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Investment Advice for a beginner
Tom Bards
Posted: 09 February 2018 09:21:11(UTC)
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Hi all,


I am relatively new to investing, have read a lot about it and feel like I have a good grasp of most aspects of building a portfolio and investing for the long term.

With the latest market volatility my principle holding (SMT) has gone from around 6% up to 3-4% down in about a week. I understand corrections happen and I'm not too concerned but I wanted to ask to see what members think a good avenue to take from here is. Should I just hold it? or Buy more at a lower price when the funds become available? or Sell and cut my losses?

My investment horizon until retirement is 40 years.
1 user thanked Tom Bards for this post.
gillyann on 09/02/2018(UTC)
Keith Hilton
Posted: 09 February 2018 09:41:39(UTC)
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I'd say to hold, but look to add if discount to NAV exceeds about 5%.

Hopefully though, you're not putting all your eggs in one basket.
Jim S
Posted: 09 February 2018 09:47:18(UTC)
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Well, noone has a crystal ball about what will be happening to the SMT share price over the next days/weeks/months, likewise with global markets. I guess you need to ask yourself why you bought into SMT in the first place, look at its track record, and decide whether you are still confident in the fund manager to provide a good return going forward.
Some people will be seeing the recent market falls, & more specifically the SMT discount widening to 5%, as a buying opportunity.
Unless you have a strong reason to sell, it might be best just to sit tight & ignore the turbulence.
2 users thanked Jim S for this post.
Tim D on 09/02/2018(UTC), gillyann on 09/02/2018(UTC)
Dennis .
Posted: 09 February 2018 09:48:41(UTC)
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Do nothing, . I have been investing since the mid 80's and the 87, 1999, 2007, etc crashes were a lot worse than this so far. Just hold on and see what happens over the weekend and if you have some spare cash buy something. When you see these "crashes" on a long timescale they are just blips on the curve. TV and radio also over dramaticise the falls. They talk of 1000 point falls which might only be a few % but never report when it creeps back up again.
4 users thanked Dennis . for this post.
Tim D on 09/02/2018(UTC), Keith Cobby on 09/02/2018(UTC), dlp6666 on 09/02/2018(UTC), gillyann on 09/02/2018(UTC)
Hank Elvis Dobbs (texan)
Posted: 09 February 2018 09:48:52(UTC)
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Hi Tom..would you have been so keen to invest today rather than when you did?...I suspect not ...a perfectly normal reaction.You invested as the vast majority of newbies do on a spike.The overiding emotion being fear..Fear of missing out on further rises ...percieved easy money.

Stay with it and yes add to it as i can gaurantee that in 40yrs even if it drops another 20% now, it'll amount to pennies compared to the profit you will eventually make.Get yourself a balanced portfolio of managers .. relax and let them get on with it...sleep at night.
6 users thanked Hank Elvis Dobbs (texan) for this post.
Dennis . on 09/02/2018(UTC), Keith Cobby on 09/02/2018(UTC), Guest on 09/02/2018(UTC), dlp6666 on 09/02/2018(UTC), Alex Marshall on 09/02/2018(UTC), gillyann on 09/02/2018(UTC)
The Spanish Inquisition
Posted: 09 February 2018 10:14:49(UTC)
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Do yourself a huge favour and stop following the markets ups and downs. The indexes got way ahead of themselves this year and could easily go another 5-10% down from here but its just noise, maybe add a little but I think you need to remember what it felt like to be 6% up and not on the sidelines missing out....Good luck
Tom Bards
Posted: 09 February 2018 12:38:55(UTC)
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I suppose rationally you have to think to yourself what are the chances that SMT, in 40 years, doesn't at least return to or exceed the price I purchased it at. Thinking of it in that way, the probability seems extremely unlikely that it wouldn't at some point return to this price in the next 40 years. For that to happen, all the companies it holds would have to seriously decline and never return which again is highly unlikely. I will just hold it I think.
Mickey
Posted: 09 February 2018 12:48:59(UTC)
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Hi Tom,
In your position, I would just hold onto SMT, add to it if it got 20% below the price I paid for it but only if it did not exceed my preferred allocation to one holding. I tend to aim for no more than 15% in any one Investment Trust and 25% in any one sector. Having some idea of preferences helps me keep the portfolio balanced. I did allow SMT rise to above 20% of the portfolio but banked profits at the start of the current turmoil.
Mickey
Posted: 09 February 2018 13:06:36(UTC)
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Whilst on about SMT, it is interesting to see that the well-publicised falls and gains of the past two days are not only occurring to this higher risk holding. Over the past month,

- SMT down 8.5% (Global Growth)
- TIGT down 7.26% (UK Equity Income)
- WTAN down 8.6% (Global Growth)
- RCP down 7% (Flexible Investment)
- FGT down 6.7% (UK Equity Income)
- HSL down 6.3% (UK Smaller Cos)
- HANA down 2.25% (Global Growth)

Lots of examples but essentially stocks are down across the board, whether they cover Global, UK, Asia, US etc. It is perhaps too easy to focus on the wider swings of Scottish Mortgage but the bigger picture is this is a correction and most stuff is getting hit.

So, on that basis, I would expect SMT to see you right in the longer term.
2 users thanked Mickey for this post.
Micawber on 09/02/2018(UTC), dlp6666 on 09/02/2018(UTC)
King Lodos
Posted: 09 February 2018 13:30:42(UTC)
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I think whenever you buy stocks, you have to accept there could be 50, 60, 70% downside round any corner – and be psychologically prepared.

Short-term volatility like this is near-impossible to 'trade' – that is: make reliable decisions on whether to buy, hold or sell .. Stick to a plan, or do nothing .. The long-term trend *can* be predictive, but the short-term usually isn't.

It doesn't really matter whether you buy more SMT – it might make more sense to buy something that diversifies you away from the very particular kind of companies SMT favours .. It's usually been the case that periods of strong performance are followed by weaker periods.


I've got very mixed feelings on SMT..

I'm a big fan of most the businesses it's in these days, but they're expensive, and some of them aren't even businesses yet .. Historically, high valuations and compelling stories haven't been the best long-term investments .. i.e. It's usually been better to invest in a company making sandwich spreads than the one inventing the Internet.
kWIKSAVE
Posted: 09 February 2018 17:47:05(UTC)
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King Lodos

You say elsewhere you have just bought Apple ; is this not the sort of stock SMT invests in ?

SMT seems to be very driven by the performance of the FANG stocks and has therefore suffered much recently.

Perhaps a good time to buy ..... although I will look elsewhere.
Freefall Junkie
Posted: 09 February 2018 18:10:25(UTC)
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I'd say SMT is definitely a hold long term. It is my biggest holding. However you have to recognise that it has a very particular investment approach based on identifying high growth companies with potential to disrupt market incumbents, usually through innovative technology. This makes it at the riskier end if the investment trust spectrum, in spite of the fact that it is the UK's biggest trust. It also has a sizable holding in Tesla which I think has a real chance of going spectacularly belly up in the next year, but that is another story...

SMT has had a bad week, down over 10%, but you have to view that in the context of nearly doubling in value over the previous couple of years.

Pensioner
Posted: 09 February 2018 20:04:14(UTC)
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Hi Tom
You have made a good start, stick with IT's , SMT is an aggressive IT and will do well. With a 40 year horizon you will do well. With the volatility in the market at the moment, not seen since the banking crisis, it should be for you a good entry point. But, the market may go even lower. It maybe best to make small purchases as you can afford over the months and years. MNKS,FGT,CTY,FRCL,WITAN are a few others you could consider to give you diversity. You do have to consider dealing costs and stamp duty with IT's so try and watch this cost. It may add a penny or two to the share price. Avoid individual shares, especially if you have a demanding day job......too much hassle.......you need to operate a stop loss.......you sell and then you need to decide what you are going to buy? ............even if you've made a profit. Been there, done that even in my time did 'day trading'. Never again!
As an alternative which is cheaper than and IT. Consider an OEIC, minimum £100 per month and ideal to DRIP feed into the market....no big up front charge and no stamp duty. There are many good fund managers. Do your research as there are many 'dog funds' also.
Good Luck
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