So it is standard procedure for investors to only talk about their good investments. I have already posted my results with Trimble. This stock started horribly but ended up being a good investment in the past year or so. Today, I’ll share one of my extreme failures – Microsoft. The chart is shown below. As you can see, the S&P500 has outperformed my shares of Microsoft and I am sitting on a 30% loss currently.
In April of 2000, I started to look at Microsoft as an investment based again on a qualitative analysis. I felt that the company had a huge monopoly on the PC operating system, legal or otherwise. To me this seemed like a huge advantage – they had a great means to limit competition. And as people have used their software for years, it becomes difficult to switch to other forms of software, whether that be operating systems (Windows vs Linux) or word processors (Word vs Open Office). This still seems valid although it seems that things are moving towards “Web2.0” where applications are now hosted on a internet server rather than a personal computer. If this is the case, it seems that Microsoft would lose its competitive edge to companies like Yahoo and Google.
As you can see again (and I am ashamed of this fact), that the purchase of this stock was based on a qualititative analysis. You think someone with my background would be inclined to perform a comprehensive quantitative analysis. This time the qualititative analysis didn’t work. It’s a gamble – sometimes you win, sometimes you lose. I need to reanalyze Microsoft. I am not sure what the conclusion may be: I could buy more shares, keep the current shares, or sell shares. (Just in case the SEC reads my website… I am a complete idiot and I am just trying to make sense of the crazy stock market. Please don’t use my thoughts or opinions as a recommendation or advice unless you a determined to be a loser.)