Scottish Mortgage shares keep diving. Surely it’s time to buy?

Scottish Mortgage Investment Trust Shares (LSE: SMT) have fallen sharply since peaking in November 2021, at the height of the US tech bubble. After plunging over 17 months, is there finally light at the end of the tunnel for shocked shareholders?

A stunning slump

As I write, Scottish Mortgage shares stand at 652.94p, up 1.6% from Wednesday’s close. However, the stock has been a full lemon for ages, as shown in the table below:

During all five periods ranging from five days to one year, this stock has destroyed its value. Even worse, it dropped exactly three times in one year. During that time, the FTSE 100 index up 2% (excluding dividends).

In short, Scottish Mortgage shares have been the dogs in 2022/23. However, it has at least increased by more than half (+51.4%) in the last half decade.

Unfortunately, almost all shareholders who buy into this trust anytime from May 2020 will lose money – at least on paper. Yawis.

I have been a big bear of Scottish Mortgage shares

Since 2020/21, I have been very bearish (negative) on these FTSE 100 stocks. That’s when it was blown into a powerful bubble during the 2020/21 tech boom. When the ‘tech crack’ comes at the end of 2021, this stock will explode.

I am very relieved not to have invested in this £13.4bn trust’s shares until now. But after such a stomach-wrenching fall, I suspect there may be hidden value in this former growth stock.

When reality changes, I change my mind

The above phrase is often associated with the famous English economist John Maynard Keynes (and also Sir Winston Churchill). It reminds us that there is nothing wrong with reversing long-held beliefs when the time is right.

After a rough fall for this popular and widely held stock, I have moved to the bull camp for Scottish Mortgage shares. Not least because the trust’s shares are now trading at a discount of more than a fifth (-21.4%) to their underlying asset value. That’s the equivalent of buying £100 of shares for £78.60.

Also, I think the family portfolio would benefit from higher exposure to global stocks and technology stocks. So why not get this investment on the cheap through the UK’s most popular global technology fund?

From dogs to stars?

If Scottish Mortgage shares continue to fall, it could become a screaming buy at some point. But I’m not skilled, smart, or lucky enough to know when this will happen. Then again, it’s the same for everyone else, right?

In summary, I think the current price level gives me the opportunity to get on the Scottish Mortgage bus at a reasonable price. Therefore, my husband and I are going to buy some of these sinking stocks when we have enough money to spare!