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This argument could have easily been applied to MSFT 10 years ago, yet thanks to solid revenues and profits they have continued to pay a healthy dividend while

This argument could have easily been applied to MSFT 10 years ago, yet thanks to solid revenues and profits they have continued to pay a healthy dividend while maintaining consistent and stable value for investors. This produces a fairly stable and predictable return. Of course you won't see the type of returns APPL stock owners saw in that same period, but you really can't predict that sort of thing without inviting huge risk. Betting on individual companies because you think you know if they are going to win or lose is a solid recipe for failure as an investor.

btilly 14y ago
If you applied that analysis a decade ago, you'd be ignoring all of the barriers to entry in Microsoft's key markets, and its lack of serious competitors in those markets. But would it have been a good investment? According to http://beta.fool.com/stockdissector/2012/10/03/dividends-count/13552/ http://beta.fool.com/stockdissector/2012/10/03/dividends-cou... if over a decade you took everything you got from Microsoft, and reinvested it for maximum returns, your annualized interest rate is 6.35%. That is the most favorable possible view of Microsoft's performance. Let's compare to other big tech companies. I'll ignore dividends for the others because I am lazy and don't need it to make my point. Yahoo! (which is widely regarded as a company that has been doing poorly overall) went from $8.73 to $18.89, which is an annualized return of 7.4%. IBM went from $75.45 to $185.85, which is an annualized return of 9.4%. Oracle went from $10.39 to $29.95, which is an annualized return of 11.2%. SAP went from $18.75 to $71.04, which is an annualized return of 14.2%. Red Hat went from $4.52 to $47.73, which is an annualized return of 26.6%. And for the most extreme example, Apple went from $7.90 to $525.62, which is an annualized return of 52.6%. If you wanted to invest in a major company with a significant software presence a decade ago, it looks like Microsoft was a fairly bad choice. I believe that it will continue to be one over the next decade.

btilly 14y ago

If you applied that analysis a decade ago, you'd be ignoring all of the barriers to entry in Microsoft's key markets, and its lack of serious competitors in those markets. But would it have been a good investment? According to http://beta.fool.com/stockdissector/2012/10/03/dividends-count/13552/ http://beta.fool.com/stockdissector/2012/10/03/dividends-cou... if over a decade you took everything you got from Microsoft, and reinvested it for maximum returns, your annualized interest rate is 6.35%. That is the most favorable possible view of Microsoft's performance. Let's compare to other big tech companies. I'll ignore dividends for the others because I am lazy and don't need it to make my point. Yahoo! (which is widely regarded as a company that has been doing poorly overall) went from $8.73 to $18.89, which is an annualized return of 7.4%. IBM went from $75.45 to $185.85, which is an annualized return of 9.4%. Oracle went from $10.39 to $29.95, which is an annualized return of 11.2%. SAP went from $18.75 to $71.04, which is an annualized return of 14.2%. Red Hat went from $4.52 to $47.73, which is an annualized return of 26.6%. And for the most extreme example, Apple went from $7.90 to $525.62, which is an annualized return of 52.6%. If you wanted to invest in a major company with a significant software presence a decade ago, it looks like Microsoft was a fairly bad choice. I believe that it will continue to be one over the next decade.