Stocks Are A Lot Like Buses, Microsoft And An Instructive Story

Stocks are like a bus

For at least a year now, many financial newsletters I’ve read have been recommending investing in Microsoft.  Microsoft is one of those companies that is just positively gushing billions of dollars of cash per year.  And they recently started paying dividends.

The newsletter writers were saying this was a great buy and hold stock, which will consistently increase its dividends.  I thought they were right then, and I definitely think they are right now.

But I just couldn’t get excited about it.  The stock had been languishing around $20 a share forever.  It was yawn wide boring.  And I had lost money on it in the past.  So I never put on the trade.

Recently, the world woke up to the fact that Microsoft is gushing billions of dollars of cash per year and is paying, guess what – news flash – a constantly increasing dividend.

The stock has risen rather rapidly from $26 to $32 dollars a share.  So should I go out and load up on the stock?  I’m certainly full of irrational exuberance at this point, and I suspect many people would jump on board now, afraid they missed the bus.

So should I jump on board too?

I don’t think so.  I should curb my enthusiasm.  I flat out missed this one.

And there is no need to compound my mistake and go out and buy when it is high.  A more rational action is to put in a low bid order to buy 100 shares should the market come down to $26 a share.  By the way, when you put in a ridiculously low number like that it is called a stink bid.  And you’d be surprised how often they get filled over time.

I’m much smarter to do this than chase the stock.

Stock prices go up, and stock prices come down.

Stocks are a lot like buses.  If you miss one, another will come around in five minutes.

To your heath and prosperity – John

P.S.  I might say the same for those that think they missed the bus on Apple stock.  Even with the recent pullback, it still seems rather pricey.  Should you rush out an load up on Apple shares now that its constantly in the news?

Well, history shows that’s probably the wrong time to buy.  A better time would have been to buy when no one was talking about it – and the price was much lower.

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