Microsoft Corporation (MSFT) Leads the Dow In This Important Metric

Microsoft Corporation’s dollar volume towers over the other 29 Dow stocks.

Microsoft Corporation (NASDAQ:MSFT) is not the largest company on the Dow Jones Industrial Average (INDEXDJX:.DJI) Exxon Mobil Corporation (NYSE:XOM) holds that crown with a $402 billion market cap, relegating Microsoft Corporation’s $287 billion cap to second place. Eleven Dow components sport higher annual revenues than Microsoft Corporation’s $80.4 billion, led by Exxon Mobil Corporation (NYSE:XOM) at $398 billion and Wal-Mart Stores, Inc. (NYSE:WMT) at $475 billion. The software giant is not the Dow’s most profitable company, either, or its fastest-growing member.

But there’s one place where neither Wal-Mart Stores, Inc. (NYSE:WMT) nor Exxon Mobil Corporation (NYSE:XOM), or any other Dow member for that matter, can touch Microsoft Corporation. It’s the Dow’s most popular stock, judging by the average daily dollar volumes traded.

A total of $1.8 billion of Microsoft Corporation (NASDAQ:MSFT) stock changes hands every day, leaving Exxon Mobil Corporation (NYSE:XOM) far behind in second place with a $1.2 billion daily dollar volume. Wal-Mart Stores, Inc. (NYSE:WMT) is nowhere near the top, sitting in the middle of the 30 Dow components with just $614 million of daily trading action to its name.

In fact, Microsoft Corporation shifts more dollar volume every day than nearly any other stock on the market. Apple Inc. (NASDAQ:AAPL) rules the roost with a totally unchallenged $6.7 billion daily action. Google Inc (NASDAQ:GOOG) also runs in front at $1.8 billion — a rounding error ahead of Microsoft Corporation (NASDAQ:MSFT).

So what makes Microsoft Corporation so special? Why should investors care about daily trading volumes? I can think of at least two important reasons:

With billion-dollar daily trading volumes, Microsoft Corporation is one of the market’s most liquid stocks. Fools should still prefer setting their price for every trade with limit orders rather than blindly accepting whatever your broker sees as the current market price, but if you’re ever going to use a market order, Microsoft Corporation (NASDAQ:MSFT) and Apple Inc. (NASDAQ:AAPL) would be fairly safe bets.

In the world of open-source software development, you’ll find Linus’ Law: “Given enough eyeballs, all bugs are shallow.” In other words, let a ton of smart people examine your code, and every problem will soon be apparent — and fixed. The same idea applies to the stock market; investors just know the idea as the “efficient markets” hypothesis or “the wisdom of crowds.” You’re more likely to get a fair price on stocks that are evaluated by thousands of investors every day. Ergo, Microsoft Corporation and Google Inc (NASDAQ:GOOG) are probably closer to fair value than most stocks at any given moment.

I’m not saying that Wal-Mart Stores, Inc. (NYSE:WMT) or Exxon Mobil Corporation (NYSE:XOM) are speculative, or that the high volumes of Apple Inc. (NASDAQ:AAPL), Google, and Microsoft Corporation (NASDAQ:MSFT) somehow makes them safer investments. Even the least popular Dow stocks see nearly $200 million in daily trading, after all. We’re hardly talking about microvolume penny stocks here. But the safety in numbers around Wal-Mart Stores, Inc. (NYSE:WMT)’s shares applies more strongly to the higher-volume tickers — and the popularity title is a rare feather in Microsoft Corporation’s hat.

Nobody ever complained about being No. 1, right?

The article Microsoft Leads the Dow In This Important Metric originally appeared on

Fool contributor Anders Bylund owns shares of Google Inc (NASDAQ:GOOG). The Motley Fool recommends Apple Inc. and Google Inc (NASDAQ:GOOG). The Motley Fool owns shares of Apple Inc. (NASDAQ:AAPL), Google Inc, and Microsoft Corporation (NASDAQ:MSFT).

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.


Tags: Apple Inc (AAPL), Exxon Mobil Corporation (XOM), Google Inc (GOOG), Microsoft Corporation (MSFT), Wal-Mart Stores Inc. (WMT)

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