These Tech Stocks Will Make Me Rich

Welcome to week 58 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

$18.71

(15.8%)

Harris & Harris

$6.22

$6.36

2.3%

IBM

$126.39**

$121.88

(3.6%)

Oracle

$22.64**

$21.52

(4.9%)

Taiwan Semiconductor

$9.81**

$10.89

11%

AVERAGE RETURN

--

--

(2.20%)

S&P 500 SPDR

$123.67**

$107.16

(13.35%)

DIFFERENCE

--

--

11.15

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

My portfolio returns improved this week. Mr. Market's average return improved more.

And that was with Citigroup (NYSE: C  ) telling us taxpayers to take a hike as it tries to dump one of its only remaining stable businesses: wealth management. CEO Vikram Pandit this week said he'd like to sell his company's remaining 49% stake in Smith Barney to Morgan Stanley.

Meanwhile, this panel of Foolish experts has mixed views for when we'll see a broad-based earnings recovery. David Kelly, chief market strategist at JPMorgan Funds, says "we've already turned the corner" on an earnings recovery, while Bob Doll, vice chairman and global chief investment officer at BlackRock, says investors ought to be patient.

"Don't forget that it is going to take a long time to climb the hill after what we now know to have been a bubble in financial earnings," Doll said.

Lousy unemployment numbers appear to back Doll's assertions. According to a recent survey from Manpower, hiring plans have dropped to their lowest level since 1962, when the survey began. In August, the unemployment rate rose in 27 states. California and Nevada set new records for joblessness last month, Bloomberg reports.

The week in tech
Silicon Valley is part of the problem. Cisco (Nasdaq: CSCO  ) and Hewlett-Packard (NYSE: HPQ  ) are among the big names to have suffered layoffs this year.

Yet innovation persists. Google (Nasdaq: GOOG  ) this week unveiled Fast Flip via its Labs. Designed for rapid review of content in a format reminiscent of flipping through a magazine or newspaper, the service has attracted more than three dozen publishers.

Others, such as Adobe (Nasdaq: ADBE  ) , are choosing to buy, rather than build, new products. The company best known for Photoshop, Flash, and those pesky-yet-invariably-useful PDF files this week acquired Motley Fool Stock Advisor pick Omniture (Nasdaq: OMTR  ) for $1.8 billion. Skeptics abound, but I suspect that, among other things, Adobe plans to use Omniture's tools to beef up its AIR platform for cloud-computing software development.

Finally, Palm's (Nasdaq: PALM  ) earnings report offered hope and horror simultaneously. Revenue came in higher than expected, with 823,000 devices sold, but guidance was lower than analysts had hoped. Worst of all, the company plans to issue 16 million new shares to fund operations during its transition to Web OS-based handsets.

Of course, transitions are everyday fare in Silicon Valley, where real earthquakes rattle buildings and upstart innovations disrupt business models. That's why tech investing is best practiced in a diversified, patient manner. Look at David Gardner. He produced a decade of 20% returns in the real-money Rule Breaker portfolio by sticking with innovators. 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:

  • Oracle's fiscal first-quarter earnings report disappointed investors who were expecting more revenue. They're missing the point. A sell-off has made shares of the database king a more attractive buy.

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

Get your clicks with more techie Foolishness:

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

Fool contributor Tim Beyers had stock and options positions in Apple and Google 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.


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