2010 was a great year in the markets, and a decent year for the Rayno Portfolio, but let's not get too excited. It's like being happy about getting a new Toyota after your buddy totaled your Porsche. That's how I view the 2009/2010 market in the context of the 2008 financial debacle. Yes, I like the Toyota, but can I get the Porsche back too?
 
The Rayno Model Portfolio delivered a solid 9% gain -- 10.4% total if you include dividends. This is a slight underperformance in the S&P gains. But please keep in mind that we advised readers to go to 100% CASH (or better yet gold) at the beginning of 2008 -- and so our 2008 Model Portfolio lost no money in one of the worst financial crises in history. A 10.4% gain looks a lot better when you managed to avoid the 35% decline two years earlier.

The Rayno Model Portfolio still has a track record of having NEVER LOST MONEY, and the cumulative returns since 2005 are now in excess of 40% total since 2005. Again, a lot of this goes back to the decision of going to 100% cash in 2008.

Sometimes the best way to make money is to avoid losing it.

The results of the model portfolio are below. To summarize, there were some volatile results in our picks. Our best pick was silver, via the Silver ETF (SLV), which was up 70%. As you know we have been fans of the precious metals for many years, and we believe they are in strong, secular bull markets that will continue. I'm still a huge silver bull.

This bidding war between HP and Dell for 3Par says something to me about big technology companies: They are stuck. They can't grow internally, so they have to look outside the company.

If you think about the evolution of all big industries, they trend toward consolidation and giant companies eating up new companies in the search for growth and innovation. This certainly appears to be the case with players like HP, Dell, Microsoft, and Cisco. The new innovation is not coming from within, it's coming from outside.

BIG SKY, MT -- RightNow Technologies  (Nasdaq: RNOW), a provider of customer-service software, today launched an ambitious new platform to open up the way customer service applications are built "in the cloud."

With the new "Cloud CX Platform," RightNow is honing its focus around improving customer experiences across the Web. With so much marketing hype and confusion built around "cloud computing," this is an important expansion of RightNow's CX (Customer Experience) product that the company hopes will help differentiate itself in the larger cloud services market -- basically any software than can be sold as a service (Saas).

"This is our largest product announcement to date," said Greg Gianforte, CEO of RightNow, at the launch event here this morning. "We're exposing our cloud platform to our customers."

At the Rayno Report, we are always looking at hot new growth trends. Why not rehab? Charlie Sheen and Lindsay Lohan are doing it.

Now, I haven't done much research on it but I don't think there are too many publicly-listed rehab plays. Maybe there is a private-equity rollup in there somewhere.

What we really need is rehab for Washington D.C. and Wall Street. Now, that's a great idea! Can you see all the Federal Reserve officials, Senators, and Goldman Sachs bankers doing Yoga in California with Lindsay Lohan? Hey, it worked for Michael Milken.

Okay, onto more news:

• Pfizer beats the street and its stock-price hiccups (Reuters). Gets my award as the most boring blue-chip of the last ten years. Maybe it's time to buy that 5% divvy?
• Meanwhile, when's the last time you heard about Pfizer and Proctor & Gamble both listed in the WSJ as "Hot Stocks" (WSJ)?
• For those who think China's now a preeminent global leader: China's Three Gorges dam is imperiled by islands of garbage (Reuters).
• Blackberry threatened by a Gulf states ban (BBC).
• Federal government declares Gulf Spill the "worst ever" (CNN). No report on what they think about Charlie Sheen's shenanigans.
• Pending home sales decrease 2.6% (Bloomberg). Hmm. People are buying houses. Shocking, isn't it?
• Blackberry is introducing it's new touch-screen phone today (Bloomberg). No word on whether you can use it to call Saudi Arabian intelligence officials.
• Remember when the U.S. Dollar was a piece of trash? Well, that's back again... (WSJ). I will trade you dollars for rubles.
• Is Bing outmaneuvering Google? (CNN).
• Corning is trying to bring back "Gorilla glass," a product from the 1960s (AP). Can you call something 50 years old innovation?

Tech earnings reports are rolling in like Budeweisers in a NASCAR infield, and we've got it covered. What's striking is the range of results, from earnings bombs like Netflix, and Amazon, to solid efforts from blue chips Apple and Microsoft.

Here's our recap of the Winners and Losers of earnings season:

Yesterday, I pointed out that it's absurd to consider Microsoft a declining company when in fact it's been making an average of $15B a year in profit and has increased the value of its balance sheet  by billions of dollars every year for the past three years, during the worst recession of the past 80 years.

Today, to answer the critics, I will point out what's gone well and what's gone wrong with Microsoft. I'll even make suggestions about what the company should change. I believe the company is coming to a crucial point in its history, and CEO Steve Ballmer needs to make some radical changes.

First off: Microsoft's core businesses are as healthy as ever. Now that it fixed the Windows Vista debacle and Windows 7 is shipping, Microsofts' Windows Division and its Business Division are firing on all cylinders. Consider this: in fiscal year 2009, which ended June 30, 2009, the Windows division made $10B in profit. It has already equalled that in only 3 quarters of business this year. That means when Microsoft announces its earnings later this month it's likely to report year-on-year profit growth of more than 20% in the Windows division.

It had become popular in the mainstream media to popularize the "dying" of Microsoft. This is absurd. What is common with a "dying" company is a deterioration of its financial position and diminishing assets. Microsoft is a money machine.

I'm not saying that Microsoft does not have challenges. I'm just saying that the negative sentiment against the company does not reflect certain business fundamentals.

There is a growing "meme" out there that Microsoft is on the verge of death and that Google will take over the world with free stuff. Please.

I'm actually anti-Free. I haven't even read Chris Anderson's book titled "Free." Don't  really feel like I need to read it either. I think free as a business is almost always representing subsidy -- a crutch to gain market share in the eary going. Eventually, if you want a business, you need to move to premium, paid services.

Think of all the free stuff out there, and then try to give me an example of some free stuff that holds the best market position: That is: Highest quality, high margins. I can't think of anything.

It's funny how the financial and technology press like stampede onto the same story like uneducated mass of Angus cattle. Yesterday's example: 15,000 stories about how Apple has surpassed Microsoft in market cap.

A big shakeup is coming in Microsoft's consumer products division -- the Entertainment and Device Division -- which produces mobile phone technology,the Xbox, videogames, and other devices. The biggest news is that two huge names in technology and senior Microsoft executives, J Allard and Robbie Bach, will be leaving Microsoft.