Microsoft (MSFT) blows away the numbers. Buy or sell? Here’s my take. (July 20, 2017)
MSFT
I want to look at Microsoft ( NASDAQ:MSFT ). This is a stock that has been going up for a long, long time. The whole WannaCry thing, I thought was going to be a pretty big driver to Microsoft’s ( NASDAQ:MSFT ) earnings; just because of all the individuals and more importantly and more profitably the businesses that haven’t upgraded to the most recent Windows. I know about that.
I used to be, before I was a trader, I know how that works. Businesses get used to their systems and they don’t want to change anything because it is working, so they don’t update, they don’t upgrade. They make bootlegged copies, all that stuff that you don’t really hear about but everybody actually does. Then along comes this ransom ware thing and the folks that are running the companies, and certainly the IT departments are going, “Okay, wait a minute, the risk/reward here. We are risking a lot by not keeping Windows up to date. And what is our reward? Well, how much is it going to cost us to get Windows up to date?” And then, Boom! They upgrade, Microsoft ( NASDAQ:MSFT ) starts making a bunch of money and they didn’t really get any negative publicity from that whole thing. Nor did they need to. In fact, if you had the most recent Windows version and everything was upgraded, you were fine.
My point is, this is the type of stuff that drives earnings. I think it is phenomenal that these guys blew their estimates away by a lot. They were supposed to be 71 cents. Instead, they are up 90-91 cents, and I believe they also guided higher, so this is a stock that is on fire. But here is the deal: There is no way I could be buying this tomorrow. I would be selling it. I am not really sure whether I would short it or not. I think the better time to be shorting stocks is after they break down and then they move back up to test that breakdown, and then they fail. So this wouldn’t really be my short. The way this stock has rallied today, I am talking about after hours, what you are really doing is, if you are buying the stock tomorrow you are giving somebody who bought at the bottom 12.5 percent profit in a very short period of time.
I think you have got to sell this thing and then just wait for it to settle in. As far as buying it then on a pullback, talk to me next month, because that is really when you would probably be better off considering taking this thing. Look at the zigzags in the stock, they are all over the place. And sometimes if just doesn’t get anymore difficult than this. So wait for the stock to pull back and then if you want to buy it, fine. Just don’t pull the trigger tomorrow unless you are shooting some bulls, or shooting the bull. You know what I mean.
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