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

To: Bill Fischofer who wrote (21523)	4/24/1999 6:51:00 PM
From: Sir Francis Drake	Read Replies (2) \| Respond to of 74651

Bill Fischofer - interesting discussion. <<There is simply no way for a ham-fisted ISP to shackle its subscribers to a particular set of "approved" sites any more than a dealer can control where you choose to drive your car once you leave the lot.>> You are right... DOWN THE ROAD. I noticed from your profile that you like to spot long term secular trends. That is a great investing style - as long as you are right in picking who the winner is going to be, and what the trend will be. More often than not, I find it's not so simple - MSFT is a great example. Apple seemed once upon a time the best bet: better, more user-friendly O/S, control of hardware/software platform, momentum in the market place, early customer loyalty (dominated universities) etc., etc, etc. Even IF, and that is a big IF, you spot the "great secular trend" correctly (anyone can name any number of "obvious" trends that are only vague memories today), picking which company will dominate is very hard (even having the "right" tech is not a guarantee of success, as management execution and matters of pure chance which are impossible to predict are the most important variable in the equation). I prefer to go for companies that work NOW, and whose stock is ALREADY proven (like the benighted AOL). Actually, I find that the more technologically sophisticated investors (engineers, cutting edge scientists) often tend to make very poor choices when it comes to picking tech stocks that will outperform in the long run. Since they are so comfortable around technology, they cannot identify with the broad market of unsophisticated users - and they miss what is important in driving popularity of any given technology. When you say that the ISPs "cannot shackle" users to sites - maybe, maybe you are right longer term. But remember, however pedestrian and ordinary navigating the web may be to you or me, internet usage is STILL in its infancy - particularily outside of the US. The biggest growth is still ahead of us, and the biggest growth will occur outside of the US. What does that mean? It means that there are countless users out there, who are novice users. These people have tremendous inertia when it comes to "exploring" in the same free-wheeling way as a sophisticated user does. They tend to stick to what AOL serves them up. I turned my parents on to the net. My Dad is nearing retirement, and not techphobic, but I noticed that he feels comfortable with AOL, and to the degree that he surfes, the AOL homepage is sufficient for his purposes. The same with my grandparents. Now, before you denounce them as not representative, or mere old fogies - let me assure you that, from casual observation, I see this across all age-groups. People are creatures of habit. If you give them a homepage that satisfies their basic needs - and this is important, it has to have good functionality - then why shouldn't they stick with it? Just because one day you may wish to find out what the feeding habits of the African ocelot are, does not mean you have to abandon your starting point forever. My analogy is as follows: the starting point is like a garage. You may take your car to any destination you wish - but you start and end up in your "familiar" garage. As long as it has all the necessary amenities, why ever would you abandon your "garage"? Besides, don't underestimate the power of "familiarity" - many (most?) people actually prefer to have something familiar as a starting point, and something they return to - home base. Frankly, I don't find it interesting to try to figure out where this will all end up 5 years from now. For NOW, the model is what it is. I'd rather keep my AOL for as long as it climbs. If one day, the "trend" changes and AOL is outdated, I dump it and jump on the new stock. But trying to be an early explorer? No thanks. The risk/reward ratio is not worth it. At best, I'd have gotten into a winner at a say, 20% discount - but the risk I'm taking of being wrong is huge, and the risk of bailing on a stock that at present works (outmoded AOL) is the risk of missing all the upside. Not worth it. I will always have time to hop on the next winner. I give up the first 20%, but I'm still on for the next 1600%. That's the kind of math that makes sense to me.