Each week, I report the results of the Big Idea Portfolio, a collection of five tech stocks that I believe will crush the market over a three-year period. I've done it before; my last tussle with Mr. Market ended with me beating the index's average return by 13.35%.
Real money was on the line then as it is now, which means any one of the five stocks you see in the following table could cause me a lot of public embarrassment. This week, Apple (AAPL +0.27%) -- which had been one of my portfolio's top performers -- cost me the most.
The Mac maker is down about 10 percentage points from my last update. Why? Lower-than-expected iPhone 5 sales may have something to do with it. Early estimates had Apple moving as many as 8 million of the new handsets during its first weekend on sale. The final figure came in closer to 5 million.
More recently, investors sold after an appellate court lifted a preliminary injunction banning Samsung from selling its Galaxy-branded smartphone here in the United States. The sell-off suggests the Big Money fears Apple's ability to compete with its South Korean rival, but fresh data says that's an overreaction. In a new report, ChangeWave Research found that roughly one-in-three, or 32%, of consumers surveyed said they were either "very likely" or "likely" to buy the iPhone 5:
Source: ChangeWave Research.
The same survey taken at the time of the 4S launch found that only 21.5% were likely to buy, yet the handset went on to set sales records. The message? Don't be surprised if today's sellers are tomorrow's buyers.
What's the Big Idea this week?
Mr. Market's slump didn't quite match Apple's, but it was also plenty steep enough to cause investors pain. The tech-heavy Nasdaq fell 2.77% as the blue-chip Dow Jones Industrial Average pulled back 2.08% and the S&P 500 declined 1.92%. Small caps did best as the Russell 2000 slumped a more reasonable 1.55%, according to data supplied by The Wall Street Journal.
Yet indexers can take at least some (admittedly cold) comfort in knowing that as bad the markets performed this week, my five stocks did worse. Here's where I stood through Thursday's close:
|
Company |
Starting Price* |
Recent Price |
Total Return |
|---|---|---|---|
|
Apple |
$420.59** |
$628.10 |
49.3% |
|
Google (GOOG 2.14%) |
$650.09 |
$751.48 |
15.6% |
|
Rackspace Hosting (RAX +0.00%) |
$41.65 |
$67.04 |
60.9% |
|
Riverbed Technology (RVBD +0.00%) |
$25.95 |
$22.10 |
(14.8%) |
|
Salesforce.com (CRM 1.66%) |
$100.93 |
$152.61 |
51.2% |
|
AVERAGE RETURN |
-- |
-- |
32.44% |
|
S&P 500 SPDR |
$125.83** |
$143.36 |
13.93% |
|
DIFFERENCE |
-- |
-- |
18.51 |
Source: Yahoo! Finance.
* Tracking began at market close on Jan. 6, 2012.
** Adjusted for dividends and other returns of capital.
Notable newsmakers
None of my stocks rallied. Even Google, a cloud-computing powerhouse that should be benefiting nearly as much as Apple from sharp declines in the PC market, saw its stock slide after Microsoft (MSFT +1.34%) said it will add the search king as a defendant in its patent battle with Motorola Mobility. The fight has thus far been limited to the German courts.
Meanwhile, additional work to boost its product line has done little to move Riverbed's shares higher. This week, the company announced a partnership with VMware (VMW +0.00%) that will bring tools to Riverbed's Steelhead WAN Optimization gear. The goal: make virtualized environments more efficient and cost-effective.
Facebook (FB +0.72%), too, is improving. The social network this week launched gift-giving in its Android app and plans to add similar functionality to its iOS app within weeks. It's a bold stroke for the company, which had publicly struggled to develop a mobile strategy. No longer.
