Better Buy: Microsoft Stock or Every Nasdaq Stock? | Personal Finance | – The Daily Progress

If you’re considering an investment in software giant Microsoft (NASDAQ: MSFT), you’re not crazy, and you’re hardly alone. The company helped shape the computer industry we all rely on today, and while it and the rest of the world have moved beyond personal computers over the past three decades, Microsoft is as relevant today as it ever was.

The stock’s still dishing out gains, too. Despite being down 20% from last year’s record high, shares are up more than 300% for the past five years. In fact, the recent lull is being eyed by many as a buying opportunity.

Before plowing into a position in the admittedly impressive company, however, there’s a question you may want to ask yourself and an alternative choice you may want to consider.

There’s nothing wrong with Microsoft…

To be clear, you could do much, much worse than stepping into a stake in Microsoft. Not only is its Windows operating system still the world’s most popular PC platform, the company’s deep into the cloud computing, video gaming, and personal productivity software markets. It also owns professional networking website LinkedIn and has integrated its software with the site quite nicely to make it a true business-building tool. Then, there’s the techy stuff the company’s doing that most investors never hear about.

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This well-diversified (but complementary) mix of businesses is a big reason Microsoft not only has not failed to produce year-over-year growth in every quarter since late 2017 but also is still broadly accelerating that growth. Recurring revenue is another contributing factor to that persistent growth. Analysts are looking for more of the same, too.

Data source: Thomson Reuters. Chart by author.

This reliable progress, however, still doesn’t necessarily make Microsoft the best next trade for every investor. There’s a potentially better option out there, even if you’re on the hunt for tech-led growth. Indeed, Microsoft’s sizable slide since the middle of last year underscores the very reason you may want to opt for the alternative.

…but here’s a better idea for most investors

It’s a question some investors don’t want to ask themselves only because they know they won’t like the answer. But it must be asked all the same: Is your portfolio diversified enough right now to make even the venerable Microsoft your next pick?

If you currently have fewer than 10 stocks and no diversified index funds in your mix of holdings, the answer to the question is a solid no; you need more …….


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