Barrons: For Most of the Valley, It Was a Very Good Year

"THE SKY IS FALLING! HOUSING IS COLLAPSING! The mortgage market is a mess! The banks are in trouble! The brokers are worse! We're headed for recession! Or maybe stagflation! The consumer is tapped out! IT budgets are shrinking! Oil prices, OMG, oil prices are insane! And ye gods, the LBO market is history! Head for the hills! Run for your lives! Buy gold! And load up on duct tape!

Oh, I forgot to mention: None of this applies if you live in Palo Alto, Mountain View, Redwood Shores, Sunnyvale, Santa Clara, Menlo Park or San Jose. Or Taipei. Or Bangalore. Or Beijing.

You see, for all the alarmist chatter, tech turned out to be an island of calm in 2007. Through Thursday, the Nasdaq Composite was up 9.3% and the Morgan Stanley tech index has risen 10.2%, compared with gains of 3% for the S&P 500 and 6.3% for the Dow. According to Morningstar, the average tech mutual fund is up 13.5%. Weirdly, tech has become a place of refuge.

But the best returns for tech investors involved playing the right themes and avoiding some spectacular land mines. Let's take a walk down memory lane.

HOT AS THE SUN: Solar stocks don't fit the traditional definition of tech stocks, but they do rely on silicon, many are based in China, and more and more of them are funded by venture capital. First Solar (ticker: FSLR) last week looked on target to be the year's best-performing stock with a market cap over $250 million. Through Thursday, First Solar was up 723%. Also posting triple-digit gains: SunPower (SPWR), 254%; Trina Solar (TSL), 152%; Canadian Solar (CSIQ), 146%; Solarfun (SOLF), 118%; MEMC Electronic Materials (WFR), 135%; and Evergreen Solar (ESLR), 107%. Cypress Semiconductor (CY) jumped 113%, thanks to its stake in SunPower."

THE FOUR HORSEMEN: No tech stocks get more ink than the vaunted foursome: Google (GOOG), Apple (AAPL), Research In Motion (RIMM) and Amazon.com (AMZN). The stocks have been thoroughbreds. Through Thursday, Google was up 50%; Amazon, 130%; Apple, 121%, and Research In Motion, 151%.