Member Info for fela96

Cassandra, I think passive investing is bad for the world economy (that's a different debate), but from an individual point of view, I don't believe that investing in listed, "safe" companies makes any sense - an index tracker will beat it in all likelihood, net of fees. Therefore, for me, a portfolio full of cash-generative businesses, especially high dividend payers, is not low risk - it risks wasting my money in opportunity cost.

The main reason I'm in SMT is for its unquoted holdings. I don't care if 90% of them go to zero, if the other 10% grow into the industry leaders of the future.

LLL, I didn't wish to imply that volatility has a 1:1 inverse correlation with risk. Some assets, e.g. options, have high risk and high volatility.

However, in order to achieve an acceptable level of risk in a long term portfolio, a certain level of volatility must be accepted.

In summary:
Cash / bonds = high risk, low volatility
Growth stock portfolio = low risk, high volatility
Options / all-in individual stock = high risk, high volatility

LLL, some investments are designed to minimise capital losses I.e. to maintain the investor's wealth at any given point in the future with respect to inflation (within tolerances). SMT is no such vehicle - the point here is to grow the initial investment above inflation. The price for this expected growth is that drawdowns are expected to be frequent and large.

So yes, when I invest in SMT I am saying "please potentially lose me money - with the reward being likely larger gains in the long run".

Littlened, the risk that the "industry" is referring to when it talks about volatility is the risk that capital value will depreciate at any given point. For a long term investor, this is not a risk but a price that one expects to pay. The real risk is the opportunity cost of long term gains which is forgone by not paying that price. It makes no sense as a long term investor to talk about volatility as if it were the major threat to the goals of the portfolio. Volatility should not come as a surprise to you and you should embrace it.

Equating risk with volatility only makes sense if your goal is capital preservation, in which case you shouldn't be in SMT full stop.

£6k to tell you that a 30% private equity growth fund which is 10x in 20 years is more "risky" than a lumbering dinosaur index which has gone nowhere in that time?
Think you're wasting your money mate.

"Fela, not being funny but if you think it will take 10 years to see a profit here, you need to ask yourself is it worth it?"

The bottom for any IT could be years if not decades away, nobody knows. I expect this IT to make better annualised returns than its competition but at the expense of higher volatility. I also expect the vast, vast majority of the returns to occur on the best 30 days. If your investment horizon is less than 10 years you absolutely should stay well away from this. The volatility will kill you.

"Another excellent buying opportunity, i'm piling in,what is not to like if you take a 3 year view"

You could be disappointed, bottom could be years from now. 10 year view is probably better, I'm bullish on that time frame for sure.

lll, good point about age. I wouldn't be touching this with a barge pole if I was in my 70s. I'm 26 though so I'm buying.

Will slowly transition to CGT and maybe CTY as I get older.

lll - trading shares as far as I can see only gives you an edge when you have time to do LOTS of research, you are holding pretty small companies (e.g. pre-IPO) with relatively low liquidity, and/or you don't try to trade short term. The last one is most important.

That's why I'm invested in SMT - the managers here admit they have no edge in the short term, and they invest pre IPO in order to gain a competitive advantage on less researched stocks.

Trading SMT short term goes directly against its managers' thesis in other words ??

But of course it's your money and I'm not trying to start a fight, just present an opposing view.

lll - the point is, if you carried on with that strategy, for decades, would you end up with more or less than if you simply bought every month for that time and held. I think you're kidding yourself that there's any skill to it, and a more honest use of that money would be at the local casino.

Additionally, it makes no sense to talk about trusting things "at the moment". At any point in history the only thing you can trust about the near future is that nobody knows where stock prices move (short of being an HFT, and they only know the next few seconds if that). Volatility can come and go whenever it pleases, it's unpredictable. Case in point: 2017 was a low volatility year, until it wasn't. If you'd told someone in 2017 that the market's cool and you can trust things to be ok for a while, you'd have looked a bit of a fool when volatility came back the next year without warning.

This only works until it doesn't. Like say the dip keeps dipping, or the rally keeps rallying.

I thought the point of an investment TRUST is that you hold it because you TRUST the price to increase long term. Trading this is bananas; it doesn't represent a coherent strategy even if you have the hubris to believe you personally can beat the market, because you're layering your trades opaquely on top of trading decisions made by the managers. It's just gambling.

There are always crises, and if you'd pulled all your money out of funds like this to "protect capital" in any of the previous global crises in history, you'd have ended up losing out on the rebound. Unless you can time it perfectly, which you can't - the rebound always starts when things are at their most grim and pessimistic.

Anyway why bother talking about nuclear war? We're all dead in that case so why does money matter?