> Over the past five years, their stock is up over $5/share or around 21%.
How much as the economy grown in the last year, or how much has the dollar inflated in the last 5 years. I'm sure there is some stock growth there, and it definitely isn't tanking. But for someone who bought 5 years ago, was it a good investment with respect to the market average for this sector?
MS tends to be in the sweet spot for investors. It's not grossly over priced, they hit their numbers on a regular basis, and no expects them to be successful. Therefore, if one of their products hits big, investors are happy, if they have a flop, no biggie, the shares are only $23.
Compare that to Apple. Their shares are in the $500 range and they are the homecoming queen in the tech sector. If they have a flop, and you have a sizable investment, you're hosed. If they hit their numbers, your large investment stays put. It's a lot more riskier.
Actually I have to agree with this. I own a number of tech stocks and MSFT has a pretty stable price, but pays good dividends. Google and Apple on the other hand yo-yo like crazy on the stock price. If you are interested in short term bets on stock prices then GOOG and APPL are of course more interesting, but I'm currently happy to see the dividends rolling in from MSFT.
What you're talking is yield and volatility. When you're running a fund, you need to manage to benchmarks, and MSFT is a great position for exposure. IV is on the low end, there is plenty of liquidity should you need to raise cash, and with a dividend of right around 3% you have a nice predictable return, which is a big deal with institutional investing.
Additionally securities like MSFT, you can comfortably get 'aggressive' through call writing, and juice returns a little more without your risk metrics being outside your targets.
The price of a single share is utterly irrelevant to the risk of an investment. Whether you own 200 shares @ $25 or 10 shares @ $500, a 10% drop in the stock price is a 10% in the stock price.
Microsoft stock is up 25% over the last 5 years. The NASDAQ is up 56%. Apple is up 160%, even after the large drop over the past year.
Microsoft currently has a P/E of 16, Apple has a P/E of 10.
How much as the economy grown in the last year, or how much has the dollar inflated in the last 5 years. I'm sure there is some stock growth there, and it definitely isn't tanking. But for someone who bought 5 years ago, was it a good investment with respect to the market average for this sector?