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Is It Possible to Reproduce the Microsoft Investment Experience?

The point of profitable investing tips is that they result in investment profits and help you avoid investment losses. One of the ways to make money investing is to study successful investments and investing strategies. And then you try to copy them. One of the all-time greatest investments was buying Microsoft when it went public in 1986. Is it possible to reproduce the Microsoft investment experience? The stock opened at $21 a share and ended the day at $35.50 a share. In their article about three stocks that feel like Microsoft in 1986, The Motley Fool notes how those who invest in Microsoft on the first day and reinvested dividends have seen a more than thousand fold return on their investment.

Eleven years after the company’s 1975 founding, Bill Gates and the team at Microsoft (NASDAQ:MSFT) took the company public. If you had invested $1,000 in Microsoft on the day of its March 13, 1986 initial public offering, settled in for the long haul, and reinvested your dividends, your stock would be worth roughly $1.5 million today.

The Motley Fool provides three examples of stocks that could mimic the Microsoft experience. These are Albermarle (NYSE:ALB), Control4 (NASDAQ:CTRL), and iQiyi (NASDAQ:IQ). We suggest that you read their article and make up your own mind. In the meantime we will consider if it possible to reproduce and Microsoft experience and how you would go about doing just that.

To Reproduce the Microsoft Investment Experience Size Does Not Matter but Market Niche Dominance Does

Microsoft is a dominant force in the computer industry. They invented the Windows operating system and have a huge presence in cloud computing and information storage. With their huge size growth has become more difficult. However, their presence in so many parts of the computer world helps guarantee their success for years to come. Is it possible to reproduce the Microsoft investment experience without it growing to be one of the largest corporations on earth? The answer is yes. So long as a company is dominant in its market niche it will always be able to sell its products and do so at a very profitable price. The trick is to learn to use intrinsic value analysis to pick such stocks before their price skyrockets. The problem with tech stocks, especially biotechnology stocks is that it can be hard to see the future.

Long Term Success Is Necessary to Reproduce the Microsoft Investment Experience

Microsoft was not a flash in the pan. It grew rapidly through the 1990s and after the dot com bubble it went flat for a decade and then grew again. To pick the next Microsoft you need to find a company ready to create a new market with new technology or take advantage of an expanding market with superior products, services and management.

The Motley Fool choice of iQiyi makes some sense as the Netflix of China in the years to come and taking advantage of market expansion.

Albermarle scares us. The company is a lithium producer. Read our article about the resource curse. This may be an OK stock if you are really great at market timing of commodities but this is not the next Microsoft.

Control4 makes sense for the long term as smart homes are one of the waves of the future. The price of energy is likely to go up and everything that homeowners can do to make their homes more energy efficient will be rewarded. The problem for this stock is that they do not really have any exclusive technology. Thus they will always have to price their products and services low enough to get business.

You Will Need a Consumer Stock Component to Reproduce the Microsoft Investment Experience

Years ago we wrote about investing in beer. When times are good people celebrate by drinking beer. And when times are bad they drown their sorrows with beer. This is one of the products that is protected from down markets because of its wide and pervasive use. That is also where companies like Microsoft, Apple, and Amazon have gotten to. They have become the sources of products and services basic to our lives. It is our belief that to reproduce the Microsoft investment experience you will need to pick a stock that has this attribute.





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