Welcome to week 111 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 $45.04 102.6%
Harris & Harris $6.22 $4.33 (30.4%)
IBM $124.01** $138.72 11.9%
Oracle $22.40** $27.69 23.6%
Taiwan Semiconductor $9.35** $10.28 9.9%
AVERAGE RETURN -- -- 23.52%
S&P 500 SPDR $121.20** $115.89 (4.38%)
DIFFERENCE -- -- 27.9

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

Mr. Market has won plenty of weeks in this three-year contest, and last week was one of his best. I'm no longer winning by 30 percentage points.

Bullish investors rallied during the week, largely, I suspect, because of comments from Berkshire Hathaway (NYSE: BRK-B) chief Warren Buffett, who believes stocks have become a bargain relative to bonds. "I can't imagine anyone having bonds in their portfolio when they can own equities, a diversified group of equities," he said.

He's right in that dividend stocks look attractive right now. I own many. Three of them you'll find in the tech portfolio above.

Buffett was also at the center of controversy this week in calling for taxes on himself and the rest of the Billionaire Boys' Club:

If you get $100 billion more of taxes ... from people like me at the top, it means you borrow $100 billion less out of the economy. Somebody has to come up with that $100 billion ... you're taking the money from the economy either way. The only question is whether you take it by borrowing or by taxes.

Would higher taxes on the super-rich hurt common investors? I'm not so sure, but I'm also loath to back any plan that would raise capital gains or dividend taxes.

True, the super-rich benefit from lower rates on cap gains and dividends, but so do common investors like me. As a Fool, I strongly believe we should make stock investing easy and profitable for common investors.

The week in tech
Of course, Mr. Market's mood swings can sometimes make it difficult to profit as a stock investor. Just ask owners of cloud-computing superstars Rackspace (NYSE: RAX) and VMware (NYSE: VMW).

Both stocks took a beating after Equinix (Nasdaq: EQIX) this week reduced third-quarter and full-year revenue guidance. The data-center owner and operator cited churn and unexpected discounting and also said it hasn't yet realized the full benefits of integrating its acquisition of co-location specialist Switch & Data.

Microsoft (Nasdaq: MSFT), meanwhile, made headlines in announcing the release schedule for its Windows Phone 7. Few seem to think the mobile operating system will have much effect; I've argued that Mr. Softy should have abandoned Windows Mobile months ago.

But Windows Phone 7 wasn't the big news out of Redmond this week. The major story was the one Microsoft wouldn't confirm -- the one that says CEO Steve Ballmer is planning a bid for Adobe Systems (Nasdaq: ADBE). Shares of Adobe soared by 11% on Thursday, when the story broke.

Would Microdobe become a powerhouse? Possibly, but I don't see much value for shareholders in a combination. Adobe isn't growing quickly or profitably enough to justify a $15 billion buyout. And besides, according to history, it's not the megastocks but the disruptors that end up as millionaire-makers.

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:

  • Like many of its cloud-computing peers, Akamai took a beating after the Equinix news. The stock has rallied a little bit since, and for good reason. Akamai isn't a data-center operator. Instead, it operates a server network out of facilities owned by the likes of Equinix and its peers. If data-center operators were being forced into discounting, Akamai would be a likely benefactor.
  • On Friday, Bloomberg reported that IBM had won a \ .8 billion deal to integrate the technology systems of ABN Amro and Fortis Bank of The Netherlands. Call it more evidence of the health of Big Blue's consulting and outsourcing business.

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

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Akamai, Rackspace Hosting, and VMware are Motley Fool Rule Breakers recommendations. Adobe and Berkshire Hathaway are Motley Fool Stock Advisor selections. Berkshire Hathaway and Microsoft are Motley Fool Inside Value picks. Motley Fool Options has recommended subscribers open a diagonal call position in Microsoft. Try any of our Foolish newsletter services free for 30 days.

Fool contributor Tim Beyers is a member of the market-beating Rule Breakers stock-picking team. He owned shares of Akamai, Berkshire Hathaway, 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. The Motley Fool owns shares of Berkshire Hathaway, IBM, Microsoft, and Oracle and is also on Twitter as @TheMotleyFool. Its disclosure policy is tech-tastic.