So Microsoft (MSFT) had a bad quarter. Boo hoo.
It's just one quarter.
For me the results suck primarily because MSFT reportedly posted its first-ever drop in the annual sales of Windows - if you use Windows Vista, are you really surprised by this?
However, it's just one quarter...in a recession! Besides, MSFT's best quarters historically have been the first and second fiscal quarters, not the fiscal fourth quarter, which it reported earnings for.
Obviously, many of the institutional investors don't see it this way, and today they took Mr. Softee down 8%.
I feel this overreaction to MSFT's bad results indicates the gradual dominance of big, institutional investors in the ownership of stocks. The financial crisis and subsequent recession have driven many smaller investors out of stocks, leaving institutional investors to mop up shares in droves.
As these big investors have increased their ownership of stocks, they have also become more short-term focused, during this recession in particular. Therefore, quarterly results have taken on increased significance. It's all quarter to quarter hit-and-run investing right now.
Hopefully, as the recession recedes, the myopic madness will end, more self-directed and small investors will get back into the market, and institutional investors can start to look beyond the hullabaloo of "earnings season" - hello, CNBC.
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