Welcome to week 113 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 $46.61 109.7%
Harris & Harris (Nasdaq: TINY) $6.22 $4.27 (31.4%)
IBM (NYSE: IBM) $124.01** $139.83 12.7%
Oracle $22.40** $28.82 28.7%
Taiwan Semiconductor $9.35** $10.41 11.3%
AVERAGE RETURN -- -- 26.2%
S&P 500 SPDR $121.20** $118.13 (2.5%)
DIFFERENCE -- -- 28.7

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

Give Mr. Market credit. He's still badly trailing my tech portfolio, but he's regained significant ground and is nearing even for the first time in close to two years. (See the history of this contest.)

Yet my foe suffers from a huge disadvantage: He isn't a stock picker. He can't concentrate on bargains, and there are still plenty to be had.

Legendary investor Bill Miller of Legg Mason this week spoke effusively about the 50% upside available to today's buyers of Hewlett-Packard, Intel, and Microsoft. His thesis? All three have the capacity to substantially raise their dividends.

Even the airlines look like a buy at present levels. Shares of JetBlue (Nasdaq: JBLU) and Southwest Airlines (NYSE: LUV) rallied nicely on strong earnings reports, yet both stocks still sport attractive valuations. United Continental Holdings could have appeal as a short-term informed speculation.

Long-term opportunities also abound thanks to the principle of "time arbitrage." This strategy involves buying and holding stocks beaten down in the short term, confident Mr. Market will eventually price them according to the value the underlying business creates.

The week in tech
For a short time this week, it appeared that Apple (Nasdaq: AAPL) could also become a lush pick for time arbitrageurs. Shares of the Mac maker fell by more than 7% in after-hours trading Monday, when the company reported lighter-than-expected iPad sales. The stock never fully recovered and ended the week down 2.3%.

A 2% sell-off doesn't make for time arbitrage opportunity, but there's still plenty to like about Apple's valuation. Less delicious is the war of words between Apple CEO Steve Jobs and Google's (Nasdaq: GOOG) Andy Rubin over which platform -- iOS or Android -- is more "open." Expect this debate to resolve exactly nothing.

But let's not turn this into the all-Apple channel. Strong earnings reports reverberated throughout the tech world this week. On Thursday, Netflix (Nasdaq: NFLX) rose by more than 10%, to within spitting distance of a new 52-week high, when it reported $553 million in third-quarter revenue and 1.9 million new subscribers, more than triple last year's Q3 net adds.

But don't get too excited. Even as well as tech's monster stocks are performing, 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:

  • IBM joined Apple in reporting earnings on Monday, though the Street wasn't as pleased with what Big Blue had to say. IBM reported a 3% increase in revenue and an 18% improvement in earnings. But neither of those numbers was enough to keep investors from getting spooked by lower growth in signings of long-term services contracts. Shares of IBM fell by 1% for the week.
  • We'll get a closer look at Harris & Harris' progress with its strategy of mixing microcap public investments with its venture-capital portfolio when the company reports third-quarter results on Nov. 12.

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

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