How This Big Win Became a Loss for My Tech Portfolio


Each week, I report the results of the Big Idea Portfolio, a collection of five tech stocks that I believe will crush the market over a three-year period. I've done it before; my last tussle with Mr. Market ended with me beating the index's average return by 13.35%.

Real money was on the line then as it is now, which means any one of the five stocks you see below could cause me a lot of public embarrassment. This week, Google (NAS: GOOG) turned negative for the first time in months. I'm at a loss to understand why.

Maybe demand has something to do with it? According to its devices feed at Google+, the Nexus 4 smartphone sold out within minutes in most territories. The Nexus 7 shows as still available but the high-end version of the Nexus 10 -- which competes with the top-of-the-line iPad -- still shows as "sold out." Usually it's Apple (NAS: AAPL) reporting this sort of opening-week frenzy.

And that should be good for Google. Trouble is, with devices selling out so fast, the search king and Nexus 4 partner LG seem to have failed at properly anticipating inventory. Profits that were there for the taking may be headed elsewhere.

On the bright side, a strong showing by the Nexus 10 tablet offers even more evidence that analysts at the Consumer Electronics Association were lowballing when they predicted just 32 million tablets sold in the holiday quarter. Steep discounting by (NAS: AMZN) for its existing Kindle Fire tabs could also add to the total.

What's the Big Idea this week?
So far, what "could be" isn't playing well with investors who seem determined to take profits till a rally convinces them to do otherwise. The resulting tech sell-off put me a shade behind Mr. Market for the third consecutive week in our battle for stock-picking supremacy.

But that also isn't saying much: All four of the major indexes declined this week. The Dow dropped 2.13% while the tech-heavy Nasdaq fell 2.34% and the S&P 500 declined 1.92%. The small-cap Russell 2000 led the losers with a 3.12% drop, according to data supplied by The Wall Street Journal. Here's a closer look at where I stood through Thursday's close:


Starting Price*

Recent Price

Total Return









Rackspace Hosting (NYS: RAX)




Riverbed Technology (NAS: RVBD)



(34.6%) (NYS: CRM)








S&P 500 SPDR








Source: Yahoo! Finance.
* Tracking began at market close on Jan. 6, 2012.
** Adjusted for dividends and other returns of capital.

Notable newsmakers
None of the other stocks in my portfolio reported major news this week, though Rackspace and Riverbed continued to suffer at the hands of skeptics despite signs of continued growth. LinkedIn (NYS: LNKD) suffered a similar fate when Facebook (NAS: FB) revealed a new jobs app this week.

In earnings news, Cisco Systems (NAS: CSCO) reported better-than-expected results and announced plans to help telecom carriers expand their high-speed wireless voice and data networks. The stock moved up as much as 7% following the favorable report, yet there remain good reasons to buy at current levels. Notably, a cheap valuation and a pressing need for infrastructure to support the coming spike in Internet traffic.

IDC pegs total spending on cloud computing services is on track to grow 18.5% annually to $43 billion by 2016. Few are investing as heavily in the cloud as Amazon, which this week announced a new data center in Sydney, Australia. Chief Technology Officer Werner Vogels broke the news on his blog, writing that there is "tremendous interest" in Amazon Web Services in the Asia-Pacific marketplace.

Will interest lead to income and higher returns? Neither Vogels nor anyone else can say for sure, which is why it's not surprising to see investors staying cautious. After all, there's a lot more than AWS to consider before buying shares of Amazon.

Our brand-new special report has the rest of the story. Get it now and you'll learn what's really driving the company's growth, and whether now is the time to buy. You also get a full year of free updates when the story changes -- just click here now to get started.

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Fool contributor Tim Beyers is a member of the Motley Fool Rule Breakersstock-picking team and the Motley Fool Supernova Odyssey I mission. He owned shares of Apple, Google, Rackspace Hosting, Riverbed Technology, and at the time of publication. Check out Tim's Web home, portfolio holdings, and Foolish writings, or connect with him on Google+, Tumblr, or Twitter, where he goes by @milehighfool. You can also get his insights delivered directly to your RSS reader.The Motley Fool owns shares of Riverbed Technology, Cisco Systems, Apple,, Facebook, LinkedIn, and Google. The Fool owns shares of and has created a synthetic short position on The Fool has bought calls on Facebook. Motley Fool newsletter services have recommended buying shares of, Rackspace Hosting, Facebook, Apple,, Google, Riverbed Technology, and LinkedIn, creating a bull call spread position in Apple, and creating a synthetic long position in Riverbed Technology. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days. The Motley Fool has a disclosure policy.

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