The Scottish Mortgage Investment Trust (LSE: SMT) has a good track record when it comes to spotting the next big thing in tech. From Tesla to MercadoLibre, the Edinburgh asset manager has had its eye on the ball in tech markets around the globe. But over the past year, Scottish Mortgage shares have fallen 39%.
Down almost two-fifths, does this present me with a buying opportunity to add the stock to my portfolio in anticipation of the next tech boom?
Tech booms and busts
The appeal of tech from an investment perspective is clear. If a company can spend money developing a service and then expand its user base massively with low marginal costs, the profits can be considerable.
That helps explain why lots of money has poured into tech shares. That has been true in the past few years. But it was also the case in the dotcom boom and before that, the Nifty Fifty group of US shares back in the 1960s and 1970s.
In other words, the tech story seems to appeal in its own way to every generation of investors. Once prices peak, momentum falters and investors are scared away for a few years. But that does not mean that the tech model itself is any less attractive as a business. Looking at key Scottish Mortgage holdings such as ASML, Amazon, and Tencent, I reckon some tech names are more hardwired into the daily lives of people around the globe than ever before.
Why Scottish Mortgage shares have fallen
Despite that, many leading tech shares have fallen over the past year. Some of them looked overvalued, so it is understandable why there has been a pullback in the sector.
As Scottish Mortgage is an investment trust, its valuation is basically tied to what it holds in its portfolio. The match is not perfect, but in broad terms Scottish Mortgage shares typically move up or down in line with the shares it owns.
The trust has also seen a change of leadership this year. Given its strong track record – it is still up 90% over the past five years despite recent weak performance – some investors are concerned that new managers may not do as well as their predecessors. But the trust is over a century old and has not cut its dividend since before the Second World War. I do not worry about a change in operational leadership.
In fact, I reckon the trust’s proven prowess in identifying promising growth stories at an attractive stage could continue. We may need to wait for another tech boom to see the full benefits of that – but that is why I think getting in now could make sense for me.
That way, I can benefit from the lower price of Scottish Mortgage shares and hold them for the long term.
The post Should I buy Scottish Mortgage shares now to ride the next tech boom? appeared first on The Motley Fool UK.
Markets around the world are reeling from the current situation in Ukraine… and with so many great companies trading at what look to be ‘discount-bin“ prices, now could be the time for savvy investors to snap up some potential bargains.
But whether you’re a newbie investor or a seasoned pro, deciding which stocks to add to your shopping list can be a daunting prospect during such unprecedented times.
Fortunately, The Motley Fool UK analyst team have short-listed five companies that they believe STILL boast significant long-term growth prospects despite the global upheaval…
We’re sharing the names in a special FREE investing report that you can download today. We believe these stocks could be a great fit for any well-diversified portfolio with the goal of building wealth in your 50’s.
setButtonColorDefaults(“#5FA85D”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#43A24A”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#FFFFFF”, ‘color’, ‘#FFFFFF’);
- 3 growth shares that could skyrocket in September
- Are Scottish Mortgage shares a bargain at 822p?
- Should I snap up Scottish Mortgage shares as they fall below £9?
- The Scottish Mortgage share price has suffered. Here’s why I’d still buy!
- When should I sell my Scottish Mortgage shares?
John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. C Ruane has no position in any of the shares mentioned. The Motley Fool UK has recommended ASML Holding, Amazon, MercadoLibre, and Tesla. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.