Scottish Mortgage Investment Trust (LON: SMT) is one of the UK’s most popular, best-performing, and most volatile investment trusts. But Scottish Mortgage shares have collapsed spectacularly since peaking in early November 2021. After six months of steep falls, is this stock now set to slump or soar?
Scottish Mortgage shares skyrocket
Over the past five years, Scottish Mortgage shares have been on an absolute tear. Since 5 May 2017, shares in this tech-focused investment trust have more than doubled, skyrocketing by 139.2%. In other words, £1,000 invested into SMT shares half a decade ago would be worth £2,392.20 today. That’s a market-thrashing return, given that the FTSE 100 index is up just 3.1% over the same timeframe. (All figures exclude cash dividends.)
Burnt since Bonfire Night
However, since late-2021, the Scottish Mortgage share price has taken a brutal beating. At their record intra-day high, SMT shares peaked at 1,568.5p on 5 November 2021. As I write on Friday afternoon, the shares trade at 903.20p. This leaves them down 665.3p (-42.4%) from their record high. Following this collapse, here’s how the SMT share price has performed over six recent timescales:
| One day | 1.9% |
| Five days | 1.2% |
| One month | -15.8% |
| Year to date | -32.1% |
| Six months | -39.9% |
| One year | -29.3% |
As you can see, Scottish Mortgage shares have declined steeply over periods ranging from one month to one year. The past six months have been particularly brutal, with the share price diving by almost two-fifths. Ouch.
Scottish Mortgage shares bounce back
Then again, share prices rarely fall in straight lines — and Scottish Mortgage shares have rebounded from their recent low. On 8 March, the share price plunged to an intra-day low of 816.2p before recovering to close at 834.6p. Therefore, this white-knuckle stock currently trades at 87p (+10.7%) above last month’s low. Is this recovery set to continue, or could it be a dead-cat bounce?
Interestingly, UK investors are broadly divided on Scottish Mortgage shares. Last week, it was the #3 most-bought share by Hargreaves Lansdown clients. However, it was also the #2 most-sold stock by HL customers last week. Thus, its appears that HL clients are divided into both bulls and bears of SMT.
After the ‘spec tech’ wreck?
As for me, I regard Scottish Mortgage shares as a rough proxy for the US Nasdaq Composite index. That’s because this investment trust is packed with go-go growth and ‘speculative tech’ stocks. Its largest holdings include Moderna, ASML Holding, Illumina, and Tesla. Each of these shares has performed poorly since the Nasdaq peaked in November 2021.
Right now, I’m not a huge fan of fast-growing but loss-making US tech stocks. That’s because I clearly remember the dotcom boom (1995-99) and subsequent bust (2000-03). From its March 2000 high to the low of October 2002, the Nasdaq Composite collapsed by almost four-fifths (-80%). Yikes.
As a veteran value investor, I would not buy Scottish Mortgage shares today. But I do see their appeal among growth investors keen to capture a slice of US tech gains. And if tech stocks do come back into vogue again, then the SMT share price could soar once more. Then again, I suspect this star stock’s best days are behind it — though I could well be wrong, of course!
