and "your".
By posting on our share chat boards you are agreeing to the following:
The IP address of all posts is recorded to aid in enforcing these conditions. As a user you agree to any information you have entered being stored in a database. You agree that we have the right to remove, edit, move or close any topic or board at any time should we see fit. You agree that we have the right to remove any post without notice. You agree that we have the right to suspend your account without notice.
Please note some users may not behave properly and may post content that is misleading, untrue or offensive.
It is not possible for us to fully monitor all content all of the time but where we have actually received notice of any content that is potentially misleading, untrue, offensive, unlawful, infringes third party rights or is potentially in breach of these terms and conditions, then we will review such content, decide whether to remove it from this website and act accordingly.
Premium Members are members that have a premium subscription with London South East. You can subscribe here.
London South East does not endorse such members, and posts should not be construed as advice and represent the opinions of the authors, not those of London South East Ltd, or its affiliates.
To also compare historic data:
SMT rose 40% in the 2000 decade in that decade which was basically a value decade you would have made more in cash than SMT?
SMT is a sell due to the overvalued shares it holds. Any one holding Tesla is in dream land still. However, SMT are definitely the one to hold when US inflation and interest rates are close to zero and the government are writing checks they can't afford. That time is now over and will not be back for decades. SMT are just in the wrong stocks. The cost of growth stocks to raise money and grow is just not there and many will go bust - it was easy last year money was being given to growth without a proper investigation and cheaply. Money was taken away from the value stocks to buy growth stocks and the opposite is now happening. Value is cheap and the share price of these companies are stable, pay a good dividend and will grow because they are cheap and - growth story has ended for now but it will come back but it tuck 16 years last time.
Historically low interest rates and a flood of easy money hitting the markets after the 2008 financial crisis created perfect conditions for growth stocks to flourish, as investors headed for riskier assets in search of a decent return. But it is not a rising tide that has lifted the fund’s return alone. Even after the 27 per cent decline in net asset value over the year to April, the trust has delivered a return of 565 per cent over the past decade and almost 80 per cent over the past three years, more than twice that generated by the benchmark FTSE All World Index, which includes some of the largest technology companies, also beneficiaries of ultra-loose monetary policy. That could comfort investors questioning whether the stellar returns before this year were more a result of luck than stockpicking skill.
The risk associated with backing Scottish Mortgage is higher, but so, too, are the potential compound returns on offer for those who can hold their nerve long enough.
ADVICE Buy
https://stocks.apple.com/AVJ8DKtYcR3ygOxULrDHDKg
Risks are high but so are the rewards at Scottish Mortgage Investment Trust
Emma Powell, The Times, May 25 2022
Believers in Scottish Mortgage Investment Trust need to maintain their faith more than most right now. The wind has turned against the FTSE 100 constituent, precipitating a share price fall far greater in magnitude than those at the start of 2020 or during the 2008 financial crisis.
A regulatory clampdown on Chinese technology companies and the prospect of more aggressive interest rate rises by the US Federal Reserve have caused a sell-off in the growth stocks that make up the trust’s largest holdings. Its net asset value shrank by 14 per cent over the 12 months to the end of March, a dramatic reversal from the 111 per cent expansion in the previous year.
Indeed, the shares have fallen further than the value of the trust’s holdings, which means a rare discount has opened up since the start of this year, now at almost 11 per cent. The question today is whether investors have the appetite to withstand a further decline in the share price in the immediate term, in the hope of a revival of the returns it has delivered in the past.
Scottish Mortgage, Baillie Gifford’s best-known investment trust, has made its name as an early backer of companies that it reckons have high growth potential, including an initial stake in Amazon in 2004 and Tesla in 2013. Such bets take time to be proved right, or indeed wrong, which means that even the fund’s own managers discourage those that aren’t willing to park their cash for at least five years from buying in. Long-term investing “requires the ability to endure periods of intense discomfort”, Lawrence Burns, deputy manager, has told investors. He and Tom Slater, the fund’s lead manager, stepped up to run it when James Anderson left in April after 22 years with the trust.
Rising rates will continue to make re-rating difficult for American technology stocks such as Amazon and Tesla. The belief that tighter regulation would prove more of a blow to such companies in the West than in the East has proved a costly bet. Chinese groups including Alibaba, the ecommerce giant, and Meituan, the food delivery company, sapped the most juice out of the fund after suffering falls in value of more than 40 per cent in the year to March.
Underestimating the pace and scale of regulatory change that could occur in China and cutting holdings in western technology stocks over their Chinese counterparts was a mistake, the managers have conceded, but that is not an indication of any intention to reduce Chinese exposure. Will the fund be bitten twice, or more? That depends on whether you believe that the worst of the regulatory crackdown is behind us; the threat of US sanctions is already accounted for in much-reduced stock valuations, and structural growth areas such as ecommerce don’t reverse.