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Why has MSFT price not gone up much in last 10 years?
- Thread starter TheFinn
- Start date
Law of large numbers -
What drives a stock like Microsoft ? mutual fund & other big money fund managers. A committee sits around a table talking about how much MSFT they should own...
Once all those mutual fund & other big money managers have bought MSFT then who else is left to buy MSFT and drive up the price ?
All the mega-cap stocks have the same problem even AAPL ... which is why even though AAPL looks "cheap" on valuations you can't expect every money manager to drop 20% of their funds money into AAPL like you see in the QQQ which is ~20% AAPL.
What drives a stock like Microsoft ? mutual fund & other big money fund managers. A committee sits around a table talking about how much MSFT they should own...
Once all those mutual fund & other big money managers have bought MSFT then who else is left to buy MSFT and drive up the price ?
All the mega-cap stocks have the same problem even AAPL ... which is why even though AAPL looks "cheap" on valuations you can't expect every money manager to drop 20% of their funds money into AAPL like you see in the QQQ which is ~20% AAPL.
hahaha what a crazy man.. however he seems to love the company, maybe its time for investors to see a change, he is since 2008..
Quote from shopster:
as long as this clown is at the controls, the stock is DOA.
s
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Quote from Whistlingleaf:
Law of large numbers -
What drives a stock like Microsoft ? mutual fund & other big money fund managers. A committee sits around a table talking about how much MSFT they should own...
Once all those mutual fund & other big money managers have bought MSFT then who else is left to buy MSFT and drive up the price ?
All the mega-cap stocks have the same problem even AAPL ... which is why even though AAPL looks "cheap" on valuations you can't expect every money manager to drop 20% of their funds money into AAPL like you see in the QQQ which is ~20% AAPL.
The 10-year AAPL charts looks the opposite of MSFT/WalMart. It's is pure growth. Obviously, they had a bunch of new products and a ton of hype, being Apple and all.
Quote from TheFinn:
I'm looking at the price of MSFT for the last 1o years, it has moved up and now over that period, but it was around 26 10 years ago and now is at 30.82. I looked at their profit on wolfram alpha
http://www.wolframalpha.com/input/?i=microsoft+quarterly+profit
see chart at bottom
Their profit has gone from 8bn a year to 23bn a year during that time on a pretty consistent basis. So why has the price not gone up consistently? Do people not look at it as a growing company even though their profits are growing? Maybe there is something I am missing.
Because they print shares that are handed to insiders who then exercise and dump on the market.
Microsoft prints shares like the FED prints dollars. so common shareholders lose. Also microsoft likes to blow billions on acquisitions that have to be expensed away. i.e.: Danger acquisition, aquantative etc..
Quote from TheFinn:
What purpose do the expectation-setters serve?
If they do their job properly, then they ensure the prices of all assets are broadly in line with the most accurate information and forecasts available. This means that people who use price signals (i.e. everyone who doesn't live in a cave) make better economic decisions - they scale back on things that are expensive and utilise things that are plentiful which can achieve similar ends. Thus, worldwide human productivity is significantly higher than it would be otherwise, due to this more efficient utilisation of scarce resources. Higher productivity = achieving the same output for less inputs, or getting higher output for the same input. So, given the total available input of global human capital, accurate and skilled expectations-setters help to maximise human output. This leads to beneficial outcomes such as lower mortality rates, better education, superior artistic output, greater availability and lower costs of goods, services, healthcare, leisure, relationships etc.
A good example of the opposite is the housing bust. If more people had the first clue about asset price bubbles, and the balls to act on their conviction, it would never have happened and we wouldn't be in the pickle we are in now. The housing bust and current debt crises, government cutbacks, rising taxes and high unemployment are all caused SOLELY by people being incredibly bad speculators, and not giving their capital to be managed by the few people who can speculate well. I.e. there were not enough good traders relative to the atrocious market participants and retail investors who fucked up in epic fashion. The natural response should be to do everything possible to encourage improved trading skill and understanding of markets & risks, not the opposite (which has generally been the policy response).
If you look at countries with highly developed capital markets and less restriction on trade, they tend to have far more of the benefits I mentioned than those countries with undeveloped markets and heavy restrictions on trade, investment, and so on. This is why skilful trading and investing is in most cases one of the most important, profitable, and altruistic activities on the planet.
MSFT transitioned from a fast grower to a cash cow.
During this transition the stock is in no man's land,
growing too slow for a growth manager and being too
expensive for a value manager.
During this transition the stock is in no man's land,
growing too slow for a growth manager and being too
expensive for a value manager.
Quote from Whistlingleaf:
Law of large numbers -
What drives a stock like Microsoft ? mutual fund & other big money fund managers. A committee sits around a table talking about how much MSFT they should own...
Once all those mutual fund & other big money managers have bought MSFT then who else is left to buy MSFT and drive up the price ?
All the mega-cap stocks have the same problem even AAPL ... which is why even though AAPL looks "cheap" on valuations you can't expect every money manager to drop 20% of their funds money into AAPL like you see in the QQQ which is ~20% AAPL.
Quote from TheFinn:
The 10-year AAPL charts looks the opposite of MSFT/WalMart. It's is pure growth. Obviously, they had a bunch of new products and a ton of hype, being Apple and all.
Who is left to buy AAPL now ? Do stocks go up when there are no new buyers ?
At a certain point there are no more buyers when that happens a stock can range trades for 10 years despite putting up good numbers.
What happens if/when TZ/T decide to cut phone subsidies in half and force the consumer to pay double for an iPhone and that consumer switches to another OS ?
10 years ago nobody would have said that MSFT would range trade for 10 years - why do you think it's possible that it can't happen to AAPL ?
There are many things that can go wrong for AAPL in the next 10 years ...
http://www.reuters.com/article/2012...feedType=RSS&feedName=financialsSector&rpc=43
"Ralph de la Vega, the head of the AT&T's company's mobile business, also suggested he would push to reduce subsidies for the phones it does sell."
Gee I wonder who he would mean by phones that sell well ?
Don't take my word for I think will happen I'm just some random idiot on the internet ... but when the Division Head of the largest subsidizer of i-Phones comes out and says something ... you should pay attention. And you can be sure if T does it then VZ and S will be right behind ~
Those ridiculous margins AAPL has been enjoying won't last when consumers have to pay up for i-Phones. Are consumers willing to pay 500+ for an iPhone if subsidies get cut in half ?
I also suspect we'll see larger upgrade charges ...
"Ralph de la Vega, the head of the AT&T's company's mobile business, also suggested he would push to reduce subsidies for the phones it does sell."
Gee I wonder who he would mean by phones that sell well ?
Don't take my word for I think will happen I'm just some random idiot on the internet ... but when the Division Head of the largest subsidizer of i-Phones comes out and says something ... you should pay attention. And you can be sure if T does it then VZ and S will be right behind ~
Those ridiculous margins AAPL has been enjoying won't last when consumers have to pay up for i-Phones. Are consumers willing to pay 500+ for an iPhone if subsidies get cut in half ?
I also suspect we'll see larger upgrade charges ...