Welcome to week 33 of my stock-picking throwdown with Mr. Market. Let's get right to the numbers:


Starting Price*

Recent Price

Total Return





Harris & Harris












Taiwan Semiconductor
















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

Has the market finally hit a bottom? It sure seems like it. A huge rally in the Nasdaq has put the exchange into positive territory for the year, while the S&P 500 has pared its losses significantly.

All this, despite unprecedented agreement between Big Media scapegoat-cum-trader Jim Cramer and buy-to-hold super-investor Warren Buffett. Both now say that federal intervention into the current economic crisis could herald disastrous consequences.

Even so, Treasury Secretary Tim Geithner and Federal Reserve Chairman Bern Bernanke this week asked Congress for more authority in regulating risk-taking and compensation practices for the nation's largest banks. Outrage over AIG bonuses likely helped spur the move, but the national mood is so sour that investors have turned away from all financial institutions, even good ones like American Express (NYSE:AXP).

The week in tech
Tech, too, is suffering a poor reputation after a week of layoffs. Amazon.com (NASDAQ:AMZN) is closing three distribution centers, with the likely result of 210 lost jobs. Google (NASDAQ:GOOG), too, is cutting employees, preparing to bid farewell to some 200 members of its sales and marketing staff.

"We overinvested in some areas in preparation for the growth trends we were experiencing at the time," said Omid Kordestani, senior vice president of global sales and business development at Google. He means that, for now, growth is slowing -- not surprising, when a recent Duke University survey of 543 U.S. company chief financial officers concluded that tech spending would decline 6% this year.

Depressed? Don't be! There's also good tech news to report. Red Hat (NYSE:RHT) put up strong fourth-quarter numbers. Revenue rose 17.5%, and cash from operations improved 9.5%. Conversions help account for some those gains.

See, many enterprise customers have been trying Red Hat's Linux software in limited doses. Those who standardize buy large, lucrative support contracts and production licenses, further boosting Red Hat's already-generous free cash flow. CEO Jim Whitehurst recently told investors to expect plenty of successes in this area, calling the opportunity for conversions "huge."

Yet shares of Red Hat remain well below their 52-week high. That's an opportunity. History shows that panicky markets like these reward prudence in picking stocks -- stick to the very best -- and patience in waiting for gains. That's how David Gardner produced a decade of 20% returns in the real-money Rule Breaker portfolio. 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:

  • The Wall Street Journal this week reported that IBM would ship 5,000 jobs, most from its services division, abroad. India is expected to be biggest beneficiary, though Big Blue has several service centers located elsewhere in the emerging world. Either IBM's rosy 2009 earnings outlook is in jeopardy, or CEO Sam Palmisano is cutting costs to make a run at Sun Microsystems (NASDAQ:JAVA). I'm betting on the latter.
  • Akamai had a strong week, but questions over its competitive advantage linger, thanks to comments from hosting service provider Voxel and its CEO, Raj Dutt. Dutt predicts that hosters will follow Voxel and create their own content delivery networks, eliminating the need for Akamai's services. I don't buy it.

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

Get your clicks with more techie Foolishness:

Amazon.com is a Stock Advisor selection. American Express is an Inside Value pick. Akamai, Google, and Harris & Harris are Rule Breakers recommendations. Try any of these Foolish services free for 30 days. There's no obligation to subscribe.

Fool contributor Tim Beyers had stock and options positions in Apple and stock positions in Akamai, 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.

The Motley Fool owns shares of American Express and is also on Twitter as @TheMotleyFool. Its disclosure policy is tech-tastic.