The problem starts at the top. What’s the vision? How are you going to execute on the cost-savings demanded of cloud, and the intuitive touch interfaces demanded on tablets, and go beyond that? Ballmer doesn’t see that far ahead, and until someone at the company does, someone at the top of the company, you don’t need Microsoft in your portfolio.
Vision is essential to any tech company. It has to have an entrepreneur at the top, and that entrepreneur has to have some idea of where the company should be in 3, 5, 10 years, based on customer needs. Microsoft doesn’t have that, and until it gets that you shouldn’t own it.
I don’t know if Google Inc (NASDAQ:GOOG), at a price of $800 per share, is a great investment. Everybody likes it, but there’s good reason for them to like it. It will come good, I think, even at this price. I have a few shares, and they have made me very happy. This is one of those companies you want to accumulate on weakness, but it’s definitely one you want to accumulate, for all the reasons you want to dump MSFT.
General Electric Company (NYSE:GE)
There’s something to be said for timing.
Entrepreneurs tell stories, and the stories can be compelling. But you don’t want to buy an entrepreneur’s story while he’s busy spinning it. You want to buy it when the story is told.
I bought into General Electric during the 1990s, and left it alone. Some 15 years later I’m still underwater.
I looked at it several times after Jeffrey Immelt became CEO, and I liked the story he was telling, so I stayed with it. It represented a compelling long-term vision, and that vision is now coming true.
But GE is a huge beast. Jack Welch’s GE was a financial powerhouse, and dominant in content. To make GE what he wanted to make it – more like the company J.P. Morgan put together in the 1800s, with industrial equipment and technology at the front – Immelt had to tear down the old GE. He had to sell off things that were still working, and invest in things that weren’t working yet.
It was a long process, and I’d now call GE a buy. But I wasted a lot of money and time with this stock. Don’t be a dummy like I was. Be Foolish and be disciplined about dumping your garbage, no matter the story it tells. Demand results.
What could I have bought instead? Something new, something different, something like Intuitive Surgical, Inc. (NASDAQ:ISRG), the makers of the Da Vinci robotic surgeon, which is now worth more than five times what it was in 2009. It was below $480 just a few months ago. Should have caught it then.
As with Google, buy when everyone else is selling and you’ll do well, if you have a buy sheet ready for when the panic hits.
The article Favorite Shares of the Truly Foolish originally appeared on Fool.com and is written by Dana Blankenhorn.
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