Microsoft Up 20% Since July - Is It Time To Buy?

Microsoft Up 20% Since July - Is It Time To Buy?

This tech stock giant has a performance history to be proud of. 

Since 2016, the price has moved 475%, handsomely rewarding investors. It has also been a pleasant journey for investors, barring the decline caused by the Covid-19 pandemic in 2020, with the price generally trading inside a bullish channel. 

Without question, all companies aspire to have a similar history of performance. 

However, Microsoft Corp. MSFT was also not exempt from this year's declines, with the stock price dropping by over 30%. Compare that to PayPal Holdings Inc. PYPL, which fell by almost 80%, and you can see why this stock is always a consideration for investors. 

The question is: If you do not have a position on Microsoft, when is the correct time to buy?

This depends on if you choose to be aggressive or conservative. Either way, you still want to wait for a high-probability entry point. This is where patience comes in. 

The Daily Timeframe

For Aggressive Investors/Traders

Ideally, you want to wait for the stock's price to confirm a bull trend above the daily 200 simple moving average. The advantage to this approach is that you get in early and make more profit as the stock price pushes further up.

The downside? You get stuck for months in the sideways market the price has been in since the start of 2022 with little return on your risk.

For Conservative Investors/Traders

You want to wait for the price to break out from consolidation and print new all-time highs. The downside is you have to apply patience and wait for the proper setup, and you could walk away with less profit once the trend ends. However, the upside is that you will rack up profit much quicker, seeing a quicker return on your risk. You can also spend your risk on other assets already set up while you wait for Microsoft to meet your entry criteria. 

Most will tend to be aggressive, as applying patience is an investor skill few learn to appreciate and master. However, conservative investors will generally outperform aggressive traders over a five to 10-year period. 

I tend to be conservative and prefer stocks that are printing new all-time highs. 

Why? Because they move quicker and allow me to compound, the secret sauce to growth through stock investing. 

Posted In: Long IdeasEducationShort IdeasTechnicalsPreviewsTrading IdeasGeneral