What to Do with Microsoft Stock and Other Tech Darlings?
Microsoft Corporation (NASDAQ:MSFT) saw MSFT stock, like many other popular tech stocks, take a small hit on Wednesday following the election of Donald Trump as president of the United States of America.
MSFT stock has otherwise celebrated a fairly prosperous 2016, rising three percent overall but, on Wednesday morning, the shares took a 0.5% tumble. This coincides with declines in the share prices of many tech giants, including Alphabet Inc (NASDAQ:GOOG) stock’s one-percent drop, Tesla Motor Inc‘s (NASDAQ:TSLA) four-percent fallout, and Apple Inc.‘s (NASDAQ:AAPL) one-percent skid.
The question is whether these relatively small hitches in share prices from MSFT stock, TSLA stock, GOOG stock, and AAPL stock are small jitters in the market following the election of a unpredictable president, or predict greater losses as the market bounces around after the unexpected win of President-elect Trump.
A couple of caveats to mention, however, before we go full doomsday-prepper over Microsoft stock in particular, and the stock market in general.
The market often has slight fluctuations following the election of a new president. That’s par for the course and, historically, the market usually corrects itself back to the norm in short order. Beyond that, the first few years of a presidency rarely (as seen in the above linked article) dramatically shift the trends of shares in the near future.
Of course, presidential actions can and often do have a tremendous effect on shares in the long term but, again, the trends before the election are often the best indicators of where a stock is headed in the following weeks and months.
Now, back to the doomsday scenarios. Namely, if everything else about the 2016 presidential election has been so contrary to norms, why not market trends as well? And why wouldn’t it be bad for MSFT stock?
To support that line of thinking, you have the dire predictions from the Brookings Institution, a non-partisan think tank, which predicts a 10% to 15% market loss. (Source: “What do financial markets think of the 2016 election?” The Brookings Institution, October 20, 2016.)
And then there’s the Financial Times which, while having more conservative estimates than Brookings, also projects significant losses in the market. (Source: “So how would markets react if Donald Trump wins?,” Financial Times, November 4, 2016.)
So while history would say to be confident in the stability of the market, there’s certainly a fair number of people out there who think otherwise. They believe that history might not know what’s talking about and that Microsoft stock might turn out fine.