For months I have been mourning the loss of englishforum.ch only to stumble into the reddit and the link there leading here. The joy of finding @Fatmanfilms@Phil_MCR and the rest of the gang is hard to describe! I am a total stranger and yet have received some of the most valuable, proven over the years, sound and sage advice. To all of you, a heartfelt THANK YOU for existing and sharing your experience here.
I am still recovering from the watching-paint-dry performance of SSON (Smithson Investment Trust), and hope to exit it in the coming months. The rest of my portfolio is equal parts Fundsmith and QQQ (Nasdaq100), so 1/3 Fundsmith + 1/3 QQQ + 1/3 SSON.
Moving to today:
I just received a sizeable payout from a contract and find myself sitting on cash I will not be needing anytime soon (read 5+ years). My eyes are drawn to semiconductor ETFs and I need the hive mind to chime in with ideas and opinions: once I exit SSON, I will be down to 2 positions (Fundsmith and QQQ). If I buy a big semiconductor ETF as my third position - would that be a good growth mix of 3, or should I consider a second property mortgage instead to start a revenue stream (renting it from day 1)?
Funnily enough, I donât own SSON, but was looking at UK funds and stocks including SSON as they seem relatively beaten down (and maybe have some takeover optionality).
Semiconductors were my biggest holdings in recent years, but I sold down nearly everything. Still holding only much reduced positions in AMD, MXL. I even still have a short position on INTC (much of it already closed at recent lows).
Since the start of this year, Iâve taken a much more defensive outlook. Iâve been investing in gold and gold miners (which I have never done before) and also into uranium and uranium miners (viewing uranium as a commodity which hopefully not just holds its value over the next few years but increases). However, this is all based on a somewhat pessimistic view of the economy that I have.
So right now, Iâm very defensive in mainly, REITs, utilities, tobacco, healthcare, etc.
How come? The Fed is cutting its rate, and it doesnât look like a recession to me.
(Germany and therefore the EU might be a different story due to the ailing car industry)
I have a sizeable position in Smithson which I have increased, I think itâs going to be an excellent performer over the mid to long term. Berkshire Hathaway was looking poor around 4-5 years ago as it had underperformed over 1/3/5/10 years IRRC. Today it looks very different & would have been one of the best places to invest back then. In 2021 the âcleverâ people were investing in Scottish Mortgage Trust & ARKK. Technology stocks always carry much high risk than something like Fundsmith, The Nasdaq was above 3700 on 1 October 1999 & still had not recovered to that level 15 years later on 1 October 2014.
Itâs true that with such large amounts of fiscal spending and now with the Fed cutting on top of that, it is hard to see why we should have anything other than a massive booming ecomony.
So I guess it is somewhat irrational, but I donât like it and so my risk tolerance is adjusted. Iâm still 70% invested in stocks, so it is still high risk, but i want to reduce the risk by reducing stock exposure and the make-up of the stock component.
I find property to be too much hassle, but for those who are good at it, I guess it can be an option if you find the right property at the right price.
The man is here, for real, OMFG - real fanboy moment here @Fatmanfilms
Two things to clarify: As I am -13% on my SSON, I was thinking of exiting it. Are you suggesting good times may be ahead for it and letting go may be premature?
Secondly, you mention Berkshire - is that a good place to pitch tent for 5+ years?
When you bought SSON you paid 2% over NAV today itâs at a discount of 12% even though Smithson have bought back 20% of the outstanding shares, currently buying over 500,000 shares a week. The NAV has performed well v the sector, which is currently out of favour. Eventually the discount will reduce & the stocks will return to favour.
Nvida the current darling of the Stockmarket has fallen 80% on 2 occasions, tech is volatile in both directions.
Many years ago on EF, which I am sure can be found here with a search I wrote, I would be happy to have 100% of my net worth in Fundsmith, S&P 500 or Berkshire Hathaway, my view is unchanged. Over a 15-20 year period all will do extremely well. My investment horizon remains at 30 years & always will be.
panicking because your stock values are temporarily down and/or
buying high and selling low
When you invest in stocks, you have to be prepared for the valuation to be volatile over time. This means stocks may not be for you if:
you need the money by a certain date; or
you donât have the risk tolerance for the volatility.
Not wanting the risk is a personal thing and something to be honest about. I see some people who see it as a macho thing and go in thinking Iâm going to go 100% stocks. But in reality, few people can watch their wealth fall by 50% or so without tapping out and selling at the worst possible time.
So it is important to pick investments that have a risk profile you can stick with (and have only as much exposure as you can stomach), and buy investments that you have conviction on so that you can hold over time instead of second-guessing yourself when they inevitably fall in value due.
All fair comments and remarks; I am more comfortable with volatility than most of my peers, and my default investment behaviour is buy-and-hold. I had to sell some investments only once in the past 20 years (paying off a mortgage), and continue to invest money I do not foreseeably need in the coming 3 years.
I hear you on the Nvidia honeymoon moments, and we will probably see another dip soon (more edge compute vs the nvidia-all-is-cloud).
Note to self, go grab some BRK-B and mirror FMFâs advice.
P.S. I just googled what âcristallise your lossesâ means and boy is that important to know. Currently on-paper, will not fall in the trap of crystalising them, na-ah. Will keep it and see if small-mid caps get a fair chance. Good point, thank you @Phil_MCR
So NAV of Smithson is level or slightly higher than when you bought,
Investment trust structures are used to hold illiquid assets, so nothing needs to be sold when investors panic, however the are priced by supply & demand not NAV. Discounts are historically wide at the moment, I picked up some PRSR at a 40% discount a few months ago, the discount has since narrowed to 12%. I donât normally like residential property, however yielding over 5% & a huge discount to NAV it was an obvious value play I could not ignore, I got greedy & put in a limit order 1% below market that never executed as it shot up a few days later after months of being out of favour.
Had Smithson started 5 years before it did the price would be around ÂŁ70 todayâŠ
Opening with the mandatory disclaimer, this is not investment advice, nobody should bet money they are not comfy to lose, yada, yada, yadaâŠ
I am looking at entering SMH and BRK.B. My research and reading to date lead me to believe the following:
SMH is overvalued, with some suggesting it might correct all the way to Novâ23 levels (160-ish vs current 240, which is a steep downhill).
BRK.B is standing by for Nov earning call and is expected to âprobablyâ decline by 1.75%ish or so.
The question to the hive mind is completely covered by the disclaimer above, and is the following:
Is now a good time to enter both positions, and should this be done in one go or in 3 chunks before year end?
Nobody knows the future, so it is really down to your temperament and risk appetite. Just avoid investing more than you can handle which would cause you to panic sell when the markets go down.
Will keep it and see if small-mid caps get a fair chance. Good point, thank you