As all the long
time readers know, I love Microsoft (MSFT),
not as a short term trade although I do trade it very frequently for quick
money, but more for long term investment and actually very long term, so much
so that I don’t even think I will ever sell it in my life time. For those who
don’t know me well yet, you can read here to find outwhy I’m so much a fun of MSFT as a long term dividend reinvestment
(DRIP) stock that I expect will return me millions of dollars during the late
part of my life without me doing anything else by simply enjoying its dividend
growth and the investment compounding effect. The beauty of this powerful
strategy is that I don’t need to put in a lot of money upfront (although it is
my biggest holding for now). All I need to do it is to buy it (e.g. just
$10,00-50,00) and leave it there and forget about it. I have already forgot it
for about 10 years since I first bought it and it is becoming increasingly
better from its business perspective. Now it has touched its all time high over
$100, a major milestone obviously for it and there is no sign it is slowing
down from here!
As I said, my
fundamental interest in MSFT is for its boring businesses that can generate
tons of cash flow which can fund its fast increasing dividends for years to
come. For this type of long term DRIP investment, I don’t like high growth
stocks that certainly make me feel good for now but in the long run, it will
actually hurt my overall return. I know it’s very hard for people to understand
this although I have explained many times and even via a mathematical
illustration (see here). I saw some very
interesting comments questioning the validity of this strategy in comparing to
the potential gains from chasing high growth stocks. They thought I was simply
interested in getting a few bucks of dividends hoping to get rich from them
while ignoring the high flying stocks via their fast increasing share prices.
What a lack of understanding about the true essence of this powerful strategy!
That’s OK for me as the loss is yours not mine if you simply ignore this low
risk, stress-free wealth building strategy that is so powerful and easy to do
for everyone. “Unfortunately”, MSFT is becoming more and more like a growth
stock now than a boring dead money type of stock better for DRIP. Under the current CEO, Microsoft has really
revived and reinvigorated itself and has become a leading high tech company again in all the
major forefronts of the tech innovations nowadays. The latest smart move for
MSFT is its acquisition of the open source software developer, GitHub. It will
put MSFT in a much stronger position to compete with Amazon in the Cloud
business, one of the hottest tech futures at the moment. I’m not an IT guy and cannot explain the
benefits of this MA better than other experts. But judging by the market
reaction, which is usually negative to the acquirer’s stock, it clearly
suggests the market loves this deal as MSFT was even trading higher following
the announcement, You can read the business case why MSFT should buy GitHub here
but in a nutshell: “So the opportunity for Microsoft is fairly
straightforward. If it can get the Microsoft Azure cloud tightly integrated
with GitHub — basically, give developers an easy way to get a GitHub project up
and running in the cloud — it can kill two birds with one stone. Developers
could love GitHub even more, and it would drive more usage of Microsoft Azure.”
We have already
heard Street analysts talking about the potential forMSFT as the first company to become the Trillion dollar company. I will certainly not be surprised to see this
happen but with a mixed feeling. I’m wishing MSFT will not go highs too fast
although in a vain hope. To compensate for my long term “loss” due to its share
price fast growth, I’m doing a lot of short-term income trading with MSFT. I
have many virtual/digital ATMs that are keeping generating incomes for me. MSFT
is one of the most reliable and profitable ATMs for me for years. I love MSFT
and will continue with my love affair with it!
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