Get the Right Stocks in Your Portfolio

This article is part of our Rising Star portfolio series.

My real-money Rising Star portfolio is designed so you can follow along and achieve a well-rounded, diversified portfolio of your very own. Now that I'm a few recommendations in, I want to step back and assess where we are at this point.

First, here's a look at the stocks I've bought and their performance to date:


Date Purchased


Coca-Cola (NYSE: KO  )

Nov. 30, 2010



Dec. 31, 2010


lululemon athletica (Nasdaq: LULU  )

Jan. 12, 2011


Johnson & Johnson (NYSE: JNJ  )

Feb. 28, 2011


Abbott Labs (NYSE: ABT  )

Feb. 28, 2011


lululemon athletica

March 24, 2011


II-VI (Nasdaq: IIVI  )

April 5, 2011


So far, so good. There's no way to draw any meaningful conclusions after just a few months, but getting off to a good start is certainly better than the alternative!

When I started the port, I established the following allocation guidelines:

Large caps


Mid caps


Small caps




I won't be too much of a stickler about hitting these percentages, but this is a pretty good guideline for most people. After buying five stocks over seven different purchases, here's how it shakes out so far:


Market cap (millions)



% of Port






lululemon athletica





Johnson & Johnson





Abbott Labs














So that gives me 53% large-cap exposure, 33% mid-cap, and 14% small-cap. I have exposure to health care, retail, technology, and however you want to define Coca-Cola (sugar water industry?). I really like the way things are shaping up.

It's also pretty easy to see where our next stop should be: international. This is sort of a squirrely category to begin with (to use a technical term). After all, Coke, Johnson & Johnson, II-VI, and Abbott Labs all have more than half their sales overseas. But all my stocks are headquartered in the U.S., and I do want to branch out some more to get some internationally based companies in the mix.

Why? Increasing your exposure to foreign stocks, up to a certain point, both raises your expected returns and lowers your risk. It's what Princeton professor Burton Malkiel calls "the closest thing to a free lunch in our world securities markets." Not buying foreign stocks, says Wharton professor Jeremy Siegel, "is a risky strategy for investors."

In my next article, I'll show you how to construct a screen that will provide us with a great list of international candidates. Until then, feel free to keep up with my tweedlings on Twitter.

This article is part of our Rising Star portfolio series, where we give some of our most promising stock analysts cold, hard cash to manage on the Fool's behalf. We'd like you to track our performance and benefit from these real-money, real-time free stock picks. Click here to see all of our Rising Star analysts (and their portfolios).

Fool analyst Rex Moore recalls fondly his days on the high seas aboard the Black Pearl. Arrrgh! He owns shares of Johnson & Johnson and lululemon. Johnson & Johnson and Coca-Cola are Motley Fool Inside Value recommendations. lululemon athletica is a Motley Fool Rule Breakers recommendation. II-VI is a Motley Fool Stock Advisor pick. Johnson & Johnson and Coca-Cola are Motley Fool Income Investor choices. Motley Fool Options has recommended a diagonal call position on Johnson & Johnson. The Fool owns shares of Abbott Laboratories, Coca-Cola, II-VI, Johnson & Johnson, and lululemon athletica. Motley Fool Alpha LLC owns shares of Abbott Laboratories and Johnson & Johnson. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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