Welcome to week 64 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 |
$22.79 |
2.5% |
|
Harris & Harris |
$6.22 |
$4.59 |
(26.2%) |
|
IBM |
$126.39** |
$122.87 |
(2.8%) |
|
Oracle |
$22.58** |
$21.45 |
(5%) |
|
Taiwan Semiconductor |
$9.81** |
$9.91 |
1% |
|
AVERAGE RETURN |
-- |
-- |
(6.10%) |
|
S&P 500 SPDR |
$123.09** |
$106.65 |
(13.36%) |
|
DIFFERENCE |
-- |
-- |
7.26 |
Source: Yahoo! Finance.
* Tracking began on Aug. 7, 2008.
** Adjusted for dividends and other returns of capital.
Finally. After weeks of losses, Mr. Market took the bigger beating, allowing me to add 130 basis points to my lead in this three-year contest. (Click here to see how it all began.)
Mr. Market's rough week could be attributed to any number of factors, but numbers may offer the simplest explanation. According to his measurement of the cyclically adjusted P/E multiple, economist Andrew Smithers says the S&P 500 index is more than 40% overvalued. He last made a prediction like this in March 2000. (Gulp.)
Policy could also be playing a role. Former Fed chairman Paul Volcker is aggressively backing a plan that would revive some of the protections once offered by the Glass-Steagall Act of 1933, in which banks such as Wells Fargo
Volcker isn't getting much of a hearing inside The White House, and that's a shame. There's a real debate to be had over whether banking and brokering ought to be akin to church and state. But it won't happen. Instead, you'll hear murmurs of how Volcker is asking the feds to do too much, and that we don't need more intervention.
That may very well be true. Just yesterday, the Commerce Department said that U.S. Gross Domestic Product rose 3.5% during the third quarter. "Recession" and "over" are appearing next to each other in headlines for the first time in months.
Either way, policy can get in the way of returns if implemented poorly. Count me among those interested investors who'd like regulators to argue over this issue some more.
The week in tech
I'll admit to being more interested in this issue than most. Investment bankers have long held sway over the IPO market -- and a healthy market for public offerings is more important to the tech sector than to other areas of the economy. Should big banks be playing in the private equity pool? I'd like to know.
I'm guessing that the bankers will swim as long as they can. Each week brings more signs of a tech recovery. Consider Amazon.com
Motorola
In other wireless news, the WiMAX Forum announced a successful test of internetwork roaming in Taiwan this week. This is an important breakthrough, in that it proves WiMAX is capable of growing into a cellular telephony alternative.
Of course, "growing into" is the key phrase there. One of the great truths about tech is that overnight successes take years to develop and even longer to displace. Patience and diversification are the keys to tech investing gains.
Look at David Gardner. He produced a decade of 20% returns in the real-money Rule Breaker portfolio by betting on a broad portfolio of innovators, and holding for the long-term. 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:
- On Wednesday, Akamai reported market-beating results on both the top and bottom lines. Revenue improved 5% to $206.5 million but per-share earnings declined slightly, to $0.38, on a non-GAAP basis. Margins, meanwhile, held mostly steady -- a good sign amid fast dropping prices in its commodity file delivery business.
There's your checkup. See you back here next week for more tech stock talk.
Get your clicks with more techie Foolishness:
- Is this cloud-computing giant in the making overvalued?
- You need Mr. Mac, Verizon.
- Maybe it's time you gave Mr. Softy another look.
