Scottish Mortgage shares continue to rise. Am I missing out by not buying?

At their current price, this Fool thinks Scottish Mortgage shares could be a steal. Here, he details why he’d buy some of its stock.

| More on:
Asian man looking concerned while studying paperwork at his desk in an office

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

Scottish Mortgage Investment Trust (LSE: SMT) shares caught the attention of many investors during the pandemic. In a year when the stock market was very weak, Scottish Mortgage bucked the trend. During the year, it rose by a whopping 100%.

However, investors who purchased the stock back then hoping to see that fine form continue would be disappointed right now. Although it reached an all-time high in November 2021, since then its share price has dropped by over 50%.

More recently, it’s fallen 6% in the last 12 months. Yet a 10% rally in the last six months has me questioning whether by not buying today, I’d be missing out. And I think the answer is yes.  


As a retail investor looking to make my investing journey as simple as possible, the diversification the investment trust offers me is a major attraction. It has around 100 companies in its portfolio, with the Baillie Gifford-run fund holding a stake in companies such as Amazon, Nvidia, Tesla, and Moderna. This means that through a single investment, I gain exposure to a host of businesses, in turn offsetting risk. For me, that’s ideal.

On top of that, Scottish Mortgage offers me the opportunity to invest in unlisted shares. The most noticeable of these is Elon Musk’s SpaceX, which has been in the news lately following the latest launch of its Starship spacecraft. It also includes TikTok’s parent company ByteDance.

What I also like about the trust is that it looks cheap, trading at a 14% discount to its net asset value. What this essentially means is that I gain access to high-quality companies cheaper than their market rates.

Growth stocks

Its focus on growth stocks is something of a double-edged sword. When inflation and interest rates rise, as is the case now, these stocks are the first to suffer as investors dump them for ‘safer’ alternatives. This is because these companies use large amounts of debt to fuel growth. And with interest rates forecast to remain elevated until late 2024, this debt will become more expensive to service. As such, Scottish Mortgage may continue to suffer in the months ahead.

Despite this, I like to think long term. And I see its large focus on growth stocks as having high potential for handsome gains. The same can be said for its large weighting to China. While it may suffer in the near term, I think ample opportunities will exist in the region as it continues to grow and develop.

Am I missing out?

So, would I be missing out if I passed on buying Scottish Mortgage shares today? I’d say that I would.

Granted, the months ahead may be rocky. And this isn’t helped by factors such as its focus on growth stocks and China. But I can look beyond that. And at its current price, I see an the opportunity . Its diversification is also a bonus. If I had some cash, I’d be keen to snap up some shares.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Charlie Keough has positions in Nvidia. The Motley Fool UK has recommended Amazon, Nvidia, 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.

More on Investing Articles

Young mixed-race woman looking out of the window with a look of consternation on her face
Investing Articles

8% yield! Here are the dividend forecasts for Barclays shares for 2024 and 2025

This FTSE 100 bank offers one of the biggest yield on the UK's blue-chip share index. But is it too…

Read more »

Young woman holding up three fingers
Investing Articles

3 reasons why Lloyds’ share price could surge through £1 in 2024!

Optimistic UK investors are buying Lloyds in the hope of a sharp share price rebound. Could the company be a…

Read more »

smiling couple holding champagne glasses and looking at camera at home with christmas tree
Dividend Shares

2 discounted high-dividend stocks on my Christmas list!

These top dividend stocks are already in the Christmas sales! I'm hoping to buy them to make a solid second…

Read more »

Close up of a group of friends enjoying a movie in the cinema
Investing Articles

I’m eyeing these two cheap dividend shares for 2024!

This Fool likes dividend shares as a play for 2024. Here, he identifies two that look cheap and explains why…

Read more »

Investing Articles

This FTSE 250 growth machine is top of my list of stocks to watch in 2024

Despite a 13% fall, Games Workshop shares trade at a P/E ratio of 22. Stephen Wright plans to keep a…

Read more »

Investing Articles

The Tesla share price is a bargain to me

A lot of people think the Tesla share price is overvalued. Oliver Rodzianko disagrees. He tells us why he’s piling…

Read more »

Investing Articles

The BT share price is up 20% in a year. Should I buy now for 2024?

The BT share price has performed strongly so far in 2023. Christopher Ruane thinks it might keep moving up --…

Read more »

Light bulb with growing tree.
Investing Articles

One 9p penny stock I’m loading up on in 2024

This penny stock has fallen more than 50% over the past two years despite encouraging progress being made at the…

Read more »