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Google Inc (GOOG): Is The Stock’s Rally Over for Now?

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Each week, I endeavor to 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 time, Google Inc (NASDAQ:GOOG) fell slightly in a big week for the market indexes. Facebook Inc (NASDAQ:FB) and Microsoft Corporation (NASDAQ:MSFT) deserve most of the blame.

Google stock retreated about 80 basis points last week as thousands awaited Friday’s official release of Facebook Home for Android. That appears to have been an overreaction. As of Sunday, more than 3,000 had downloaded and rated the app at Google Inc (NASDAQ:GOOG)’s Play Store. Of those, nearly 1,600 give the app 1 out of 5 stars. Overall, they give it 2.4 stars.

“No widgets, kinda clunky, and pretty much just Facebook with access to your apps drawer. Meh, an unimpressive launcher compared to most others,” wrote reviewer Jeremy Noah, who called the app “good for Facebook-ophiles” after trying the app on his Samsung Galaxy S3.

Google IncThe message? Facebook has much work to do before Home becomes a suitable substitute for Google Inc (NASDAQ:GOOG)’s existing Android interface. In the meantime, Microsoft has allied itself with 16 others to urge European regulators to take action against the search king for what it deems “predatory” efforts to control the market for mobile software and devices.

We don’t yet know how EU officials will respond to Mr. Softy’s urging, or Google’s own efforts to settle existing grievances. The resulting uncertainty appears to be weighing on Google stock.

What’s the Big Idea this week?
Elsewhere, a small move in Apple Inc. (NASDAQ:AAPL) shares fell short of the market’s overall rally, costing me  another 135 basis points in my three-year battle with Mr. Market. All four indexes reported strong gains.

This time, the Nasdaq led the way with with a 2.84% surge, followed by the S&P 500’s 2.29% rally, the Russell 2000’s 2.12% jump, and the Dow’s 2.06% gain, according to data supplied by The Wall Street Journal. Here’s a closer look at where I stood through Friday’s close:
Company Starting Price* Recent Price Total Return
Apple $416.26** $429.80 3.3%
Google $650.09 $790.05 21.5%
Rackspace Hosting, Inc. (NYSE:RAX) $41.65 $48.40 16.2%
Riverbed Technology, Inc. (NASDAQ:RVBD) $25.95 $14.60 (43.7%)
salesforce.com, inc. (NYSE:CRM) $100.93 $169.52 67.9%
AVERAGE RETURN 13.04%
S&P 500 SPDR $124.39** $158.80 27.66%
DIFFERENCE (14.62%)

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

Notable newsmakers
Among the other tech stocks making news last week:

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