Welcome to week 118 of my stock-picking throwdown with Mr. Market. Let's get right to the numbers.


Starting Price*

Recent Price

Total Return

Akamai $22.23 $51.06 129.7%
Harris & Harris $6.22 $4.49 (27.8%)
IBM (NYSE: IBM) $123.46** $145.81 18.1%
Oracle (Nasdaq: ORCL) $22.40** $27.74 23.8%
Taiwan Semiconductor $9.35** $11.00 17.6%
AVERAGE RETURN -- -- 32.28%
S&P 500 SPDR $121.20** $120.20 (0.83%)
DIFFERENCE -- -- 33.11

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

After a couple of rounds for Mr. Market, I'm back on the scorecard with a nice week in which my tech portfolio added almost 2 percentage points to my lead in this three-year contest. (See how it all began.)

What's driving the gains? I'd say uncertainty more than anything else. In the absence of clear evidence of a recovered economy -- and let's be honest, there isn't any -- my portfolio of cash-rich techies, three of which pay dividends, is about as good as you'll find. Not that I'm biased or anything. (Grins.)

Yet my stocks may look like laggards over the next two weeks. Black Friday shopping sprees began in earnest Thursday night and continued through the next day, leading to a decent retail rally. In a down market, Pacific Sunwear (Nasdaq: PSUN) was up more than 1.8% in intraday trading, Guess? (NYSE: GES) was up 1.7%, and Express (Nasdaq: EXPR), one of our Black Friday bargain stocks, was up just less than 2%.

Retailers are benefiting from a newly flush stampede of shoppers. Economists surveyed by the Associated Press estimate that consumer spending will rise by 2.4% in the holiday quarter, following a 2.8% rise in the July-September quarter, BusinessWeek reports.

Credit whoever you want for this renewed sense of growth, but former President Bush and Berkshire Hathaway Chairman Warren Buffett are equally thankful for the widely despised TARP medicine administered at the of 2008. Today's economic malaise, such as it is, would have been a calamity without stimulus, both men argue.

The week in tech
Are they wrong? I don't think so, but as my tech portfolio shows, I'm also unwilling to bet on tech stocks that are too dependent on a broad economic recovery. I'd rather cling to stocks with healthy cash flows and even healthier balance sheets.

Take Google (Nasdaq: GOOG), for example. The leading search-engine operator has more than $33 billion in cash and short-term investments in the bank -- more than enough assets to fund the development of its own tablet to compete with the iPad.

Don't laugh; that's exactly the sort of step The Big G needs to take. Yes, Samsung sold 600,000 Galaxy tablet computers in its first month of release, but that pales next to the 1 million Wi-Fi-only iPads sold during its first 30 days on the market.

There's a simple reason for this: For as functional as the Galaxy tab appears to be, at 7 inches it's too small to effectively compete with the iPad. Video streaming requires a bigger screen.

Will Google do what's necessary to create a bigger Android tablet? I hope so. But even if it doesn't, someone will. An unknown, perhaps. Often, it's the little-known disruptors that grow to become millionaire-maker stocks.

We've seen it happen time and again. 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.

  • Further cementing his company's bellwether status, IBM chief Sam Palmisano will join Federal Reserve Chairman Ben Bernanke, Ford’s Alan Mulally, and local business representatives in a panel discussion on the economy at Ohio State University next week.
  • Oracle took another chunk out of SAP (NYSE: SAP) when a judge ruled in its favor in a longstanding legal battle. The German software supplier has been ordered to pay $1.3 billion in damages for illegally downloading and profiting from Oracle software. An appeal is under way.

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

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Berkshire Hathaway and Ford are Motley Fool Stock Advisor selections. Akamai and Google are Motley Fool Rule Breakers recommendations. Berkshire and Google are Motley Fool Inside Value picks. Guess? is a Motley Fool Hidden Gems recommendation. Motley Fool Options has recommended that subscribers write Guess? covered calls. 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, 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 Berkshire Hathaway, Google, Guess?, IBM, and Oracle. The Fool is also on Twitter as @TheMotleyFool. Its disclosure policy is tech-tastic.