Cricket, re: margin & MSFT timing
There are several aspects to your questions which bear on an answer.
Firstly, are you just looking for a good entry point to MSFT, as a long-term investment? Or rather, are you looking for trading opportunities?
If it is the former (i.e., entry point for the long-term), you may lose more by waiting for a MSFT split (and trying to make up for that by going on margin) than by simply averaging in at current prices, being prepared to invest more heavily during a general market correction (such as the present one). MSFT has done very well following market corrections in the past, and I see no reason for this pattern to change.
If it is the latter (i.e., trading), I don't know what to recommend to you, as I am not a trader (although I do buy MSFT on dips or market corrections when I consider it fairly valued or undervalued, but for a long-term hold).
Another matter is whether MSFT would be your only holding. Although MSFT is a solid stock, it can and does have substantial swings which are sometimes divorced from the overall market. For example, in 1995, as a prelude to the Windows/95 rollout, there was a MSFT buying panic, which drove the price briefly to about 109 (stated in pre-split terms). At that point, the CFO stepped in and said that he didn't understand why the price was so high, which drove the price back down to the low 90s within a few days. [If this sounds reminiscent of what happened recently, if not regularly, that's because it is.] Anyway, the stock went as low as about 80, as a result first of Windows/95 shipment projection reductions (back to reality) and then Internet/Navigator/Java angst.
So you see, a perfect entry point is very difficult to predict for trading purposes, especially if you are worried about a margin call. Averaging in (and buying more on dips and/or other selloffs, should they present themselves), and avoiding margin while doing so, all with a long-term hold in mind, is one way to avoid these problems.
Stay primarily long-term, be prudently diversified, and use margin sparingly if at all, and you will probably do better over the long term than those who try to "make a killing" over the short term (and sometimes kill themselves in the process).
[My lecture for the day. < g > ]
Best regards,
Arno |
