These Tech Stocks Will Make Me Rich

Welcome to week 23 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

$13.49

(39.3%)

Harris & Harris

$6.22

$3.40

(45.3%)

IBM (NYSE: IBM  )

$128.33**

$84.12

(34.4%)

Oracle

$22.75

$16.53

(27.3%)

Taiwan Semiconductor

$10.34

$7.37

(28.7%)

AVERAGE RETURN

--

--

(35.00%)

S&P 500 SPDR (AMEX: SPY  )

$125.26**

$84.40

(32.62%)

DIFFERENCE

--

--

(2.38%)

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

A rotten week for Mr. Market was slightly worse for my tech portfolio, which fell another 26 basis points behind in our three-year race to the finish line.

The good news? My tech stocks held up better than most. Apple (Nasdaq: AAPL  ) took a beating when CEO Steve Jobs opted for medical leave due to a still-mysterious condition that's preventing his body from absorbing food. Seagate (NYSE: STX  ) succumbed to the tech recession, parting ways with CEO Bill Watkins and COO David Wickersham and cutting 10% of its workforce. And after months of often-wild speculation, Google (Nasdaq: GOOG  ) said that it would cut 100 recruiters and end development on six of its smaller projects, including a very useful organizing tool called Google Notebook. (Bummer.)

Worst of all, though, was the news from Nortel. Canada's once-dominant networking equipment supplier finally gave in to market and competitive pressure and declared insolvency this week. Hello, Cisco (Nasdaq: CSCO  ) ? You just won the recession lottery. Pick up your prize at bankruptcy court.

The only remedies for times like these are prudence in picking stocks -- stick with the very best -- and patience in waiting for gains. That's how David Gardner produced a decade of 20% returns in the real-money Rule Breaker portfolio. Tom Gardner's "simpleton portfolio" was also a 10-year winner. I believe that, with these five tech stocks, I will achieve similar success.

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

  • Earlier this week, Merrill Lynch analysts cut their rating of Akamai from buy to neutral, citing a few known catalysts and competitive challenges. I'd say the company's very fair valuation -- Akamai trades for 17 times trailing and eight times forward earnings -- is compensation enough for the uncertainty.
  • IBM has taken to "in-sourcing," choosing East Lansing, Mich. and Dubuque, Iowa for its two newest service centers, according to BusinessWeek.

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

Get your clicks with more techie Foolishness:

Apple is a Stock Advisor selection. Akamai, Google, and Harris & Harris are Rule Breakers recommendations. Try either of these Foolish services free for 30 days. There's no obligation to subscribe.

Fool contributor Tim Beyers had stock and options positions in Apple and Google and stock positions in Akamai, 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 is also on Twitter as @TheMotleyFool. Its disclosure policy is tech-tastic.


Read/Post Comments (7) | Recommend This Article (9)

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.

  • Report this Comment On January 17, 2009, at 10:26 PM, steven107 wrote:

    While I don't like the headline, because you will find, nothing is a sure thing. Even a sure thing isn't a sure thing, at least your talking about stocks you own. I prefer it that way, it suggests that you contributed time and thought.

  • Report this Comment On January 18, 2009, at 12:03 AM, dividendgrowth wrote:

    TSM's fab is running on 25% capacity, compared to 100+% a year ago.

    We have to be prepared for REVENUE DECLINES of 50% or more at tech companies.

    During the Great Depression, it was common for cyclical industrials (similar to today's techs) to suffer revenue declines of 67% or more.

  • Report this Comment On January 19, 2009, at 10:07 AM, TMFMileHigh wrote:

    'Morning all. Thanks for the comments.

    steven107 -- I wouldn't use that headline if I didn't believe it. Also, while I do write a lot about stocks I own, I'm also unafraid to write about stocks I don't own. I give time and attention to every column.

    And if I can mention this without appearing to be complaining -- I'm not -- the Fool's disclosure policies effectively ban me from trading in any of the stocks in this column for three years. It's a pretty massive commitment.

    dividendgrowth -- Agreed. With TSM, I like the balance sheet and I believe we'll continue to realize a fairly stable payout through the lean years.

    FWIW and Foolish best,

    Tim (TMFMileHigh and @milehighfool)

  • Report this Comment On January 23, 2009, at 1:34 PM, steven107 wrote:

    I was led to believe that you all were allowed to trade stocks that you write about 10 day before or after, and I believe another fool commented the same info in an article lamenting that he would have to wait 10 days before buying what he was writing about. They may want to update it if it has changed to three years.

    I still think some fools are not putting much effort in to some of their recomendations but are just turning out articles. I don't pay enough attention to which authors I have been developing a negative opinion of because my memory is horrible, but perhaps you all should implement an author rating system like the ratings button on youtube, whereby if we think you are cool after reading your work, we can give you a 4star by clicking next to your name. If we think you are not even trying, we can give you a 1 or 0 stars.

    ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

    Trading Restrictions

    *Must hold any stock they own for at least 30 days. *Cannot write about a stock in the period ten days before and ten days after purchasing or selling the stock.

    *Cannot trade based on any knowledge they may have about articles that have yet to be published.

    *Must notify our compliance officer every time they buy or sell a stock, regardless of whether they have written about it.

  • Report this Comment On January 23, 2009, at 1:36 PM, steven107 wrote:

    I should follow this up or someone will point it out to me, I see the reccomend this button, but is it tied to the article or tied to the author? I'm meaning that I want an Author to have a 'reputation' that goes up and down based on his ratings, so that it will travel with him from article to article.

  • Report this Comment On January 25, 2009, at 10:00 PM, TMFMileHigh wrote:

    Hi steven107,

    No author reputation rating as yet but I like the idea. The more accountable, the better. That goes for readers, too.

    Maybe our respective CAPS ratings as a proxy? Mine got shelled with the downturn but is recovering. For a reader -- the thinking goes -- a comment would get more weight if it's made by a CAPS All-Star.

    FWIW and Foolish best,

    Tim (TMFMileHigh and @milehighfool)

  • Report this Comment On November 27, 2009, at 10:51 AM, jlanganki wrote:

    I strongly disagree with your Oracle pick. Their database software is difficult to use. You would be much better betting that Microsoft's SQL Server will slowly steal marketshare away from Oracle. Microsoft's database products are vastly superior in quality. Microsoft may eventually lose the home computer market, but will never lose the business market.

    I really wouldn't necessarily buy other stock, but definitely not Oracle. Everyone that uses Oracle wants to eventually switch to Microsoft SQL Server.

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