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Technology Stocks : How high will Microsoft fly? -- Ignore unavailable to you. Want to Upgrade?

To: Quonnie who wrote (18742)	3/24/1999 5:26:00 PM
From: Sir Francis Drake	Respond to of 74651

Well, Quonnie - you kind of answered your own question. Jumping in at this level or not - that depends entirely on your time horizon. You claim to be a Buy and Hold, long-term investor. Well in that case... Take a look at MSFT's graph from as far back as you care. Here's a thought - it was impossible to buy so high that just by holding you couldn't make money. And in not too long a time frame. Sure, if you buy at the very top - PERHAPS you will wait a few months before you make back your money and then some. Look at last year. It headed down over the summer and slummed for awhile - yet, in the face of incredible panic worldwide (anyone remember the hedge fund fiasco?), in the face of the DOJ, in the face of increased competition - MSFT did not decline so badly from it's absolute high. And then... in just a few months - it ROCKETED up, and led the tech sector UP, UP, UP. Look over the history of MSFT and see how long it took - ever - between a peak, and surpassing that peak. Do you think this will all be different now? I believe MSFT will continue to grow. Everytime you think they are down for the count - they bounce back with a new initiative, and every time there is a challenge - they come back stronger than ever (so often they come out with - let's admit - a crappy product, worse than competition - BUT, they keep improving it until it's better than the competition). MSFT has fantastic profit margin, a great cash position, great management and great prospects for growth. Some will say - it sits at about $400 billion - there are mathematical reasons why they can't possibly grow at a rate that would soon put in a position of being worth more than all other stocks combined (it's easy to reach that absurd level from a mathematical projection). My answer is twofold: first, I believe the market for MSFT products is still expanding - look at the agreement with Argentina (looking to dominate Latin America); and if you think Dell has a huge untapped market in China... which operating system will be in most of those computers? And at a fatter profit margin than any box maker can manage. And the competition? I'd much rather be in the competitive position of MSFT than DELL. Does Linux threaten MSFT more than any number of boxmakers threaten DELL? Hmmm.... Second - you can grow the valuation through increased p/e. Sure, that may seem outrageous ("overvalued"). However, I'll point out one thing - there are a few - very few - companies which trade on other principles than strict business valuation. You pay extra for security, monopoly, and "status". It's kind of like a brand name. You pay for more than there's "actually there". And to a certain degree, you have to allow for that. Finally, there are technical reasons why I believe MSFT will continue to be outperform the market for several more years (money flow, mutual funds investment policies etc.). So, if you are truly a long term Buy and Hold - don't ask questions that should only interest a trader (WHEN to buy - or timing the market), but rather questions an investor might ask (IF you should buy). To you, fundamental analysis should be important - not technical analysis. Once you decide the stock is good, the prospects are good, you simply buy. As a trader, I'm less concerned with the long term - I could buy a really crappy stock, because it'll have a one day pop - and get out. So, if you believe MSFT is a good stock, and you are willing to wait for the long term... isn't the answer to the question of WHEN to jump in obvious? When you got the money!<G> This is my opinion only. Do your own DD. I do not recommend you buy or sell any stock. Good luck.