Hacker News Reader

Comment by at-fates-hands | Hacker News Reader

Over the past five years, their stock is up over $5/share or around 21%. Not bad for a company people keep expecting to fail.

Full disclosure: I always take the long view with tech companies, especially the big ones. Start ups can have the wheels fall off over a 10% drop. Big companies like MS, this is virtually nothing. I mean, look at Best Buy. Their profits were down over 80% last year and they're still out there hammering away.

Here's that BBY article I was alluding to: http://www.webpronews.com/best-buy-earnings-net-income-down-...

"Hubert Joly is the CEO now, coming in as the company reports a 90% profit drop thanks to less-than-stellar sales, and restructuring expenses."

View on HN

> Over the past five years, their stock is up over $5/share or around 21%.

How much as the economy grown in the last year, or how much has the dollar inflated in the last 5 years. I'm sure there is some stock growth there, and it definitely isn't tanking. But for someone who bought 5 years ago, was it a good investment with respect to the market average for this sector?

>>> But for someone who bought 5 years ago, was it a good investment with respect to the market average for this sector?

Yes, and here's why. . .

http://www.kiplinger.com/article/investing/T052-C017-S001-wh...

MS tends to be in the sweet spot for investors. It's not grossly over priced, they hit their numbers on a regular basis, and no expects them to be successful. Therefore, if one of their products hits big, investors are happy, if they have a flop, no biggie, the shares are only $23.

Compare that to Apple. Their shares are in the $500 range and they are the homecoming queen in the tech sector. If they have a flop, and you have a sizable investment, you're hosed. If they hit their numbers, your large investment stays put. It's a lot more riskier.

Actually I have to agree with this. I own a number of tech stocks and MSFT has a pretty stable price, but pays good dividends. Google and Apple on the other hand yo-yo like crazy on the stock price. If you are interested in short term bets on stock prices then GOOG and APPL are of course more interesting, but I'm currently happy to see the dividends rolling in from MSFT.

That strikes me as a really bizarre argument.

The price of a single share is utterly irrelevant to the risk of an investment. Whether you own 200 shares @ $25 or 10 shares @ $500, a 10% drop in the stock price is a 10% in the stock price.

Microsoft stock is up 25% over the last 5 years. The NASDAQ is up 56%. Apple is up 160%, even after the large drop over the past year.

Microsoft currently has a P/E of 16, Apple has a P/E of 10.

What you're talking is yield and volatility. When you're running a fund, you need to manage to benchmarks, and MSFT is a great position for exposure. IV is on the low end, there is plenty of liquidity should you need to raise cash, and with a dividend of right around 3% you have a nice predictable return, which is a big deal with institutional investing.

Additionally securities like MSFT, you can comfortably get 'aggressive' through call writing, and juice returns a little more without your risk metrics being outside your targets.

MSFT is keeping up with the S&P 500, but it's still doing pretty poorly compared to its biggest competitors (GOOG, AAPL, ORCL).

I don't understand. It's stock performance has been as good or better than those competitors in the very short term.

Are you talking all-time? Microsoft crushes those companies. And IBM crushes it.

My point is, to say that Microsoft is doing poorer than those competitors, you have to pick a very specific time period. Over the long-run, right up until today, Microsoft has been and will continue to be a wealth generating machine, albeit in a competitive market.

Reply on news.ycombinator.com