Microsoft stock has much brighter prospects than do shares in Tesla or Amazon
The NASDAQ Composite has lost 7% of its value since peaking at 16,212. This drop has accompanied big stock sales by Microsoft CEO Satya Nadella, Tesla CEO Elon Musk, and Amazon Executive Chair Jeff Bezos. Is that drop a sign that we are in for a major tech stock downturn — along the lines of the 77% plunge in the NASDAQ between October 1999 and July 2002 (when it bottomed out at 1,160)? Or is it a buying opportunity caused by CEOs dumping their shares in advance of higher tax rates on their capital gains? I don’t know the answer, but I am holding on to my stocks as I did during the NASDAQ crash and all the stock market breaks since. The reason is simple — when stocks sell off, investors eventually seem to conclude that compared to the alternatives, stocks are the best place to put your money over the long-term. Since I can’t pick market peaks or floors, I hold on through the painful declines. If forced to choose — I favor the scenario that investors will start off 2022 with the idea that stocks are a better place than cash or bonds for their money. I don’t see the recent downturn as the beginning of a two year plunge in the value of tech stocks. Comparing Microsoft, Amazon, and Tesla, I would be most comfortable betting on Microsoft. (I have no financial interest in the securities mentioned). Washington State has passed a new 7% capital gains tax that goes into effect at the beginning of 2022. The new tax imposes a 7% tax on capital gains over $250,000, according to the Seattle Times. What’s more Federal taxes could also increase for high earners. As CNBC reported, The House has proposed a new 5% surtax on income over $10 million and 8% on income over $25 million. Corporate insiders have sold a record amount of stock in 2021 and the leading sellers are technology CEOs. As CNBC reported, the combination of high stock prices and looming tax increases, drove corporate insiders to sell $69 billion in stock in 2021.
