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Scottish Mortgage and the Eighth Wonder

Closed-end funds and OEICs
scrumpyjack
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Re: Scottish Mortgage and the Eighth Wonder

#245095

Postby scrumpyjack » August 17th, 2019, 7:04 pm

Yes, SMT is a classic example of why I have let my winners run and am happy to have done so. My holding is now very very large indeed, but as an Investment Trust I feel the risk is actually nothing like that of a single company (eg Fevertree - damn, missed that one!).

Aminatidi
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Re: Scottish Mortgage and the Eighth Wonder

#245184

Postby Aminatidi » August 18th, 2019, 10:50 am

scrumpyjack wrote:Yes, SMT is a classic example of why I have let my winners run and am happy to have done so. My holding is now very very large indeed, but as an Investment Trust I feel the risk is actually nothing like that of a single company (eg Fevertree - damn, missed that one!).


How do you handle the dips?

The last 12 months has been poor and I only have 18 months investing under my belt.

I need to get used to things not always performing as that's both life plus what sometimes makes things seem like a good opportunity to purchase.

Dod101
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Re: Scottish Mortgage and the Eighth Wonder

#245211

Postby Dod101 » August 18th, 2019, 12:42 pm

What dips? Most of the dips (so called) in the last 12 months have been nothing more than market noise. The way to handle this is simply to ignore them. I have held Scottish Mortgage for more than 15 years I am sure, and in that time have more often sold than bought. It is now my second largest holding. I will continue to hold it and see no reason to do otherwise.

Dod

Aminatidi
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Re: Scottish Mortgage and the Eighth Wonder

#245216

Postby Aminatidi » August 18th, 2019, 1:02 pm

Dod101 wrote:What dips? Most of the dips (so called) in the last 12 months have been nothing more than market noise. The way to handle this is simply to ignore them. I have held Scottish Mortgage for more than 15 years I am sure, and in that time have more often sold than bought. It is now my second largest holding. I will continue to hold it and see no reason to do otherwise.

Dod


Maybe when I've been doing this a few decades I'll see it as market noise.

Today though it certainly looks like a bit of a dip on the timeline.

I don't try and market time but sometimes things are just cheaper than they were a short while back.

Dod101
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Re: Scottish Mortgage and the Eighth Wonder

#245236

Postby Dod101 » August 18th, 2019, 2:49 pm

I do not want to teach grandmothers to suck eggs, but if you plan to invest over the long term say upwards of 10 years then the occasional market dip is something to ignore. No share is a one way escalator upwards and no share could be. Markets and the shares traded thereon, fluctuate all the time. Markets after the tech bubble of 2000/1 and then during and after the financial crisis of 2007/8 were the times to be concerned, but we survived them and it had little effect on my lifestyle or income , even although I depend on my dividends to live off and have done since I retired relatively early at the end of 1994, so as I have said before, if you intend to hold SMT for the long term (see my definition above) just buy it and leave it alone, and above all do not keep looking at its price.

Good luck to you, but relax!

Dod

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Re: Scottish Mortgage and the Eighth Wonder

#245375

Postby scrumpyjack » August 19th, 2019, 9:15 am

Yes if you are going to invest in equities you must not get too unsettled by the dips. I admit I was rather unsettled back in 1974 when the market lost 2/3rds of its value (the index fell from 530 to 170). Now that was a real dip! 10% off is just noise as others have said.

Dod101
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Re: Scottish Mortgage and the Eighth Wonder

#245387

Postby Dod101 » August 19th, 2019, 9:38 am

scrumpyjack wrote:Yes if you are going to invest in equities you must not get too unsettled by the dips. I admit I was rather unsettled back in 1974 when the market lost 2/3rds of its value (the index fell from 530 to 170). Now that was a real dip! 10% off is just noise as others have said.


Difficult to believe that now but I remember it well; the first oil price shock. Markets recovered fairly quickly though if I remember correctly. I had very little in it in these days though.

Dod

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Re: Scottish Mortgage and the Eighth Wonder

#245414

Postby gbjbaanb » August 19th, 2019, 11:01 am

Aminatidi wrote:Just reading this thread whilst debating putting 5-6% into SMT.

Compelling :?


bear in mind that SMT is techn-focussed, it has a lot in Amazon (9%!), Tesla, Tencent, Netflix etc. So if things change for this sector, it could bring the lot down quickly - I'm thinking Netflix has reached its growth limits, Amazon looks like it could get taxed "to save the high street", Tesla could easily turn into the nightmare all its shorters dream of, and so on

So I think its a "past performance isn't necessarily a guide to future" with SMT. Maybe the growth has peaked and MidWynd might be a better option as it is more diversified with a similar global profile, but less "growth orientated" tech.

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Re: Scottish Mortgage and the Eighth Wonder

#245415

Postby Alaric » August 19th, 2019, 11:01 am

Dod101 wrote: Markets recovered fairly quickly though if I remember correctly.


December 1974 was the low point. If mark to market had been required at the time, many financial institutions may have been technically insolvent. It had been low volume trading though during the 1974 falls. Once back at their desks in the new year, it was rumoured that the investment managers at major institutions decided enough was enough and starting trading amongst themselves. Whatever it was, the market level, as documented by the old FT 30 Index had near enough doubled by March 1975.

There was also a fear that because of the interaction of accounting rules, taxation rules and out of control inflation, that Companies were in danger of being taxed out of existence. Inflation accounting started to get a foothold at around this time, but perhaps the Corporation tax rules were changed as well.

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Re: Scottish Mortgage and the Eighth Wonder

#245417

Postby Dod101 » August 19th, 2019, 11:11 am

gbjbaanb wrote:
Aminatidi wrote:Just reading this thread whilst debating putting 5-6% into SMT.

Compelling :?


bear in mind that SMT is techn-focussed, it has a lot in Amazon (9%!), Tesla, Tencent, Netflix etc. So if things change for this sector, it could bring the lot down quickly - I'm thinking Netflix has reached its growth limits, Amazon looks like it could get taxed "to save the high street", Tesla could easily turn into the nightmare all its shorters dream of, and so on

So I think its a "past performance isn't necessarily a guide to future" with SMT. Maybe the growth has peaked and MidWynd might be a better option as it is more diversified with a similar global profile, but less "growth orientated" tech.


I felt that Aminatidi is going from one extreme to the other but I was pleased to see the sense of adventure and anyway his other holdings will make up for the volatility in SMT. That is not to say that I think that SMT has particularly peaked, although one would think that, a it like Berkshire Hathaway, it is not going to get any easier.

Dod

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Re: Scottish Mortgage and the Eighth Wonder

#245420

Postby Aminatidi » August 19th, 2019, 11:24 am

Dod101 wrote:
gbjbaanb wrote:
Aminatidi wrote:Just reading this thread whilst debating putting 5-6% into SMT.

Compelling :?


bear in mind that SMT is techn-focussed, it has a lot in Amazon (9%!), Tesla, Tencent, Netflix etc. So if things change for this sector, it could bring the lot down quickly - I'm thinking Netflix has reached its growth limits, Amazon looks like it could get taxed "to save the high street", Tesla could easily turn into the nightmare all its shorters dream of, and so on

So I think its a "past performance isn't necessarily a guide to future" with SMT. Maybe the growth has peaked and MidWynd might be a better option as it is more diversified with a similar global profile, but less "growth orientated" tech.


I felt that Aminatidi is going from one extreme to the other but I was pleased to see the sense of adventure and anyway his other holdings will make up for the volatility in SMT. That is not to say that I think that SMT has particularly peaked, although one would think that, a it like Berkshire Hathaway, it is not going to get any easier.

Dod


What I put in was £8K which is currently a touch under 6% of my investments so you'd hope that other than psychology I'll be able to focus on it being 6% rather than the £8K if that makes sense.

If I can't handle that then I think the way to look at it is better to learn with "just" 6% than what I usually see with SMT which is people pooing it because they're put a lot in and then panicked.

Got to do something a little adventurous at some point :)

1 CAPITAL GEARING TRUST 31.5% [N/A]
2 PERSONAL ASSETS TRUST 12.2% [N/A]
3 Fundsmith Equity Class I 11.9% Global
4 RUFFER INVESTMENT CO 11.8% [N/A]
5 Lindsell Train Global Equity Class D 11.5% Global
6 SCOTTISH MORTGAGE INVESTMENT TST 5.7% [N/A]
7 SCOTTISH AMERICAN INVESTMENT CO 5.7% [N/A]
8 MID WYND INTL INVESTMENT TRUST 5.5% [N/A]
9 Valu-Trac VT RM Alternative Income Institutional 3.3% Specialist
10 Cash 0.8% [N/A]

richfool
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Re: Scottish Mortgage and the Eighth Wonder

#245424

Postby richfool » August 19th, 2019, 11:37 am

Aminatidi wrote:
Dod101 wrote:
gbjbaanb wrote:
bear in mind that SMT is techn-focussed, it has a lot in Amazon (9%!), Tesla, Tencent, Netflix etc. So if things change for this sector, it could bring the lot down quickly - I'm thinking Netflix has reached its growth limits, Amazon looks like it could get taxed "to save the high street", Tesla could easily turn into the nightmare all its shorters dream of, and so on

So I think its a "past performance isn't necessarily a guide to future" with SMT. Maybe the growth has peaked and MidWynd might be a better option as it is more diversified with a similar global profile, but less "growth orientated" tech.


I felt that Aminatidi is going from one extreme to the other but I was pleased to see the sense of adventure and anyway his other holdings will make up for the volatility in SMT. That is not to say that I think that SMT has particularly peaked, although one would think that, a it like Berkshire Hathaway, it is not going to get any easier.

Dod


What I put in was £8K which is currently a touch under 6% of my investments so you'd hope that other than psychology I'll be able to focus on it being 6% rather than the £8K if that makes sense.

If I can't handle that then I think the way to look at it is better to learn with "just" 6% than what I usually see with SMT which is people pooing it because they're put a lot in and then panicked.

Got to do something a little adventurous at some point :)

1 CAPITAL GEARING TRUST 31.5% [N/A]
2 PERSONAL ASSETS TRUST 12.2% [N/A]
3 Fundsmith Equity Class I 11.9% Global
4 RUFFER INVESTMENT CO 11.8% [N/A]
5 Lindsell Train Global Equity Class D 11.5% Global
6 SCOTTISH MORTGAGE INVESTMENT TST 5.7% [N/A]
7 SCOTTISH AMERICAN INVESTMENT CO 5.7% [N/A]
8 MID WYND INTL INVESTMENT TRUST 5.5% [N/A]
9 Valu-Trac VT RM Alternative Income Institutional 3.3% Specialist
10 Cash 0.8% [N/A]

I would favour the choice of Mid Wynd in preference to SMT (as suggested by gbjbaanb), for someone who is cautious but wants some growth exposure, (noted Aminatidi already holds both).

monabri
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Re: Scottish Mortgage and the Eighth Wonder

#245431

Postby monabri » August 19th, 2019, 12:00 pm

Baillie G's "Pacific Horizons " (PHI) fund piqued my interest.

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

A short article from BG's Trust magazine.

http://magazine.bailliegifford.com/Trus ... rm-growth/

Luniversal
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Re: Scottish Mortgage and the Eighth Wonder

#245474

Postby Luniversal » August 19th, 2019, 3:23 pm

"How do you handle the dips?"

If you are ploughing back dividends in the manner of my backtest from 1983, you ardently desire the share price to be depressed year after year: it means you pick up loads of shares on reinvestment of income. Then pray that the price suddenly zooms shortly before you cash in.

A volatile and enterprising style such as Baillie Gifford's with SMT is bound to be out of fashion at times. That is when you lay the foundations of a future fortune, more than when all sing Anderson's praises.

Moreover, the more shares you acquire during weak times, the more dividend income they generate for reinvesting. All part of the Eighth Wonder, though inherently low-yielding issues such as SMT, uncommitted to growing dividends, will not hoover up extra shares like a 'dividend hero' such as City of London (CTY).

A stalwart middle-of-the-roader such as CTY will accumulate on a different, less jagged trend. Its capital value (inception 1983) outran SMT's until 2015.

In their latest financial years, the 36th of the exercise, CTY has risen a fraction to £2.05m arising from a £37,000 investment in Jul. 1983; whereas SMT hit £3.65m, measured from Apr. 1983. So the Global Growth trust holds a long lead, hard to see being closed... but towards the bottom of the bull market a decade ago it was worth £425,000 to CTY's £622,000.


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