These Tech Stocks Will Make Me Rich

Welcome to week 81 of my stock-picking throwdown with Mr. Market. Let's get right to the numbers:

Company

Starting Price*

Recent Price

Total Return

Akamai (Nasdaq: AKAM  )

$22.23

$29.20

31.4%

Harris & Harris

$6.22

$5.16

(17%)

IBM

$125.26**

$127.25

1.6%

Oracle (Nasdaq: ORCL  )

$22.54**

$24.95

10.7%

Taiwan Semiconductor

$9.81**

$10.13

3.3%

AVERAGE RETURN

--

--

6.00%

S&P 500 SPDR

$122.43**

$114.25

(6.68%)

DIFFERENCE

--

--

12.68

Source: Yahoo! Finance.
* Tracking began on Aug. 7, 2008.
** Adjusted for dividends and other returns of capital.

Rarely has my tech portfolio pummeled Mr. Market as badly as it did last week, adding more than two percentage points to my margin in this three-year contest.

Not that the market did poorly. The S&P 500 ended the week more than 3% higher on relatively good economic news, CNBC reports. Non-farm payrolls declined by 36,000 in February -- far less than anticipated -- easing concerns that Washington, D.C.'s snowpocalypse and other paralyzing winter weather would force strapped employers to delay hiring.

Trouble is, we've seen encouraging economic data before, only to be confronted with a lousy housing market and a similarly awful home improvement market. Anything less than a complete overhaul of the mortgage banking system may prove insufficient. My Foolish colleague Morgan Housel suggests giving banks such as Wells Fargo (NYSE: WFC  ) and Bank of America recourse against borrowers who cut and run on their mortgages when it's fiscally smart to do so. The goal? Reduce or even eliminate speculative excess.

The Fool's co-founder and CEO, Tom Gardner, has a similar idea. He counsels Fools to avoid investing with chief executives who lack a long-term purpose when deploying capital, and suggests new compensation plans according to ability to create value for employees, customers, and shareholders.

The week in tech
I agree with Tom's Foolish sentiment; purpose can be a powerful force for returns when used properly. Consider Apple (Nasdaq: AAPL  ) . Few have ever pursued a purpose as passionately as CEO Steve Jobs, and he's at it again with the iPad.

Whether you love or loathe the device, one thing's clear: Jobs believes it can transform the market. So do a large number of investors. Shares of the iPhone inventor touched a 52-week high last week, when the company announced that the iPad would be available on April 3.

TiVo (Nasdaq: TIVO  ) , meanwhile, rose more than 50% on news that a federal appeals court had upheld a lower court judgment against Dish Network and EchoStar (Nasdaq: SATS  ) . The digital video recording pioneer stands to reap at least $300 million in damages.

Finally, private equity firm Elliott Associates submitted a $5.75-per-share offer to acquire Novell (Nasdaq: NOVL  ) . The bid marked a 21% premium to the ailing Linux provider's market value. Regardless, investors appear to want more.

Whether they'll get it is an open question. Such is the volatile nature of tech. Risk is always present, though history shows that a portfolio of disruptors can create massive wealth when operating inside a diversified portfolio.

Look at David Gardner. He produced a decade of 20% returns in the real-money Rule Breaker portfolio by betting on a collection of innovators, and then holding them for the long-term. Tom Gardner's "simpleton portfolio" was also a 10-year winner. I believe that, with my tech portfolio, I will achieve similar success.

Checkup time!
Now let's move on to the rest of today's update:

  • Industry analyst Dan Rayburn reports that several of Akamai's competitors are working on alternatives to its value-added services. That's potentially worrisome news; high-margin services such as application acceleration and advertising delivery are big profit drivers for the Web content delivery king.
  • On Friday, Caris & Co. raised its fiscal 2011 earnings estimate for Oracle and predicted the stock would rise to $27 per share, Barron's reports. "We continue to view Oracle as a solid market-share gainer, particularly in middleware, applications and eventually servers," analyst Curtis Shauger wrote.

There's your checkup. See you back here next week for more tech stock talk.

Get your clicks with more techie Foolishness:

Akamai and Harris & Harris are Motley Fool Rule Breakers recommendations. Apple is a Motley Fool Stock Advisor selection. Try any of our Foolish newsletter services free for 30 days.

Fool contributor Tim Beyers is a member of the market-beating Rule Breakers stock picking team. He had stock and options positions in Apple and stock positions in Harris & Harris, IBM, Oracle, and Taiwan Semiconductor at the time of publication. Check out his portfolio holdings and Foolish writings, or connect with him on Twitter as @milehighfool. The Motley Fool owns shares of Oracle and S&P 500 SPDRs and is also on Twitter as @TheMotleyFool. Its disclosure policy is tech-tastic.


Read/Post Comments (0) | Recommend This Article (8)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 1130418, ~/Articles/ArticleHandler.aspx, 8/29/2014 4:13:15 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement