Only Patience and Microsoft Fit This Setup

The popping of the tech bubble, followed by the Fed's moves to never-before-seen real rate levels, combined with the free-flowing information and capital that the Internet has enabled, puts us squarely in new territory. We're never supposed to say "it's different this time," but certainly nobody can argue that we've ever seen this type of setup before.

I don't like it. I just don't like this setup. I think the Fed's gonna have to cut the fed funds rate at some point to stimulate the markets and economies again, but it's anybody's guess as to when that might be.

Despite this setup, I spend hours each day digging for new stock ideas. Regardless of what the economy and broader markets are going to do, there will be some huge winners in every sector. Somebody's going to figure out how to take market share from incumbents.

Somebody's going to create a brand-new market and become a secular grower. I want to own those, because even if the market won't expand multiples during this time of uncharted territory, stocks that continue to grow their earnings strongly will be rewarded.

I also keep coming back to Microsoft(MSFT Quote - Cramer on MSFT - Stock Picks). Though the stock has really popped since I made it by far my biggest position back on May 10 despite the tech market's major meltdown, I continue to hold it steady.

Microsoft Still Charms The stock hasn't lost its attraction, unlike other names

Click here for larger image.

Source: StockCharts.com

The company's giant, growing cash flows aren't about to fade, regardless of what the broader economy does. For the first time since it rolled out the updated and improved Windows system in 1996, the company has a brand-new operating system that's a major leap forward.

It also has a bumbling competitor in Sony(SNE Quote - Cramer on SNE - Stock Picks), though Nintendo's trying to make some inroads, and I think Microsoft might actually start using that presence of the Internet-connected Xbox 360 in the living room to allow users to pull video and music content from the Web. And MSN is the most underrated property on the Internet, worth many tens of billions, in my estimation.

I expect I'll be getting aggressive in the market -- perhaps long, perhaps short, perhaps hedged -- sometime in the next few weeks as we start getting more clarity about where the economy and rates are going. But in the meantime, I'm sticking with patience and Mister Softee as my places to be.

At the time of publication, the firm in which Willard is a partner was long Microsoft, although positions can change at any time and without notice.

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