It’s not a growth stock. There is nothing worth waiting for here. You might as well move on to greener pastures. The organization has lost its relevance in the market place. The days of it showing stellar growth are over. It’s a value stock now. All you can hope for is an increase in dividend and put it into your retirement fund.
Then it happened. The company with $32 billion in cash and $300 billion in market cap came back roaring. With 95% of the market share and a bottom line of $13Billion it was not expected to grow at a whopping 23% no matter what the conditions and yet Microsoft did the unthinkable. It turned around and became a growth stock once again.
It is not even twenty-four hours since they announced the results and there is a parade of analysts upgrading the stock and claiming that the growth days are back and yet nothing has changed in the company itself. It still holds the same PC market share. It still makes a loss in the online business, a wider loss for that matter. It still struggles to make a profit on the gaming business (though the Halo effect did help). And apparently Vista is not all that it is made out to be.
No this is not about weather MSFT has become a better company or not. I think that was recognized a few months back. The volume of the stock being traded over the last few months has been through the roof. The momentum is firmly on the buy side for the better part of the previous quarter. Everything about it was screaming a buy. It was and still is a growth stock. But then the media would have you believe otherwise even though this is the richest and the most dominant company in the world.
The psychology of the market is fantastic. It epitomizes the most fundamental characteristics of our species, GREED and FEAR. This is the place were you get extra points for stepping on people to get ahead. If you think about it, gambling in a casino is better than putting money in the stock market. At least there is nobody actively working to worsen your odds on the slot machine.
But then isn't that what makes the market the best place to invest. Fear and greed are both such overpowering emotions that very few have control over their actions in the midst of its outbreak. So wouldn’t it be the easiest place to make money if you could just get your head in order? And that is a big "IF".
Absolutely! And here’s to you softie.