Subject: Re: o/t msft from Barrons,
My son mentioned to me that he likes buying Microsoft stock because he thinks he “kind of sort of” knows what’s going on with the company. But then he immediately followed that up with how he really has no idea, so at least he’s not too overconfident.

As it happens, Microsoft is a good company to look at to remind one of the difference between price and value.

People paid insane amounts for Microsoft shares in the tech bubble, expecting that the business would continue to do extremely well in the next 10+ years.

What happened?
The business did extremely well in the next 10+ years, exactly as expected. But the stock market returns were zip for AGES, as the overvaluation wore off. The consensus was that it was a trend-bound trading stock, as the price was in a narrow range for over a decade. But the first few years that range was overvaluation, then the same range represented fair value, then that same range represented cheapness.

I'm not sure if this link will work, but give it a try.
https://bigcharts.marketwatch....

With a couple of blip write-offs, the earnings per share rose steadily for 20 years. (then accelerated)
But the P/E fell from the 60-70 range at the start of the century to under 10 by 2011, so the stock price did nothing good for shareholders.

I bought a whole lot of Microsoft in 2012. Hundreds of long-dated $25 call options bought for $5.31 each. Ahh, good times.

So, possible moral of the story: know the company, sure, but price does matter at some point.

Jim