Critically discuss the sources of fundamental risk involved in investing in Microsoft stocks?

Question

Critically discuss the sources of fundamental risk involved in investing in Microsoft stocks

Answer 1

Fundamental risk? As opposed to non-fundamental?

According to my dictionary Fundamental in this context could have two different meanings. 1. of or forming a basis 2. most important.

I think in both cases of the definition there are two. 1. the stock might drop in price. 2. the stock might not increase in price as it has not done during the previous 5 years.

Of course 1. could happen to any stock. 2. seems to be almost unique to MSFT.

Answer 2

fundamentals say it could' do quite well with Vista coming out...but then again, with Apple's new-found glory with Ipod etc, i really think the Mac will gain new ground against the PC with it's Windows.....Windows has a LOT of inherent problems since IE is imbedded with the operating system, but that's another subject.

technically the chart looks like it's hit a roadblock if you draw a trendline the past 3 years.....i think it will fall away as the release date for Vista draws near (sell on the news) ...no doubt a host of problems will be uncovered with it........you just never know.

i'd stay away from it in fact, unless you wanted to buy puts on it soon......might be a very profitable put play

Answer 3

There are two types of risk in finance: Firm-specific risk, and market risk.

The first risk can be generally analyzed by a SWOT analysis (looking at Microsoft's strengths, weaknesses, threats, etc).

The latter risk has more to do with general macro indicators like inflation, GDP growth, interest rates, etc, etc; as well as industry-specific risks to the software industry (although this can also overlap with the first risk).

Answer 4

The stock could go up or it could go down. There is always a risk when investing in any stock.