The Motley Fool Million Dollar Portfolio: How to Build and Grow a Panic-Proof Investment Portfolio

by Christopher Whitcomb, Tom Gardner

Overview

Build a powerful portfolio and outfox the professionals using a simple yet groundbreaking philosophy from two acclaimed stock pickers & Internet pioneers.
A revolutionary and wildly successful one-of-a-kind Web experiment, the "Motley Fool Million Dollar Portfolio" enabled individual investors to follow as The Motley Fool cofounder Tom Gardner invested and managed one million dollars of The Motley Fool's own money. Now, in page after page of sound, sensible investment advice, readers are offered a rare glimpse into the inner workings of The Motley Fool machine—and given a first-class education in building, growing, and defending an individual portfolio, one investment strategy at a time. From learning to think like an investor to finding a first stock, from dividend investing to blue-chip bargains to small-cap treasures, from international investing to community-based online tools that are revolutionizing stock selection and asset allocation, this book takes readers through the essential strategies for building any portfolio—no matter how small its start or how big its ambitions.

Product Details

ISBN-13:	9780061977763
Publisher:	HarperCollins e-books
Publication date:	11/21/2023
Sold by:	Barnes & Noble
Format:	eBook
Pages:	402
File size:	1 MB

About the Author

Brothers David Gardner & Tom Gardner cofounded in 1993 The Motley Fool, a multimedia investment advisory company dedicated to building the world’s greatest investment community. They have coauthored four New York Times bestsellers—including The Motley Fool Investment Guide—and oversee the award-winning personal finance and investment Web site Fool.com, which attracts millions of visitors each month.

Tom Gardner, along with his brother David, cofounded The Motley Fool, a multimedia financial education company, in 1993. They have coauthored five books and oversee the award-winning website Fool.com (with approximately five million unique visitors per month); a nationally syndicated newspaper column, carried by over two hundred papers; and fourteen premium investing services worldwide. John lives with his wife in Northern California.

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The Motley Fool Million Dollar Portfolio
How to Build and Grow a Panic-Proof Investment Portfolio

Chapter One

Getting Started

Americans make three primary investment mistakes.

A startlingly large portion of our populace stands on the market's sidelines forever, missing out on the greatest builder of wealth available to the average (law-abiding) citizen. Many Americans just never save—or invest—anything. This is the greatest mistake of all. No matter your age, the best time to start investing is now.

The second biggest investment mistake is waiting too long to start. It turns out that financial independence can't be achieved as quickly as everything else in our lives: 90 seconds in the microwave oven, one-click buying on a Web site, or speed dial on our mobile phone.

The third biggest investment mistake is the subject of this book. People with this affliction might have money put away and may have purchased some mutual funds and even a few stocks. They've recognized the value of getting started, allowing the returns to compound over time. They make us proud. But they often have one tragic flaw: They are wildly unsuccessful pickers of stocks.

Picking good stocks

Investors often pick the wrong stocks and build the wrong kind of portfolio. They lack any coherent strategy. When the stocks they buy inevitably drop—at least temporarily—these folks cash out their shares and take a loss, running from the market altogether. Or they invest in bad stocks and stay with them for too long, "just hoping to get back to even." These strategies combine the damagingelements of desperation, blind optimism, and greed.

But even the most comically inept investor is in a far better situation than the non-investor or the late-comer. Because while the first two groups need to undergo a near-religious conversion before they see the light, a bad investor just needs a bit of strategy and guidance to accompany an existing practice and passion. This stuff is eminently teachable. It's what this book is for.

Think about how hard it is for many of us to get past those first two mistakes. The odds are stacked against an early start at successful investing. Most Americans begin their professional careers saddled with credit card debt and student loans while trying to pay for all that life entails, often on a relatively small starting wage. There's not a lot of cash floating around.

And even in the unlikely event that their couch cushions were overflowing with $20 bills, most people wouldn't know how to properly put the found money to the best possible use. Our high schools and universities have failed miserably to educate their students about how or why to invest. For the most part, no one has stressed the importance of saving and the value of investing, so they wander relatively blindly (or at least shortsightedly).

These are thorny, sometimes seemingly insurmountable issues and we by no means intend to belittle or gloss over them. In fact, previous Motley Fool books and countless Fool.com articles have provided advice and step-by-step guidance on how to work through them. That's our mission.

Once you're ready, we're here to inspire you to not only invest, but to invest well. There are two components to investing well: First, you have to choose the right stocks and second, you need a strategy for putting those stocks together in a smart, balanced way. This book shows you how to do both.

Before we get to that, though, there's one principle you must embrace.

No one's perfect

In order to succeed, you must first accept that you will fail. Great investors pick stocks that lose to the market at least one time out of five. It's a lot like basketball free throws—Michael Jordan, arguably the game's greatest player of all time, shot just a bit over 80% from the line over his career.

Chances are, you're not the Michael Jordan of the investing world, at least not just yet, so it's essential to set realistic expectations, to know ahead of time that you're regularly going to missСespecially at the outset. Expect that even if you get to be very good, and that's if you're very, very good, you'll still be wrong 20% of the time. If you're just starting out, plan on being wrong half the time as a simple baseline from which to improve.

Yes, that's right, half the time. But don't be discouraged. To mix our sports metaphors, you'll be batting .500. That would get you your very own wing in the Hall of Fame!

12 Stocks

This book is about picking great stocks. We're writing it in order to improve your ability to pick winners and avoid losers. But perhaps even more important, it's about how to put those stocks together in a portfolio that will see you through good times and bad, a portfolio that will grow. And grow and grow. Our goal is simple—we want to help you to develop your own $1 million portfolio.

To that end, we'd like to start our journey together with a challenge: Buy at least 12 stocks. That's right. Not just one stock that your uncle claims can't miss. Not a couple bets on two numbers at Atlantic City. Not three equities for your IRA, four tech stocks, or five Dow Jones Industrials heavyweights. At least 12.

Why 12?

First, you are diversifying meaningfully. You are conditioning yourself from the shock of a few losers. And you will have a few losers. But you'll have a few winners, too, and in many cases, your winners will more than make up for your losers. Why? Because stocks can only lose 100%, yet there's no limit to how high they can climb. As you spread your dollars across a manageable number of your best ideas, you will plink down your money, watch your stocks, learn more about them as you monitor their perormance, and enjoy a first-year gain or loss comparable to the market averages. You will probably not double your money right away. (Sorry.) You will also not lose most or all of what you invested.

The Motley Fool Million Dollar Portfolio
How to Build and Grow a Panic-Proof Investment Portfolio. Copyright © by David Gardner. Reprinted by permission of HarperCollins Publishers, Inc. All rights reserved. Available now wherever books are sold.

Table of Contents

Preface ix

A Note on the Financial Collapse of 2008 xv

1 Getting Started 1

2 Why Great Investors Are Odd 11

3 Your First Stock 21

4 Dividend Dynasty 67

5 Blue-Chip Bargains 111

6 The Treasures of Small-Cap Investing 142

7 Risk Takers and Rule Breakers 185

8 We Are the World 234

9 CAPS: The Power of Community Intelligence 270

10 Your Next Million 279

11 What Next? 328

Appendix A Picking the Right Mutual Funds 331

Appendix B Further Reading 363

Acknowledgments 367

Editorial Reviews

Motley Fool makes investing fun again.

BetterInvesting Magazine

The best place online for talking with investors... amusing as well as educational.

Barron's

They’ve built up a large and much-deserved following.

Washington Post

Their panache is a cover for a belief in the old-fashioned virtues of patience, simplicity, and prudence.

U.S. News & World Report

The best place online for talking with investors... amusing as well as educational.

Barron's

They’ve built up a large and much-deserved following.

Washington Post

Their panache is a cover for a belief in the old-fashioned virtues of patience, simplicity, and prudence.” — U.S. News & World Report

“The best place online for talking with investors... amusing as well as educational.” — Barron's

“They’ve built up a large and much-deserved following.” — Washington Post

“Motley Fool makes investing fun again.” — BetterInvesting Magazine

From the Publisher