Welcome to week 126 of my stock-picking throwdown with Mr. Market. Let's get right to the numbers.


Starting Price*

Recent Price

Total Return

Akamai (Nasdaq: AKAM) $22.23 $48.93 120.1%
Harris & Harris $6.22 $4.69 (24.6%)
IBM (NYSE: IBM) $123.46** $155.50 25.9%
Oracle $22.37** $32.51 45.3%
Taiwan Semiconductor $9.35** $13.27 41.9%
AVERAGE RETURN -- -- 41.72%
S&P 500 SPDR $120.57** $128.37 6.47%
DIFFERENCE -- -- 35.25

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

Score one for Mr. Market. After a huge victory in the wake of the annual techpalooza known as the Consumer Electronics Show, my five stocks gave back a point and a half in this three-year contest. Such is the yin and yang of investing.

Indexers suffered more yin than yang this week. Of the major indices, only the Dow rallied during the week. The S&P 500 was off by 0.76%, while the tech-heavy Nasdaq gave back 2.39%. Small caps took the biggest beating, as the benchmark Russell 2000 fell by 4.26%. MannKind (Nasdaq: MNKD), down by 40%, and Vivus (Nasdaq: VVUS), down by 22%, led the week's small-cap losers.

Maybe the skeptics have a point. Not only are we fed a constant stream of news about U.S. municipalities nearing bankruptcy, but we also had a meeting between President Obama and China's President Hu at the White House this week that accomplished little. The Sino superpower's currency still isn't market-based, and while an order for 200 Boeing jets is an improvement, the U.S. remains on the losing end of a $250 billion-plus trade imbalance.

The week in tech
Silicon Valley pays attention to that number, since China remains a hotbed for tech manufacturing. But it wasn't the trade deficit that drove down the share prices of so many techies this week. Disappointing earnings and downgrades gave traders all the selling momentum they required.

Consider Seagate Technology (Nasdaq: STX). Long a tech bellwether and one of the industry's top makers of hard drives, the company posted $0.31 per share in fiscal Q2 earnings and missed the average analyst estimate. Profits were also down sharply from last year's $1.03 per share, according to data from Capital IQ.

Google (Nasdaq: GOOG) also spooked tech investors when Eric Schmidt passed the CEO reins to co-founder Larry Page. Schmidt moves into the role of executive chairman, where he will work on acquisitions and try to smooth relations with federal regulators.

Page, meanwhile, will be called on to manage a global workforce of 24,000 at a time when The Big G faces competition in every market in which it competes. Bulls are hoping he can be the next Bill Gates. Bears see him as the next Jerry Yang.

For now, I'm siding with the bulls. Page helped unleash one of history's greatest disruptive innovations when he and Sergey Brin reinvented the search engine in the '90s. If he's able to rekindle even a fraction of that innovative mojo as CEO, today's investors will be handsomely rewarded.

How do I know? 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.

Checkup time!
Now let's move on to the rest of today's update:

  • On Tuesday, IBM reported yet another quarter of market-pleasing results. Revenue improved by 7% in Q4 after accounting for currency effects. Per-share earnings rose by 16%, easily beating the average Wall Street estimate. The results continue a winning streak for Big Blue, which last week emerged victorious in a contest between its "Watson" supercomputer and two all-time champions of the television game show Jeopardy!

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

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Fool contributor Tim Beyers is a member of the market-beating Rule Breakers stock-picking team. He owned shares of Akamai, Google, 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. You can also get his insights delivered directly to your RSS reader. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool owns shares of Google, IBM, and Oracle. The Fool is also on Twitter as @TheMotleyFool. Its disclosure policy is tech-tastic.