Should I buy Scottish Mortgage shares for 2023 after growth stocks crashed?

Scottish Mortgage Investment Trust Shares (LSE:SMT) are one of the best ways to gain exposure to growth stocks as a UK investor. And let’s face it, the FTSE not exactly filled with exciting growth opportunities.

Publicly traded investment trusts focus heavily on growth and technology stocks, many of which are listed in the US and China.

Growth stocks, in general, are not doing well in 2022. And that is reflected in Scottish Mortgage’s falling share price. The SMT stock price reflects the value of ownership.

The five largest holdings of the trust are Modern, Illumina, ASML holding, Tesla and Free market. Collectively, these stocks represent about a quarter of the portfolio.

Stock growth tank

In general terms, growth stocks started to look expensive in 2021, with multiples more than investors expected. This eventually led to a sell-off, triggered by a rise in US treasury yields.

However, in 2022, global economic conditions are not yet conducive to growth. Interest rates have been raised in response to the inflationary environment, and this is not positive for growth stocks as it increases the cost of borrowing.

Since many stocks do not generate income, their value represents the potential for future earnings. So, they have to borrow to grow. Higher borrowing costs can increase the cost of growth or cause companies to delay new projects.

We are also entering a recessionary environment. Clearly, this is not positive for the majority of stocks.

Will it be better in 2023?

Some factors affecting growth will remain in early 2023. Interest rates will likely decrease in the second half of the year, but the cost of borrowing will remain above the level we have seen over the past decade.

Economic growth is also not expected to pick up in early 2023, especially in many Western countries, as inflation continues to be a drag on economic activity.

However, there are some potential upsides. For one, China is open and leaves zero-Covid. Although, the next few months could be challenging as the virus spreads.

Should I buy Scottish Mortgage shares?

I already have some Scottish Mortgage shares in my pension. However, I have been looking to buy more for my Stocks and Shares ISA.

I am a long-term investor, so these short-term fluctuations will not bother me. But, of course, I’m looking for the best entry point.

The stock has fallen 44% in the past year, and has rarely been lower than it has been in the past three years. So, I think now is a good opportunity to buy this trust.

Although there may be some pain in the next few months, I am confident about the medium term. And after a challenging year for growth stocks, many of the companies in the SMT portfolio are trading at attractive multiples.