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I am a Moscow-based bi-lingual blogger and investor. Started as a Russian mutual fund investor in 1999, I went for an ETF portfolio late in 2007. Survived the 2008/9 meltdown and love sharing the way I invest. Publisher of the Marathon Investor newsletter, a virtual primer of a balanced... More
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  • MSFT, Mr. Market And Barry Ritholtz 2 comments
    Nov 10, 2013 12:22 PM | about stocks: MSFT

    The meme of the demise of PCs and MSFT has been all over the news for years now.

    I have put together relative performance charts (stock market represented by VTI ETF compared to MSFT) and a few quotes from Barry Ritholtz on Microsoft.

    Why?

    Barry has got 137k+ subscribers and he has a strong (bearish) opinion on Microsoft. Can he influence the sentiment? Apple, Nokia, Blackberry tablets… and the digital revolution in general attract so much of attention these days and I thought why not explore how opinion makers influence the market. This is not an attempt to pick on Mr. Ritholtz whom I deeply respect for his articles on investment strategy and thought process. Believe his intentions are good. On the contrary, I think my exercise illustrates his points (to the extent that my attempt is rigorous, which of course it is not):

    Hope I have not 'cherry picked' the tweets and charts below (of course the pitfalls such as above are very relevant to me. Especially for the facts of 1) me being long MSFT and 2) the recent surge of its price!). I tried and chose the tweets with strong negative connotation ("Microsoft has failed" or written in capitalized letters) and measured performance for fixed periods of time after the tweets (30-40 days). Sure enough this is not a study of causation between the tweets of Mr. Ritholtz and MSFT stock performance. However I am curious to see what others think and how this method might be improved.

    Enough with the context. First let's listen to what Mr. Market has been telling us since October 2007 market peak. And this clearly is not a story of any demise.

    (click to enlarge)

    MSFT,VTI: PerfChart - StockCharts.com - Free Charts

    http://stockcharts.com/freecharts/perf.php?MSFT,VTI

    Here are some tweets and charts capturing performance of the MSFT stock shortly thereafter.

    Barry has got 137k+ subscribers and he has a strong (bearish) opinion on Microsoft. Can he influence the sentiment?

    (click to enlarge)

    (click to enlarge)

    (click to enlarge)(click to enlarge)

    (click to enlarge)(click to enlarge)

    (click to enlarge)30Sep

    (click to enlarge)

    (click to enlarge)

    Disclosure: I am long MSFT.

    Stocks: MSFT
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  • stocknrock
    , contributor
    Comments (20) | Send Message
     
    Nice piece. Agree there's certainly plenty of bearish sentiment on Microsoft. Yet Microsoft's profit margin is 30% higher than Google's.

     

    Microsoft's sales this quarter were over 40% higher than Google's.

     

    Yet Google's market cap is 7% higher than Microsoft's?

     

    Google's forward pe is also 50% higher than Microsoft's.

     

    Microsoft is a larger company, with more cash, greater profits, and greater profitability compared to Google... Microsoft should have a higher market cap. I see a lot of value in Microsoft stock. It's on the verge of breaking out and rectifying the inequality between its share price and Google's.

     

    Don't even get me going on how Bing is actually gaining traction, Window's phone gaining traction, and new Surface models are vastly improved and seem to be selling better. Can we talk about Microsoft's momentum in the cloud?
    11 Nov 2013, 12:19 AM Reply Like
  • finsovet
    , contributor
    Comments (86) | Send Message
     
    Author’s reply » Thanks for the comment. Agree.
    I don't tend to go into much detail of researching a stock from industry trends perspective.. I bought it on improving price action and still negative sentiment. Also noticed some prominent value investors having large positions in it. I am not disappointed so far! :)
    30 Nov 2013, 09:59 AM Reply Like
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