Member Info for fela96

I'm with you on that. Tech is such a nebulous term anyway. Anything which humans put to use is tech. Flushing toilets, fire, pencils, concrete, cigarettes. All are/were tech at some point. Saying you're diversifying away from tech is equivalent to saying you're moving some of your investments into dying industries because you believe the industries of the future are too risky.

That being said, what the last couple of years have taught me is that there is merit in passive investing. The market as a whole can boom while your entire portfolio of active investments tanks.

Yep, don't worry I don't need Lolly's ringing endorsement in order to convince me to hold here. I just found it curious that Lolly had such an (in my view) lukewarm opinion and yet was willing to hold the shares.

Walp, I agree with everything you've said. As I've stated in the past, holding a stock is functionally no different from buying it, due to the opportunity cost you are sacrificing by not selling it and buying something else. Therefore you should only ever hold a stock which you'd be happy to buy more of at the current price. The only exception to this is if you want to maintain a given allocation.

There's a difference between rebalancing and selling out, did Lolly mean rebalancing? If so that makes sense, if SMT breaches 50% of the portfolio again I'll probably do the same.

The implication is that he doesn't see SMT as a long term investment and is looking for a route out of it.

If he thinks other investments represent better value, he should sell up now and move the money there.

"Equally though, I won't be selling, as I suspect there'll be better opportunities to reduce/exit within the next 4 to 5 years."

This is hardly a ringing endorsement of the trust. If I had that view I'd sell immediately.

My perspective on this is that I maintain conviction. But I don't maintain enough conviction to keep this above 60% of my portfolio (as it once was). I've been accumulating EQQQ shares, which makes me sad. I expect my SMT shares (none of which I'm selling) to eventually outperform the EQQQ. It's my base case but with a high degree of uncertainty.

I have to bear in mind that I would never have expected a situation like this, where SMT is barely up over a period of 5 years while QQQ is up >100%. (I expected there to be periods where both are down big over that period, it's the underperformance relative to the index which I didn't expect). Therefore I have to exercise humility and assume I might be wrong about SMT eventually catching up too... hence diluting my position here.

I hold some other trusts which are faring much worse even than this, BGS being a good example. I never had as much conviction in them and will probably roll them all into EQQQ too soon.

Why not move the money into something you deem to be a better investment?

I believe if you’d bought in 1970, you’d have been waiting over a decade to see real positive return.

Also, buying in 1929 would have required waiting until 1949 or something stupid, unless I’m mistaken.

However I’m not aware of a time in SMT’s history when it lagged (risk-adjusted) global benchmarks as much as it does now.

What makes you so sure that it'll ever reach your cost basis?

And if you're so sure it will, why not buy more shares now to take advantage of it?

It's dangerous to judge future returns on the past year or two though. All you can do as an investor is trust that you made the right decision when you invested. If you can't see anything material which has changed to justify the market discount, that should mean you buy more shares, not sell them.

CaptainPicard, if you think this share will climb back to your cost basis, why would you want to sell it when it reaches it? Or do you think it will climb back to your cost basis and then fall again? What's so special about your cost basis?

"SMT dodged a bullet not investing in WeWork".

While this is true in hindsight, I think it's expected that a lot of SMT's VC investments in particular will come to nothing. The greater risk is seen as not being invested in those companies which end up being massive.

OK, if you can do it without commission then I stand corrected. Anyway, Sugarbabe, if you judge EQQQ to be a better investment than SMT or anything else, don't let a high nominal share price put you off - you can save enough cash to buy some shares at the end of the year (or every 2 months or whatever suits you). Of course if you're interested in buying BRK.A shares you might have a more difficult time given thay're half a million dollars a piece.

If you can only afford to invest £250 per month then you shouldn't be investing in ITs either. The commission on each transaction will make it not worth your while. Or, you could consider saving money in cash and investing at the end of each year.

The price per share has no bearing on the value at all.

Sugarbabe, you said you'd jettison SMT if you weren't in the red on it. So I'd put the question back to you, what would you buy into?

Lolly is right, the price you bought a share at has absolutely nothing to do with whether you should hold on to it or sell it.

Do you not think there are other stocks in SMT's portfolio which have a more gradual path to profitability? For what it's worth I completely agree that the wins will be priced in, that's why binary outcome investments have such lopsided returns.

LLL, what was the allocation to Moderna back in 2019 though? I wouldn't be surprised if Moderna is a success story, what I'd question is holding it as the top holding before it has a clear path towards, um, making money.

Precisely. The trouble I think with investments like Moderna, is that not only are the revenues years off, but it's highly uncertain whether they'll come at all (imho). With Tesla, the revenues (and eventually profits) started trickling in relatively soon. Moderna could become a huge hit, who knows, but the binary nature of the investment seems far too risky for it to be a top holding. To me it's in a similar category to Ginkgo Bioworks; should be cut down if it breaches 3% of the portfolio (assuming nothing material has changed, like actually generating a revenue stream aside from covid vaccines).