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David D. Kirkpatrick and Jamie Heller

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from: Jamie Heller

Microsoft Lowdown

Posted Thursday, May 25, 2000, at 5:18 PM ET

David,

In response to your long-term analysis of Microsoft, I'll reveal my intraday Internet orientation: The stock helped dragged down both the Dow and Nasdaq today.

Re the stock's future outlook, permit me to quote from TheStreet.com's resident columnist on Microsoft, Jim Seymour, who posted a column midday today:

I think there's not a whole lot of downside left in Microsoft at current price levels, in the mid-60s. We know the worst-case outcome--dismemberment--and have known it for some time. Jackson's actions over the past few weeks have effectively drawn a downside risk line under the stock.

Of course, the stock fell another 4 points and change today, closing at 61½. Still, as Seymour says, "Microsoft is a fairly safe place to hide this summer, if you want to stay in tech stocks." I'll leave you with that as we head into this Memorial Day weekend.

Jamie

the breakfast table
entries
123456789101112131415161718
from: Jamie Heller

Microsoft Lowdown

Posted Thursday, May 25, 2000, at 5:18 PM ET
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David D. Kirkpatrick is a contributing editor at New York magazine who writes frequently about business and finance. Jamie Heller is editor for strategic ventures at TheStreet.com, where she's worked since its 1996 founding.
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Reader Response from The Fray--to be read after the most recent entry:


I still don't understand how the stock market can be efficient in the long term and not the short run. And I'm not relying merely on Keynes' famous sentiments about the long run; my point is even simpler: when is the long run? Was Microsoft's long run value from 1990 to early 2000 or to today? Short run volatility must have consequences for people who claim long run efficiency. To my mind, and for many other reasons, believing in efficient markets is like believing in Santa Claus--there are correlations between expected results and reality, but people really ought to grow up and accept that no-one on Wall Street knows anything.

--Jeff

(To reply, click here.)

(5/22)

To Jeff: Various natural processes are long-term efficient without being short-term efficient, for example the downhill flow of water or the process of natural selection (aka evolution). Complex human processes seem to have similar behavior. Perhaps efficient is being confused with "optimal". The problem with most strategies that attempt to be optimal is that they often have truly horrendous failure cases, which wipe out all their interim or theoretical gains. Democracy has been called "the worst form of government, except for all the rest." It is hardly optimal, and in many cases very inefficient. A dictator could get the graffiti cleaned up and the trains running on time; democracy seems to have a hard time doing such things. But what about the failure case of a less-than-benign dictator or a dictator whose benign intentions diverge from many or most of the desires of the population? An example of short-term efficiency vs. long-term, in terms of human happiness.

That's not to say short-term efficiency is bad, or that we can't improve on raw systems. But it is possible for a strategy to be the best long-term one without exhibiting short-term efficiency.

--Paul Canniff

(To reply, click here.)

(5/23)

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