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It seems like yesterday that the Scottish mortgage (LSE:SMT) share price is up a magnificent 105% in a year. However, that was in 2020. The pandemic caused trillions of dollars to disappear from stock markets around the world. However, Baillie Gifford's flagship fund managed to buck the trend.
However, the journey since then has been less glamorous. Confidence fell sharply towards the end of 2022 as inflation took its toll. It provided a glimmer of hope last year, with an increase of almost 10%. However, it is still far from its all-time high of over £15.
So will 2024 be the year it returns to its former glory?
a rocky road
Honestly, I'm not really sure that's the case. This is largely due to its heavy weighting in growth stocks. These types of investments tend to be volatile. And with high interest rates, these types of companies tend to lose popularity. This is due to the fact that these companies tend to be leveraged with high levels of debt. With higher rates, this debt becomes more difficult to pay off. As a result, investors tend to stay away and opt for safer alternatives.
The UK base rate currently stands at 5.25%. It is expected to drop this year, but only to around 4%-4.25%. With this, investors can continue to be cautious when investing in Scottish Mortgage.
Value that can be had
But that doesn't mean I'm rejecting Scottish Mortgage. In fact, I'm quite tempted to buy some stocks while they're still cheap.
As I write, the trust is trading at a 12.8% discount to its net asset value. What this implies is that I can buy the companies you own at a price lower than their market value. This means that every 87.2p I invest is worth £1. I love bargains, so this is an offer I like.
Additionally, investing in Scottish Mortgage gives me exposure to 99 companies in one investment. What's more, I get access to unlisted stocks that I couldn't access as a retail investor. The most interesting of them is Elon Musk's SpaceX.
There are a few other reasons I like the look of stocks. One is the approach that is taken. Manager Tom Slater and deputy Lawrence Burns invest for the long term, with the aim of finding “The world's most exceptional growth companies.”and preserve them for years to come. This is easier said than done. But with confidence increasing tesla For just $6 over a decade ago, it has proven itself capable.
It also has a big focus on China. While this may cause problems in the future, I am confident that it will prove to be a smart decision in the long run.
A revival?
So in 2024 will Scottish mortgages get closer to their 2021 levels?
I'm not sure. I think we could see a slow recovery in its share price. However, I don't see it reaching the £15 mark next year.
However, that doesn't stop me from buying stocks. It's the opposite. If I had extra money, I would look to add the trust to my portfolio.
