Microsoft Corporation (NASDAQ:MSFT) was at one time alone at the top of the computer industry, and is still the world’s largest software company. I’m not completely writing Microsoft off. In fact, on April 16, it announced that it will cut prices to host and process customers’ data, representing a play in the growing world of cloud computing. But let’s face it, Microsoft likely didn’t see Apple Inc. (NASDAQ:AAPL)’s resurrection coming. In the same time period that Microsoft Corporation (NASDAQ:MSFT) shares fell from $60 to $29, Apple has taken off, going from around $30 to more than $700. Apple is now firmly established as the computing titan.
So while the buy-and-hold strategy can work in many cases, it is important to know the industry in which you are investing. Buffett knew that The Coca-Cola Company (NYSE:KO) was a solid company in 1988, and that it still is. The business was able to diversify its product range over the years to keep profits up. Buy and hold works in most industries, but know the company in which you invest before using this strategy. Even the investment guru Buffett stays out of technology stocks because, as he puts it, he doesn’t understand them. Given the jostling for computer supremacy, I think he’s onto something.
The article Buy and Hold is Here to Stay originally appeared on Fool.com and is written by Phillip Woolgar.
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