State of Microsoft
Whenever I have a discussion about stocks with somebody who DOESN’T trade stocks, it is not a matter of if, but when that person brings up Microsoft (MSFT). It seems like all these people think stock trading involves is buying and selling shares of Microsoft.
Well we are not in the 1990’s anymore, and unless you plan to hold the stock for 50 years there is really no point to holding shares of Microsoft. Here is why…
In the 90’s, one of the main reasons for Microsoft’s sharp incline of its stock was bringing personal computers into the American household. Their software was far beyond what any other company could offer, and they became a globalized brand in a sort of non-globalized time, especially when you consider today’s market.
Boring, Old, and Stable... Not Fun
Many arguments against Microsoft would usually rely heavily upon Apple’s recent roar into the market, but, until Apple can work its way into corporate America, the blue chip really has nothing to worry about. That is where the problem lies…
Unlike many things in the market today, I can say with 100% confidence that Microsoft is not going anywhere. It will be here today, tomorrow, and 10 years from now. While it seems like Apple (AAPL) is taking over the world, it actually isn’t. Yes, its high priced gadgets and specs will be consumed on people like myself, but overall Microsoft still controls a huge part of the market share and they probably are not going to lose much of it.
When it comes to technology, most people get scared. Imagine big companies trying to transfer everything to some other platform. You could see why it would not happen anytime soon.
A lack of competition always lead to a lack of innovation. With Microsoft’s huge stranglehold on the competition, there is no need for them to take a huge risk or find great innovations. The consistency of always being there is never fun for a stock trader or the stock.
In the height of boom over the last couple of years, Microsoft topped out at about $36. That was after staying between $25-$30 for nearly 8 years. Obviously just like most companies they came sinking back down to Earth. While there is upside to the stock, how long will it take to see that? Over the last decade Microsoft has gotten the rep for being a slow moving stock. It really won’t go up or down.
A good estimate would see Microsoft average out between $28-$30 when the market regains its upward momentum.
Bringing It All Together
The bottom line is that the luster behind Microsot is no longer there. Sure, there is upside to the stock, but how much. We are in a new time where the old blue chips are no longer blue. Stocks like Cisco (CSCO), IBM (IBM), and General Electric (GE) are no longer fun or smart companies to invest in.
What do you think?
