Motley Fool - Small-Cap Growth Investor

Motley Fool Strategy Explanation Video

Brothers David and Tom Gardner often wear funny hats in public appearances, but they're hardly fools -- at least not the kind whose advice you should readily dismiss. The Gardners are the founders of the popular Motley Fool web site, which offers frank and often irreverent commentary on investing, the stock market, and personal finance. The Gardners' "Fool" really is a multi-media endeavor, offering not only its web content but also several books written by the brothers, a weekly syndicated newspaper column, and subscription newsletter services.
*Note: Our guru strategies are based on our interpretation of the published strategies of the gurus we follow. They are not personally endorsed by the gurus. Full Disclaimer

Since 2003, this portfolio has returned 775.8%, outperforming the market by 511.4% using its optimal tax efficient rebalancing period and 10 stock portfolio size.

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Small-Cap Growth
S&P 500
* Returns are model returns and do not reflect actual trading. Full performance disclaimer

Motley Fool - Small-Cap Growth Investor

Validea used the investment strategy outlined in the book The Motley Fool Investment Guide written by Motley Fool to create our Small-Cap Growth Investor portfolio.

The Gardners specialize in searching out stocks of small, fast-growing companies with solid fundamentals, including healthy profit margins, low debt, ample cash flow, respectable R&D budgets and tight inventory controls. A key indicator of a strong stock, they believe, is an earnings growth rate that is greater than the stock's price/ earnings ratio. Wall Street calls this metric the PEG ratio (price/earnings-to-growth ratio); the Gardners call it the Fool Ratio. By either name, it's a great way to separate attractively valued growth stocks from those that are overvalued. The Motley Fool investment strategy will appeal to investors seeking solid growth companies in the small-cap sector of the market.

Motley Fool Strategy Description Video

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Performance Disclaimer: Returns presented on Validea.com are model returns and do not represent actual trading. As a result, they do not incorporate any commissions or other trading costs or fees. Model portfolios with inception dates on or after 12/30/2005 include a combination of back tested and live model returns. The back-tested performance results shown are hypothetical and are not the result of real-time management of actual accounts. The back-testing of performance differs from actual account performance because the investment strategy may be adjusted at any time, for any reason and can continue to be changed until desired or better performance results are achieved. Back-tested returns are presented to provide general information regarding how the underlying strategy behind the portfolio performed in our historical testing. A back-tested strategy has the benefit of hindsight and the results do not reflect the impact that material economic or market factors may have had on advisor's decision-making if actual client assets were being managed using this approach.

Optimal portfolios presented on Validea.com represent the rebalancing period that has led to the best historical performance for each of our equity models. Each optimal portfolio was determined after the fact with performance information that was not available at portfolio inception. As a result, an investor could not have invested in the optimal portfolio since its inception. Optimal portfolios are presented to allow investors to quickly determine the portfolio size and rebalancing period that has performed best for each of our models in our historical testing.

Both the model portfolio and benchmark returns presented for all equity portfolios on Validea.com are not inclusive of dividends. Returns for our ETF portfolios and trend following system, and the benchmarks they are compared to, are inclusive of dividends. The S&P 500 is presented as a benchmark because it is the most widely followed benchmark of the overall US market and is most often used by investors for return comparison purposes. As with any investment strategy, there is potential for profit as well as the possibility of loss and investors may incur a loss despite a past history of gains. Past performance does not guarantee future results. Results will vary with economic and market conditions.