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Spokane, Washington  Est. May 19, 1883
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Motley Fool: Mr. Softy remains up for a challenge

Universal Press Syndicate

Microsoft (Nasdaq: MSFT) has been ailing, but it’s not dead yet.

By all accounts, Windows Vista was a massive failure. But remember – the company has been here before, with Windows Millennium Edition. After ME, Microsoft learned from its mistakes, fixed a ton of problems, and then unleashed Windows XP on a skeptical world. It’s a truly stable and reliable Windows version, and many of us still use it today, more than seven years after its original release.

Windows 7 is due no later than 2010, and word is that this less-bloated release could make everyone forget about the last mistake. Microsoft can’t get this baby out the door fast enough.

Seven years ago, Windows had no credible competition. Today, Apple and others are chomping at its market share. And far out in left field, Web 2.0 technologies and cloud computing bring new threats. Who needs a premium operating system if every program you use runs on a Web server somewhere?

When Windows 7 hits store shelves, it has the opportunity to erase two years of bad press and disappointing sales – and to start another huge success cycle that could beat back the burgeoning competition and cement Mr. Softy’s place anew atop the heap of software giants.

Ask the Fool

Q: I’m thinking about opening an online brokerage account. If the brokerage goes bankrupt or closes, will my account be protected? – P.C., Davenport, Iowa

A: Most brokerages carry Securities Investor Protection Corp. insurance, protecting your account for up to $500,000, including up to $100,000 in cash claims. (Many brokerages carry additional insurance, too.) This doesn’t protect you against a loss in value of your holdings, though. Instead, it protects against the financial failure of broker-dealers. To ensure that a brokerage is SIPC-protected, look closely at its Web site for assurance or call it up and ask.

Learn more about brokerages and how to choose a good one at www.broker.fool.com and more about the SIPC at www.sipc.org.

Q: Since I have only a few thousand dollars to invest, I’m looking for stocks that cost only a few dollars each. Where should I look? – T.S., Fayetteville, N.C.

A: First off, you’re wrong to think that you need to find “cheap” stocks. You may buy 1,000 shares of stock for $1 each, only to see them fall in value, while, alternatively, you might have bought 10 shares of a $100 stock that doubles in a few years. The price alone doesn’t tell you much. A $300 stock might look pricey, but if the company’s shares are really worth $500 each, it’s a bargain.

Consider steering clear of “penny stocks,” those trading for less than $5 each. Generally volatile and extra risky, they’re often more likely to go out of business than go to the moon. Too many people fall for them, getting excited at the thought of owning thousands of shares. It’s not the number of shares that matter, though – it’s their strength and performance.

My dumbest investment

I received an inheritance. I wasn’t sure what to do with it, so I put it in the stock market. I had the thought of buying another home when prices became more reasonable. Well, the stock market dropped and now I lost part of my principal. I know better. Why didn’t I remember my own advice? - T.M., online

The Fool responds: Many of us go against our instincts and end up regretting it. Your story illustrates why we advise people to not put any money into the stock market that they’ll need within five years (or even 10, to be much more conservative). You just don’t know what the market will do in the short term. On the plus side, if it helps, home values have also plunged in many regions. Next time you’re about to make a major financial move, ask yourself what some unpleasant outcomes might be and how you would handle them.

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