Morningstar's John Rekenthaler reflects on Steve Ballmer's exit from Microsoft, and what it means for investing in technology companies long-term. He references a Wall Street Journal graphic showing the market value of major tech firms in 2000 when Ballmer took over Microsoft vs. today. Rekenthaler hypothesized that failure is inevitable in tech because the best future companies can hope for is one in which they hold competitors at bay, continually treading water.

But that hypothesis was wrong, Rekenthaler says, because the chart in the Journal failed to account for the tech bubble. Rekenthaler pointed out that for all four periods of stock returns for major tech stocks, July 1993 to June 1998, July 1998 to June 2003, July 2003 to June 2008 and July 2008 to June 2013, the only major plunge was for Lucent after 1998.

Rekenthaler writes that stock results were generally good, with the most recent periods making "pleasant if not remarkable" gains and the first period returns were better than usual, even for the 1990s.

To read more, click here.  

Edited by: Casey Quinlan


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