Microsoft is a master of diversification
The Motley Fool’s Take
Microsoft didn’t turn off the lights with its fiscal year 2022 financial results, but they still offered plenty of reasons to buy the stock.
Microsoft is best known for its Windows operating system and its Office 365 document suite, and its products are used by more than a billion people around the world. But the company has invested in expanding its footprint to include professional networking platform LinkedIn, and it has a hardware business that includes both the Xbox game console and the growing line of laptops and tablets. Surface.
The company’s “intelligent cloud” segment is growing rapidly and is now Microsoft’s largest revenue contributor overall. The company’s advertising business pales in comparison to that of its rivals, but it has just scored a huge victory, securing Netflix as a customer.
Meanwhile, Microsoft plans to acquire video game developer Activision Blizzard, the studio responsible for hit titles like Call of Duty and World of Warcraft. This can add a whole new dimension to Microsoft’s gaming business and further diversify the company as a whole.
Microsoft is a dividend payer, with a recent dividend yield close to 0.9% and an average annual dividend growth rate of nearly 10% over the past five years. With shares recently down about 15% from their high point last year, this is a growth stock that should appeal to long-term investors. (The Motley Fool owns stock and recommended Microsoft.)
ask the fool
From RR in Odessa: What is “greenwashing”?
The madman responds: According Dictionary.com“greenwashing” is “a superficial or insincere display of concern for the environment” shown by an organisation, while the Cambridge Dictionary states that a company engaged in greenwashing aims “to make people believe that [it] does more to protect the environment than it actually is.
Consumers have become more environmentally conscious in recent years. So while some companies are making their products more environmentally friendly (for example by using more recycled materials or reformulating packaging), others are overdoing their commitment to the environment.
For example, a company can highlight one (possibly small) positive thing it has done without mentioning a lot of negative things. Automakers can tout the more fuel-efficient vehicles they make without revealing they’re lobbying against rules that require them to do so. A major coffee vendor touted new cup lids that did away with plastic straws, but those lids would have used more plastic than the old lid-plus-straw combo.
From QF to Brattleboro, Vermont: What percentage of my income should I invest?
The madman responds: The answer is different for each of us, depending in part on our age, income and projected retirement needs. Consider aiming for 20% of your income. If you’re young, this can allow you to start saving early, and all that money will have decades to grow, which can be extremely powerful. If you’re older, chances are you’re behind in preparing for retirement, so saving aggressively now can help you make up for lost time.
All investors would do well to consider investing through broad index funds with low fees, such as those that track the S&P 500 (or the broader market).
school of fools
Most, if not all, investors can build great wealth by investing in the stock market for the long term, without ever buying or selling stock options. But it’s always worth knowing a bit more about the options. Imagine wanting to invest in Iditarod Express, known for its catchphrase, “When it absolutely has to get to a remote corner of Alaska in weeks.” You can buy shares in the usual way – or you can use options.
There are two main types of option contracts: “call options” and “put options”. Owning a call gives you the right to buy a certain number of shares, at a specific price, within a certain time frame (usually a few months). Owning a put gives you the right to sell a certain number of shares at a specific price within a certain time frame.
Imagine that shares of Iditarod Express are trading at $50 per share. If you expect the stock to go up in value soon, you can buy 100 shares for $5,000. Or you could buy, say, $6 “October $55” call options. In this case, $600 would entitle you to buy 100 shares at $55 each until the calls expire in October. If the shares reach, say, $65 before the options expire, you can exercise the options and buy 100 shares for $5,500. You can then keep them – or sell them at their current price, for $6,500. Since you paid $600 for the options, your profit is $400 less commissions and taxes.
If those MUSHH shares lost value or didn’t rise much, your calls would expire worthless and your $600 would be entirely lost. You basically bet the stock would top $61 per share — $55 plus $6 — on the October expiration date. Options are attractive because they allow you to magnify gains or hedge against losses. But they also often expire worthless, losing all the money you paid for them.
Options trading strategies range from somewhat conservative to risky. Learn a whole lot more before you trade options – or just avoid them.
My dumbest investment
From MS, online: I spent thousands of dollars on various services, trying to learn how to make a lot of money day trading so I could retire early. It dates back to the days of Wade Cook (about 20 years ago) and the Online Trading Academy (10 years ago). I wanted to learn how to time the market and make money fast. I realize now that these are all very stupid investments.
Now, for the past few years, I have been investing consistently in quality stocks that I found through The Motley Fool. I did well — without having to get up every morning to spend hours at my computer placing buy and sell orders. If I had invested before as I do now, I could have retired early.
The madman responds: Many people are naturally drawn to suggestions (or promises) that they can get rich quick, but there is no reliable way to do it. Usually, it is the people who get rich who sell their training services. The two companies you mentioned, for example, found themselves in hot water with the Federal Trade Commission accused of making false or unfounded tax returns while selling expensive courses. The two settled their cases, and the Online Trading Academy founder and others ended up paying millions of dollars and handing over assets.
Who am I?
My roots go back to 1912, when one of my founders published Queen Elizabeth, the first dramatic feature film broadcast in the United States (starring Sarah Bernhardt). There’s a big merger in 1994 with Viacom in my story, and another in 2019. Today, based in New York and with a recent market value of nearly $17 billion, I’m a global entertainment company and leading media. I own the oldest and only major studio left in Hollywood. My brands include CBS, Showtime Networks, Nickelodeon, MTV, Comedy Central, BET, Pluto TV and Simon & Schuster. Who am I?
Don’t remember last week’s question? Find it here.
Answer to last week’s quiz: AP Moller-Maersk