Welcome to week 120 of my stock-picking throwdown with Mr. Market. Let's get right to the numbers.
|Akamai (Nasdaq: AKAM )
|Harris & Harris
|S&P 500 SPDR
Source: Yahoo! Finance.
*Tracking began on Aug. 7, 2008.
**Adjusted for dividends and other returns of capital.
A rush of year-end optimism fueled returns both for the broader market and for my tech portfolio this week. The S&P 500 rallied by 1.28% to close at a two-year high of 1,240.40. The tech-heavy Nasdaq rallied by 1.78% to a new three-year high. For the year, the S&P and Nasdaq are up 11.24% and 16.23%, respectively, CNBC reports.
Bulls see no end to the rally. Some even predict accelerating gains. As All-Star CAPS investor rexlove wrote in a blog post on Friday:
1488 is my guess for [the S&P 500] next year. That's a roughly 20% gain from here. Sounds a bit high, but I think things could go much higher if we see unemployment numbers come down.
Such optimism could prove dangerous, but it also isn't entirely unjustified. Shares of General Electric (NYSE: GE ) rose by more than 3% Friday, after the company announced a 17% increase in its quarterly dividend. Warren Buffett must be smiling at the news. Berkshire Hathaway owns 7.8 million common shares.
GE isn't alone in raising its dividend. Hours after GE's announcement, Honeywell announced plans to raise its payout by 10%. Capital IQ says 30 companies worth at least $250 million in market cap increased payouts or distributions during the past week, including Linn Energy (Nasdaq: LINE ) and Nucor (NYSE: NUE ) .
The week in tech
Calls for Silicon Valley's cash-rich behemoths to initiate or increase dividends have gone largely ignored over the years. Perhaps that's Foolish. Tech markets are moving remarkably fast.
Consider the curious case of flash technology. On Thursday, Toshiba suffered a 0.07-second power outage in a key plant for manufacturing NAND flash used in devices such as the iPhone and iPad.
If that doesn’t sound like much, rest assured it isn't. But it's also not the only problem the plant suffered. Toshiba's power backup systems didn't work as planned, and operations slowed as a result. The company's NAND shipments could dip by as much as 20% over the next two months as a result, opening the door for more business to flow to rival Micron Technology (NYSE: MU ) .
In better news, Sirius XM Radio (Nasdaq: SIRI ) re-upped its contract with shock jock Howard Stern for another five years. Financial details of the agreement weren't disclosed, but it's unlikely he got much more than the $500 million his initial contract promised.
Bullish investors bought more of Sirius' stock upon news of the Stern deal. Motricity's (Nasdaq: MOTR ) backers have proved to be less enthusiastic. Shares of this provider of customized mobile content fell by more than 5% Friday and bounced around for most of the week. Investors apparently don't know what to make of a secondary offering designed to allow some of Motricity's pre-IPO investors to cash in gains.
Color me unworried. By my math, Motricity is poised to outgrow its present valuation and deliver the sort of millionaire-maker returns common to disruptive innovators.
We've seen it happen time and again. 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.
- Oracle just won't leave SAP alone. The database king is asking for $212 million in interest on top of $1.3 billion in damages awarded it in a court victory. So much for the Christmas spirit, eh?
- Akamai disappointed speculators who were expecting management to use this week's financial-analyst confab as an opportunity to raise guidance. They didn't, and the stock ended the week down 3%.
There's your checkup. See you back here next week for more tech-stock talk.
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