These Tech Stocks Will Make Me Rich

Welcome to week 44 of my stock-picking throwdown with Mr. Market. Let's get right to the numbers:

Company

Starting Price*

Recent Price

Total Return

Akamai

$22.23

$22.89

2.9%

Harris & Harris

$6.22

$5.36

(13.8%)

IBM

$126.97**

$109.40

(13.8%)

Oracle

$22.69**

$20.94

(7.7%)

Taiwan Semiconductor

$10.34

$10.53

1.8%

AVERAGE RETURN

--

--

(6.12%)

S&P 500 SPDR

$124.37**

$94.82

(23.76%)

DIFFERENCE

--

--

17.64

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

While Mr. Market held mostly steady, my tech portfolio once again turned north. All five stocks are now outperformers when compared to the S&P 500.

Could this mean that, despite ruminations to the contrary, a buy-to-hold strategy is still as acceptable as it ever was? It's probably not hard evidence for either side of that question, since this contest is only 10 months old. But there was a time when I was trailing badly. Holding firm to my investing thesis has thus far paid off.

And recoveries do happen. This week, 10 banks were approved to pay back in full (with interest) the TARP funds they had received. Among the suddenly more-solvent: American Express (NYSE: AXP  ) and Goldman Sachs (NYSE: GS  ) .

Still, those who oppose buy-and-hold investing got more ammo this week, when the Federal Trade Commission argued against the biotech industry's wish for a 12-to-14-year moratorium on follow-on biologics, the generic versions of protein-based drugs.

The ruling may not mean much in the short term; ultimately, it seems the agency intends to help the Obama administration fulfill its promise to bring more generic drugs to market. Innovators such as Abbott Labs (NYSE: ABT  ) could suffer increased volatility as a result.

The week in tech
Meanwhile, in the digital realm, Palm (Nasdaq: PALM  ) shipped its new Pre smartphone on Saturday -- D-Day -- and set a new sales record for Sprint Nextel (NYSE: S  ) in the process.

Palm had a big week. On Monday, The Wall Street Journal reported that Verizon's (NYSE: VZ  ) wireless group could begin selling the Pre in January, seemingly corroborating comments made last month by Verizon Wireless CEO Lowell McAdam. On Wednesday, company co-founder Ed Colligan stepped aside as CEO in favor of products chief Jon Rubinstein, completing a restructuring process begun when Elevation Partners invested in Palm in 2007.

In search, Microsoft's (Nasdaq: MSFT  ) investment in Bing.com is paying off with higher engagement numbers, as reported this week by researcher comScore. Yet Bing still has a long way to go in knocking Google off its lofty perch. Data indicates that brand matters more than results when it comes to search.

So be it. Tech investing works best when practiced over very long periods. Witness David Gardner, who 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:

  • Taiwan Semiconductor CEO Morris Chang this week told reporters that he expects the company's core foundry business to grow by as much as 50% between now and 2018. He's also entertaining lateral moves into light-emitting diodes and solar energy. Watch this space for details -- these aren't exactly related businesses, and such diversification could prove worrisome.

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

Get your clicks with further techie Foolishness:

Akamai, Google, and Harris & Harris are Motley Fool Rule Breakers recommendations. American Express, Microsoft, and Sprint Nextel are Motley Fool Inside Value picks. The Fool owns shares of American Express. Try any of our Foolish newsletter services free for 30 days.

Fool contributor Tim Beyers had stock and options positions in 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 (8) | Recommend This Article (5)

Comments from our Foolish Readers

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  • Report this Comment On June 14, 2009, at 10:09 PM, streetflame wrote:

    This portfolio is a little light on communications, don't you think? Akamai is OK but considering the strength of the communications sector it would make sense to include some representative of wireless, telecom or satellite technology.

    My version of a 5 company tech portfolio with prices as of Friday:

    Harris Corp (HRS) : $30.27

    RRSat Global Communications (RRST): $13.04

    Ceragon Networks (CRNT): $6.63

    Nam Tai Electronics (NTE): $4.67

    China Information Security Technology (CPBY): $3.00

  • Report this Comment On October 17, 2009, at 1:55 PM, streetflame wrote:

    A little over 4 months later, my 5 picks are up 50% on average.

    HRS $39.88 +31%

    RRST $11.50 -12%

    CRNT$10.14 +53%

    NTE $5.72 +22%

    CPBY $7.62 +154%

    Whereas Tim's picks are -1% on average.

    Since they have run up quite a bit, it may be time to rebalance the portfolio. I will replace CRNT and CPBY with Telecommunications Systems (TSYS - latest price $8.69) and GigaMedia (GIGM - latest price $4.87).

  • Report this Comment On October 17, 2009, at 2:03 PM, streetflame wrote:

    Keep in mind I don't know much about the tech sector and have never owned any of these - not deep enough values for me. Also I dislike tech generally right now and am short several tech companies in real life.

  • Report this Comment On January 16, 2010, at 9:44 PM, streetflame wrote:

    Three months later, my picks are as follows:

    HRS $30.27 +59%

    RRST $13.04 -4%

    NTE $5.15 +10%

    TSYS $9.38 +8%

    GIGM $3.13 -36%

    Adding CPBY +154% and CRNT +53% from before, my performance comes to +49% per average pick. So basically holding steady over the last few months.

    I still believe there is significant value in GIGM and have bought summer-dated call options in real life.

    I think it's time for a mixup, taking out the best performers - HRS, TSYS and NTE. None of these businesses had a very good 2009 despite how well the the stocks did.

    In their place I will substitute China Public Security Technology (CPBY) again - down 20% since I dropped it despite a couple of very strong quarters. A new pick will be PCS - a wireless company which has been beaten down quite a bit but has excellent growth and could be a buyout prospect. Finally my fifth pick will be J2 Global Communications (JCOM) - a steady, if somewhat boring communications services company. I would pick Artificial Life (ALIF.OB) but their current uptick looks a bit excessive.

    So, to summarize:

    CPBY @ $6.12

    PCS @ $6.32

    JCOM @ $19.32

  • Report this Comment On January 16, 2010, at 9:45 PM, streetflame wrote:

    Three months later, my picks are as follows:

    HRS $30.27 +59%

    RRST $13.04 -4%

    NTE $5.15 +10%

    TSYS $9.38 +8%

    GIGM $3.13 -36%

    Adding CPBY +154% and CRNT +53% from before, my performance comes to +49% per average pick. So basically holding steady over the last few months.

    I still believe there is significant value in GIGM and have bought summer-dated call options in real life.

    I think it's time for a mixup, taking out the best performers - HRS, TSYS and NTE. None of these businesses had a very good 2009 despite how well the the stocks did.

    In their place I will substitute China Public Security Technology (CPBY) again - down 20% since I dropped it despite a couple of very strong quarters. A new pick will be PCS - a wireless company which has been beaten down quite a bit but has excellent growth and could be a buyout prospect. Finally my fifth pick will be J2 Global Communications (JCOM) - a steady, if somewhat boring communications services company. I would pick Artificial Life (ALIF.OB) but their current uptick looks a bit excessive.

    So, to summarize:

    CPBY @ $6.12

    PCS @ $6.32

    JCOM @ $19.32

  • Report this Comment On July 10, 2010, at 2:39 PM, MegaEurope wrote:

    6 months later, my picks are as follows:

    RRST $8.68 -33%

    GIGM $2.20 -55%

    CPBY $5.45 -11%

    PCS $9.21 +46%

    JCOM $22.07 +14%

    Adding CPBY +154%, CRNT +53%, NTE +10%, HRS +59% and TSYS +8%, my average per pick is +49%. So holding steady again as gains in PCS and JCOM cancel out losses in the others.

    I will end PCS (high debt) and JCOM (boring) but let the others ride.

    New positions:

    Artificial Life (ALIF.OB) $0.78

    Western Digital (WDC) $31.59

  • Report this Comment On July 10, 2010, at 2:43 PM, MegaEurope wrote:

    AKAM has done very well for Tim. I suspect it is overpriced now.

  • Report this Comment On September 19, 2010, at 12:18 AM, MegaEurope wrote:

    RRST $8.10 -38%

    GIGM $2.09 -57%

    CNIT (formerly CPBY) $4.97 -18%

    ALIF.OB $0.99 +27%

    WDC $26.53 -16%

    Sticking with these picks for now.

    Adding CPBY +154%, CRNT +53%, NTE +10%, HRS +59%, TSYS +8%, PCS +46%, and JCOM +14%, the average per pick is 40%. So down over the last few months.

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