Welcome to week 121 of my stock-picking throwdown with Mr. Market. Let's get right to the numbers:


Starting Price*

Recent Price

Total Return

Akamai $22.23 $50.87 128.8%
Harris & Harris $6.22 $4.66 (25.1%)
IBM $123.46** $145 17.4%
Oracle (Nasdaq: ORCL) $22.40** $31.46 40.4%
Taiwan Semiconductor (NYSE: TSM) $9.35** $12.69 35.7%
AVERAGE RETURN -- -- 39.44%
S&P 500 SPDR $121.20** $124.30 2.56%
DIFFERENCE -- -- 36.88

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

With this week's action, my tech portfolio's average return is nearing that of our Motley Fool Rule Breakers scorecard. Color me pleased. Rule Breakers is my favorite Fool service -- I've contributed picks in each of the past five years.

Mr. Market's pleasant mood has aided our returns. The S&P 500 closed the week up 0.28% for the week and 11.6% for the year. The tech-heavy Nasdaq rallied 0.21% over the past five days and is now up 16.5% year-to-date. Barring a massive year-end sell-off, 2010 will reward most indexers with double-digit gains.

Some individual investors have done better. Capital IQ says 192 U.S.-exchange-listed companies worth at least $250 million in market cap have doubled this year, some of which are poised to keep growing fast. For example, Baidu (Nasdaq: BIDU) and FX Energy (Nasdaq: FXEN) are on track to boost revenue by at least 50% annually over the next two years.

These and other stocks could continue to do well in 2011 now that President Obama has signed into law a temporary continuation of the Bush tax cuts, plus additional incentives that reduce taxes for all workers. Investors should also benefit from low capital gains and corporate tax rates.

Sound good? Sure. Here at the Beyers household, we'll save thousands in taxes next year. But there's always a cost when government largesse is doled out, whether it's in the form of stimulus or tax cuts.

"It's not terribly encouraging that the first major step in fixing our massive fiscal deficit was one of the largest tax cuts in history -- and an unfunded one at that. It basically shows no will to make tough decisions," said my Foolish colleague Morgan Housel when I asked him about the bill.

The week in tech
How Silicon Valley will be affected by the tax changes is unknown, but taxes have been a sore point for many area companies. Google (Nasdaq: GOOG) has been accused of skirting tax laws by exploiting foreign tax loopholes to boost earnings.

Maybe they have, but let's also not forget that the Big G is also an earnings machine. Competitors would love nothing more than to gum up the works, and they appear to be targeting its wildly popular Android operating system.

A consortium led by Microsoft (Nasdaq: MSFT) and including Oracle, EMC (NYSE: EMC), and Apple this week filed papers with the German antitrust authority describing its ownership of 882 patents once owned by Novell that could be used to make claims against Android. The strategy? Limit Google's ability to innovate, or force it into a costly licensing agreement. Either way, the Big G would take a hit.

But don't let this possibility keep you out of the stock, argues my Foolish colleague Anders Bylund. Google is his pick for the best tech stock for 2011. Five of us submitted picks for the latest edition of this annual series, which ran last week at Fool.com.

Should you care? Yes, I think so. Last year's picks beat the market by an average of 70 percentage points. Very often, it's among the techies that you'll find disruptive innovators 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:

  • Oracle is on a roll. Fresh off a legal victory over SAP, the database king this week blew away the Street estimates in reporting fiscal second-quarter results. Revenue soared 47%, while profit improved 28% to $0.37 per share. Oracle also gave third-quarter profit guidance that exceeded analysts' projections.
  • As a group, Taiwanese shares rose to a 31-month high on Friday. Taiwan Semiconductor benefited from the tailwind, rising 2.4% in intraday trading. The rally comes at an interesting time. On Thursday, TSMC fired a U.S.-based manager who had been implicated in a high-profile insider trading scandal.

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

Get your clicks with more techie Foolishness:

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Apple is a Motley Fool Stock Advisor selection. Google and Microsoft are Motley Fool Inside Value picks. Akamai, Baidu, and Google are Motley Fool Rule Breakers recommendations. 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 had stock and options positions in Apple and stock positions in Akamai, Apple, 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 may not 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 Apple, Google, IBM, Microsoft, and Oracle. The Fool is also on Twitter as @TheMotleyFool. Its disclosure policy is tech-tastic.