Welcome to week 137 of my stock-picking throwdown with Mr. Market. Let's get right to the numbers:


Starting Price*

Recent Price

Total Return

Akamai $22.23 $37.35 68%
Harris & Harris $6.22 $5.17 (16.9%)
IBM (NYSE: IBM) $122.97** $164.05 33.4%
Oracle $22.37** $33.54 49.9%
Taiwan Semiconductor $9.35** $12.65 35.3%
AVERAGE RETURN -- -- 33.94%
S&P 500 SPDR $120.04** $132.86 10.68%
DIFFERENCE -- -- 23.26

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

At least I didn't lose by much this week. Mr. Market clawed back 12 basis points in our three-year contest. He'll have to do better than that, though. I'm up more than 20 percentage points with less than four months to go in this three-year contest.

Even so, there's no such thing as a safe lead in investing. All four of the major indexes turned south after weeks of rallying. The small-cap Russell 2000, which just a week ago was up more than 8% for the year, lost 1.01% and is now up 7.3% year-to-date. The Nasdaq, down 0.56%, performed second worst while the Dow fell 0.24% and the S&P 500 suffered a slight 0.04% loss, CNBC reports.

Blame Congress for the retreats. Lawmakers couldn't agree on a budget compromise, and up until late Friday night it seemed as if a shutdown of the federal government was inevitable. A last-minute deal between party leaders keeps the doors open for a week, but none of the (ahem) compromises addresses the long-term issue of funding entitlements. Rep. Paul Ryan (R-Wis.) has a plan, but its underlying assumptions read more like a fairytale than a reasonable narrative for achieving fiscal austerity.

So problems remain. And yet some stocks were unwilling to submit to Mr. Market's pessimism. Would-be SodaStream (Nasdaq: SODA) competitor Primo Water (Nasdaq: PRMW) continued a multiweek rally driven by investor enthusiasm for its beverage products and growth opportunity. Analysts expect both companies to grow profits by 30% annually over the next five years.

The week in tech
If only Silicon Valley's stalwarts were growing as fast. Data networking stalwart Cisco Systems (Nasdaq: CSCO) last enjoyed 30% profit gains in 2003 -- it's been downhill ever since, and that's in spite of a spate of acquisitions.

CEO John Chambers knows that frustrates shareholders. Two weeks ago, he instituted a dividend policy to reward those who've been uncommonly patient. This week, he apologized for underperformance in a somewhat apoplectic memo to employees. He promised only platitudes -- bolder decisions, stricter discipline, and to not fix what isn't broken. Whatever that means.

As Chambers was promising bold decisions, Texas Instruments (NYSE: TXN) was making some. The chipmaker this week agreed to pay $6.5 billion to acquire analog peer National Semiconductor (NYSE: NSM). The deal gets TI one step closer to serving every conceivable type of processing need, and in the process could kick off an industrywide acquisitions binge.

Finally, as the Valley says goodbye to National Semi, pundits and investors are taking a second look at another of tech's elder class: Seagate Technology (NYSE: STX). This week the drive maker talked up the smallest external disk drive we've yet seen and then pre-announced impressive fiscal third-quarter earnings. Management also reinstated Seagate's dividend at what amounts to a 5% yield.

Let this be a lesson, Fool. Young companies aren't the only ones to introduce disruptive innovation. Techies of every since deal in the business of breakthroughs, and unleash billions in stock market wealth in the process.

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's researchers have developed a way to target difficult-to-eradicate bacteria with what amounts to a nanotech smart bomb. I know that sounds nuts. What the heck is Big Blue doing in the biotech business, anyway? The difference here is IBM has been and still is one of the world's foremost authorities when it comes nanotechnology. And besides, cranking out patentable (and royalty-inducing) innovations is a long-standing tradition for the company. This is just the latest.

There's your checkup. See you back here next weekend for more tech stock talk. In the meantime, don't forget to keep up with my tech portfolio by adding these stocks to your watchlist today:

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.