Today is a day that may not live in infamy, but will surely stick out in the minds of business computer users and investors the world over. Microsoft is releasing Windows 7, the long awaited follow up to Vista and the highly anticipated, easier to use software stands to make the stock price soar. Microsoft software rests on the desktops of millions of computers in businesses across the globe, and the vast majority of those business entities are still using Windows XP. Migrating over to the new Windows 7 IF the system proves to be as good as early reports indicate, will prove a boon to Microsoft stock prices.
Recall two weeks ago or so, I posted about buying MSFT any time it trades around $25. Had you added MSFT to your portfolio, you would have watched the stock gain over $1 per share in the last 7 days. The stock retreated a little in opening trades on Thursday, but that’s mostly because anti-Microsoft analysts are working hard on the blogs, reports and talking head channels to short the stock and walk away with gains. Or article writers are working overtime to be controversial and predicting that 7 will be no better than Vista, usually typing away on a Mac. Or maybe it’s the bleak economic news that seems to be holding the market back from topping 10,000. Whatever the case may be, my personal hope is that Microsoft drops back around 25 per share, so I can add more to my portfolio. Why?
As the economy staggers through a recovery period, businesses will begin to upgrade their software and the majority of them will switch to Windows 7, IF it turns out to be as good as we hope. Since millions of computer desktops will switch over to the software in 2Q and 3Q 2010, taking a long term swing position with MSFT seems like a safe bet at the moment. But what if there is a backlash against the company because 7 turns out to be as bad as Vista. Okay, bad may be too strong of a term, Vista is unwieldy and often annoying, but it’s still the basic business tool with bells and whistles ninety percent of all users will never need. If that’s the case, 7 is no good, then a long position on MSFT may be a bad idea. Unless you have your protection in place and an exit strategy. If you notice that MSFT starts to drop below $25 and is heading for the $19-$20 realm, short the stock. (If you’re me, and MSFT drops to $20 you’d be adding it to your long term investment strategy at an even faster rate. As much as the Mac enthusiasts and opensource evangelists may wish it otherwise, MSFT isn’t going anywhere soon. It is the de facto king of business software, and as recycled laptops and desktops filter through the global marketplace MSFT will continue to expand their global presence. MSFT can be a cornerstone of any investing strategy.
I say this still even as I rode Microsoft up through the last tech bubble so many years ago, and lost a fortune when that bubble popped. I think MSFT is a solid company that will be around for the next ten years, and respect the stock enough to put it in my children’s individual portfolios. That said, I don’t think anyone should fall in love with any stock, unless you use the product everyday (that’s why Pepsi’s in my portfolio) and you know the company. Stock trading should be an exercise in advancement, and as an investor you should arm yourself daily with tips and news that you can use to make your portfolio grow. MSFT can make your portfolio grow over the next 3Q’s but keep your eyes on economic indicators that may make your playbook change.
