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Some of the most shocking news in the last few days has been the fact that Apple (AAPL) is now considered larger than Microsoft (MSFT) in the S&P500 rankings. While technically it’s not accurate (the S&P numbers don’t reflect a large number of common shares outstanding from Microsoft which are not available to the general public), it does point to an anemic problem within Microsoft.

Over the last 10 years, Microsoft’s stock has returned NEGATIVE 20 percent while Apple’s stock has returned over 800 percent.  Combine this with the fact that Microsoft has a dividend yield (the dividend amount divided by share price) barely above those of high yield savings accounts (about 1.8%) and you’ve got a recipe for investor disaster.  Remember our post on why risk should yield reward or why money today is worth so much. In short, why keep my money in a highly risky asset with uncertain returns, when I can make the same amount in a much less risky asset class.

What will be interesting is to watch these two companies battle it out over the next few years. Will Microsoft discover a new innovative solution to their fiscal woes? Will Apple be able to continue to ride the gravy train with biscuit wheels?

What are your thoughts?

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