Quote from shortlong:
Please explain why it is a good time to buy MSFT now. I really like to learn some secret trading secrets.
Thanks!
I believe MSFT is the perfect profit-generating machine. A government backed monoply, growing EPS year on year, the best margins in the industry, a butt load of cash, continual success in aquisations, global strength, and a very rosy future.
The average P/E for the S&P500 over 50years has been 14.4, more recent decades around 19. MSFT forward P/E is 15 atm. Investing at these multiples in quality stock puts you in at fair value, you will never buy the bottom and sell the exact top, but you will get closer to that than buying when its hot.
Ive attached a 20 year chart of MSFT with the P/E ratio below it. As you can see it has the lowest multiple right now that it has ever had, i realise that multiple can go higher if the profits were to drop, but i don't think they will signicantly drop, but more feel a soft patch, so IMO loading up in the low 20's is a good long term bet.
Technically speaking, go back in history through your charts you will see the best stocks to have held were the one's that did the most volume per day, e.g. GE, XOM, WMT..... the one's with the most interest in them. MSFT is the leader in daily volume in both NYSE/NASDAQ and worldwide. Historically speaking the days where a big stock like MSFT has a big gap down on huge volume are the best prices in the long term to enter at. Just like big pharma has been hammered in recent quarters, it will prove a good time to have entered for smart money, they knock 'em down only to re-load even more. Let me assure you that the 600 million shares traded on friday, they weren't selling the bid down all day, if anyone was watching the tape all day like I did they would have seen the huge size clipping off after a 3/4c downtick, drift down/pop up all day, there was definately accumulation programs turned on and I would say some decent money has positioned themselves.
p.s. P/E isn't the only thing to access value, you have to consider cash-flow, debt(MSFT doesn't owe a penny and has 40billion in cash), market share, management, political strength, brand awareness, and most importantly what wins me over with MSFT the most, is there high barrier to entry from competition, their cash streams are protected.
