Welcome to week 113 of my stock-picking throwdown with Mr. Market. Let's get right to the numbers.
Harris & Harris
|S&P 500 SPDR||$121.20**||$118.13||(2.5%)|
Source: Yahoo! Finance.
* Tracking began on Aug. 7, 2008.
** Adjusted for dividends and other returns of capital.
Give Mr. Market credit. He's still badly trailing my tech portfolio, but he's regained significant ground and is nearing even for the first time in close to two years. (See the history of this contest.)
Yet my foe suffers from a huge disadvantage: He isn't a stock picker. He can't concentrate on bargains, and there are still plenty to be had.
Legendary investor Bill Miller of Legg Mason this week spoke effusively about the 50% upside available to today's buyers of Hewlett-Packard, Intel, and Microsoft. His thesis? All three have the capacity to substantially raise their dividends.
Even the airlines look like a buy at present levels. Shares of JetBlue
Long-term opportunities also abound thanks to the principle of "time arbitrage." This strategy involves buying and holding stocks beaten down in the short term, confident Mr. Market will eventually price them according to the value the underlying business creates.
The week in tech
For a short time this week, it appeared that Apple
A 2% sell-off doesn't make for time arbitrage opportunity, but there's still plenty to like about Apple's valuation. Less delicious is the war of words between Apple CEO Steve Jobs and Google's
But let's not turn this into the all-Apple channel. Strong earnings reports reverberated throughout the tech world this week. On Thursday, Netflix
But don't get too excited. Even as well as tech's monster stocks are performing, it's not the megastocks but the disruptors that end up as millionaire-makers.
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.
Now let's move on to the rest of today's update:
- IBM joined Apple in reporting earnings on Monday, though the Street wasn't as pleased with what Big Blue had to say. IBM reported a 3% increase in revenue and an 18% improvement in earnings. But neither of those numbers was enough to keep investors from getting spooked by lower growth in signings of long-term services contracts. Shares of IBM fell by 1% for the week.
- We'll get a closer look at Harris & Harris' progress with its strategy of mixing microcap public investments with its venture-capital portfolio when the company reports third-quarter results on Nov. 12.
There's your checkup. See you back here next week for more tech-stock talk.
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