The Motley Fool Stock Portfolio: An Inside Look (2024)

If you're an investor looking to build a solid portfolio that can outperform the market, you've likely come across the Motley Fool. Founded in 1993 by brothers David and Tom Gardner, the Motley Fool has grown into a multimedia financial advisory company with a strong focus on individual stock picking and portfolio guidance.

One of the Motley Fool's flagship products is their Stock Advisor service, which provides subscribers with two new stock recommendations each month, along with a wealth of research and analysis on potential investments. But what exactly goes into the Motley Fool stock portfolio? And how have their picks performed over time? In this comprehensive guide, we'll take a deep dive into the Motley Fool's investment philosophy, portfolio construction, and historical returns.

The Motley Fool Investment Philosophy

At its core, the Motley Fool's approach to investing is centered around finding and investing in great businesses for the long haul. They emphasize buying and holding stocks rather than trying to time the market or engage in frequent trading.

The Motley Fool's "Foolish Investing Philosophy" lays out several key principles:

• Buy 25 or more companies recommended by The Motley Fool over time to build a well-diversified portfolio.
• Hold stocks for at least 3-5 years, as the Motley Fool believes the market will eventually recognize and reward great businesses.
• Invest with a long-term mindset, ignoring short-term market fluctuations.
• Reinvest dividends to take advantage of compounding returns.
• Have patience and discipline to stick to the plan during tough times.

This buy-and-hold, long-term mindset is a driving force behind the Motley Fool's stock selections and portfolio construction.

Portfolio Construction and Stock Selection

So, how does the Motley Fool go about building their recommended portfolio? According to their guidance, a well-diversified portfolio typically contains 25-30 company stocks, with the more the better to reduce risk.

To select these stocks, the Motley Fool team employs a rigorous research process led by veteran investors David and Tom Gardner. They look for companies with strong competitive advantages, innovative products or services, excellent management teams, and promising growth prospects.

Some of the key qualities the Motley Fool seeks in potential stock picks include:

• A sustainable competitive advantage (pricing power, network effects, brand loyalty, etc.)
• A strong culture and visionary leadership
• Potential for massive addressable markets and long growth runways
• Recurring revenue streams and high margins
• Shareholder-friendly management teams

The Motley Fool isn't necessarily focused on finding undervalued stocks in the traditional sense. Instead, they aim to identify high-quality businesses early and ride their growth over many years or even decades.

Once selected, Motley Fool stock picks are added to their various model portfolios, with new recommendations issued monthly through services like Stock Advisor and Rule Breakers. Members can then choose to follow along by purchasing the recommended stocks for their own portfolios.

In terms of portfolio allocation, the Motley Fool typically advocates an equal-weight approach where each stock represents around 3-4% of the overall portfolio upon initial purchase. This allows for true diversification while still giving each pick enough weight to meaningfully impact overall returns.

The Motley Fool's "Starter Stocks" guidance is also worth noting for new investors. This is a curated list of around 10 stocks that the Fool considers ideal for beginning a portfolio. It's updated annually and serves as a solid foundation before gradually adding new recommendations over time.

Historical Performance and Top Picks

Of course, the true test of any investment strategy is performance. And by that measure, the Motley Fool has an impressive track record spanning over two decades.

According to the Motley Fool's self-reported data, as of late 2023, an equal-weighted portfolio of all Stock Advisor picks since inception in 2002 was up an astounding 674%. That significantly outpaces the S&P 500's total return of around 154% over the same period.

Some of the Motley Fool's biggest all-time winners include:

Amazon (AMZN): Recommended in 1997, up over 20,000%

Netflix (NFLX): Picked in 2004, up over 17,000%

Monster Beverage (MNST): Recommended in 2005, up over 27,000%

Apple (AAPL): Picked in 2008, up over 5,000%

These outlier stocks have been major drivers of the Motley Fool portfolio's impressive gains. But the team has also demonstrated an ability to find multi-baggers across various sectors and market caps over long holding periods.

It's worth noting that while the overall Stock Advisor returns look exceptional, individual members' results can vary based on factors like timing of stock purchases, portfolio concentration, and adherence to the Fool's buy-and-hold philosophy.

The Motley Fool's Everlasting Stocks Portfolio

In addition to Stock Advisor, the Motley Fool offers another premium service called Everlasting Stocks that is focused on long-term wealth building through owning a concentrated portfolio of the team's highest-conviction stock picks.

Launched in 2019, the Everlasting Stocks portfolio currently holds around 15 stocks that are meant to be "forever" holdings, only adding or removing companies under very specific circ*mstances. The Motley Fool has invested over $10 million of its own capital into this real-money portfolio, aiming to showcase the power of patience, diversification, and compounding over the ultra-long term.

As of early 2024, the Everlasting Stocks portfolio was up over 230% since inception, continuing to significantly outperform broader market benchmarks. Some of its current top holdings include innovators like Shopify (SHOP), MercadoLibre (MELI), and The Trade Desk (TTD).

Like Stock Advisor, Everlasting Stocks exemplifies the Motley Fool's buy-to-hold mentality and focuses on investing in disruptive, market-leading businesses for the next 10, 20, or 30+ years and beyond.

While past performance is no guarantee of future results, the Motley Fool has undoubtedly demonstrated an impressive ability to uncover and profit from generational wealth-building stocks over many years.

Motley Fool Wealth Management

For investors who prefer a more hands-off approach, the Motley Fool also offers professional portfolio management services through its Motley Fool Wealth Management arm.

With Fool Wealth, clients can choose from several equity strategies ranging from high-conviction growth to dividend-focused portfolios. All are actively managed using the Motley Fool's rigorous stock-picking methodologies and concentration levels based on each client's specific goals and risk tolerances.

This white-glove service allows investors to essentially outsource the entire portfolio management process to the Fool's in-house team, from asset allocation and position sizing to tax management and ongoing monitoring/optimization.

The Motley Fool's Ownership Mentality

Beyond just looking at historical returns and portfolio performance, it's worth examining the ownership mentality that underpins the Motley Fool's overall investment philosophy.

Time and again, the Fool emphasizes that investors should approach stock ownership with the mindset of being true business partners rather than just stock traders or renters. This long-term shareholder view shapes everything from their research process to buy/sell decisions.

As Tom Gardner has stated: "We invest in companies, becoming partners with their leaders to share in the businesses' successes over many years."

Some key aspects of this ownership mentality include:

• Focusing on qualitative factors like competitive advantages, innovation, and industry positioning over short-term valuation metrics.
• Exercising patience and giving great companies time to compound returns over full market cycles.
• Concentrating investment capital in their highest-conviction ideas, just as business founders do.
• Voraciously learning about the products, customers, and culture of each business they own a stake in.
• Avoiding frequent trading and frictional costs that eat into long-term compounding.

The Motley Fool firmly believes that adopting this owner's mindset is crucial to superior long-term returns, as it helps investors stay rational, disciplined, and focused on what truly drives a business' success over decades rather than months or quarters.

Dividends and Income Investing

While the Motley Fool has built its reputation primarily on aggressive growth investing, dividends also play an important role in building durable income streams and amplifying long-term returns through the power of compounding.

The Fool's premium services include dividend-focused offerings like Motley Fool Income Investor, which is dedicated to identifying and recommending top dividend growth stocks and other income opportunities.

In general, the Motley Fool favors companies that not only pay dividends, but can continue growing those payouts over time. Reliable dividend growth allows income to compound right alongside long-term capital appreciation.

Some of the Motley Fool's dividend investment principles include:

• Prioritizing companies with visible growth runways and strong competitive positions to sustain and raise dividends
• Diversifying across sectors to create a balanced dividend stream
• Not reaching for excessive yield that may indicate underlying financial distress
• Utilizing tax-advantaged retirement accounts to maximize dividend income
• Setting realistic total return expectations rather than chasing ultra-high yields

Within the Motley Fool's model portfolios, you'll typically find a balance of growth stocks comined with sustainable dividend payers across sectors like tech, healthcare, industrials, consumer, and financials.

This blend of offense (growth) and defense (income) aims to provide full-cycle returns in both bull and bear markets over many market and economic environments.

FAQs

What stocks are in the Motley Fool's ownership portfolio?

The Motley Fool does not disclose the full list of stocks in its real-money portfolios like Everlasting Stocks. However, they do share the top 10-15 holdings, which currently include names like Amazon, Shopify, MercadoLibre, and Roku.

How many stocks are in a typical Motley Fool portfolio?

The Motley Fool recommends building a diversified portfolio of at least 25-30 stocks over time.

What is the Motley Fool's investing style?

The Motley Fool follows a long-term, buy-and-hold investing style focused on identifying and owning great businesses for many years. They emphasize factors like competitive advantages, disruptive innovation, culture, and growth potential over traditional value metrics.

What is the average return of the Motley Fool portfolio?

According to the Motley Fool, an equal-weighted portfolio of all Stock Advisor picks since 2002 was up 674% as of late 2023, far outpacing the S&P 500's 154% return over the same period.

Who has the most successful stock portfolio according to the Motley Fool?

The Motley Fool's flagship Stock Advisor and Everlasting Stocks real-money portfolios have been their most successful, significantly beating the market over their decades-long histories.

Does the Motley Fool have model portfolios investors can follow?

Yes, the Motley Fool offers several model portfolios through services like Stock Advisor, Everlasting Stocks, Rule Breakers, and more.

What is the Motley Fool Everlasting's portfolio?

The Motley Fool Everlasting Stocks portfolio is a real-money portfolio holding around 15 of the team's highest-conviction stock picks. Launched in 2019, it is meant to be an "forever" portfolio aiming to showcase long-term wealth compounding through buy-and-hold investing.

As of early 2024, some of the top holdings included Shopify, MercadoLibre, The Trade Desk, and Amazon. The Everlasting portfolio has returned over 230% since inception, significantly outperforming the market.

How can I view the Motley Fool's past stock recommendations?

Paid subscribers to services like Stock Advisor and Rule Breakers get full access to past monthly stock picks and research from the Motley Fool team through the member archives on their website.

Some of the Fool's most successful historical picks including Netflix, Amazon, Apple, and others are highlighted and discussed in detail.

Is the Motley Fool Stock Advisor worth the money?

Based on its exceptional long-term track record, the Motley Fool Stock Advisor service has proven to be very worthwhile for investors able to stick to the disciplined, patient investment approach.

At $199 per year, Stock Advisor is relatively affordable, especially compared to the potential portfolio gains from following the team's stock guidance. However, returns for individual investors can vary.

How accurate are the Motley Fool's stock picks?

No investment system or stock picker is perfect, and the Motley Fool has certainly had its share of losers over the years. However, their focus on buying great businesses at reasonable prices and holding for the long term has generated exceptional overall returns historically.

The depth of Fool's research process and concentration on secular growth trends positions them well to continue unearthing big winners moving forward.

The Long Road Ahead

While dissecting the Motley Fool's historical performance, portfolio management strategies, and investment philosophy provides valuable insights, it's also important to look ahead at the long road still to come.

Investing, after all, is a marathon, not a sprint. The Motley Fool is fully committed to being a long-term partner for its members, employees, and the companies it collectively owns pieces of through its various real-money portfolios.

As Co-Founder Tom Gardner explained: "Our aim isn't to get rich with you. It's to stay rich with you...We aim to keep flourishing over decades, living purposeful lives of compounding returns and compounding knowledge as lifelong students of the greatest money-making industry of the last 100 years -- the public stock market."

That mindset of continuous growth, learning, and patient ownership underlies everything the Fool does when it comes to selecting stocks, constructing portfolios, and managing capital for its Premium members.

While no investment manager has a perfect record, the Motley Fool's founding principles, portfolio-building discipline, and long-term focus have resonated with investors and fueled exceptional returns over the past 25+ years.

And as that journey continues, with new innovative companies emerging and business models constantly evolving, the Motley Fool remains firmly committed to guiding investors toward the best wealth-compounding opportunities over the decades ahead.