Why "The World's Greatest Retirement Portfolio" Continues to Outperform the Market

Two years ago this June, I decided the most honest and effective way to help the world invest better was to publicly show how I go about making decisions for my own retirement portfolio. I promised to invest $4,000 in each of 10 companies.

Since then, my original investment of $40,000 has grown to $54,520 -- or $2,040 more than if I had just invested the money in the SPDR S&P 500 ETF. Read below to see why the portfolio is doing so well, and how you can find out which of these 10 are great buys right now.

Company

Publication Date

Change

Vs. S&P 500

Google (NASDAQ: GOOGL  )

6/26/11

80.9%

47

Pricesmart

6/28/11

75.3%

43

Baidu (NASDAQ: BIDU  ) **

9/15/12

(12.9%)

(43)

Intuitive Surgical (NASDAQ: ISRG  )

7/25/11

25.1%

(3)

National Oilwell Varco 

7/28/11

(12.8%)

(45)

Coca-Cola (NYSE: KO  )

6/21/11

33.9%

1

Whole Foods (NASDAQ: WFM  )

7/5/11

69.6%

41

Amazon 

7/12/11

23.9%

(7)

Apple 

6/30/11

35.5%

5

Johnson & Johnson 

8/1/11

44.6%

11

       

Total

 

36.3%

5.1

Source: YCharts. **BIDU replaced ATVI on Sept. 15, 2012. Returns are for the combined positions.

Three big winners
Among these 10 stocks, three stand out as having made significant moves since last month. Whole Foods announced earnings at the beginning of May that wowed Wall Street. Previously, investors had been worried about the company's declining margins. But management made it clear this was an intentional move to win over market share and make organic food more affordable for more people -- thereby increasing the overall market as well.

Based on results from the first three months of 2013, those moves are paying off. Though other grocers can now compete on price, Whole Foods was still able to bump comparative store sales up 6.9%. And though it might seem like a grocer valued at 38 times earnings is ridiculous, it's important to remember that Whole Foods has built only about one-third of the total stores it believes it can have in the United States.

Next on the list of big movers was Google. Though the company didn't release any earnings news in May, it did host its annual I/O Conference.  The company announced that it will have a new Google Maps iteration coming soon, it unveiled the Android and Google Play subscription music service, and it offered a look into the newest update of Chrome.

But perhaps most interesting of the five product announcements was that Google search now has voice input -- something that management believes could be a huge differentiator moving forward.

The final big mover of the month was Chinese search giant Baidu. As with Google, it wasn't any earnings announcement that moved the stock's needle. Instead, it was optimism bubbling over when rival Qihoo 360 released its earnings.

Although Qihoo has apparently captured 5% more of the Chinese search market -- bringing its total to 15% -- it was pretty clear that Qihoo isn't making nearly as much money from its advertising as Baidu is. That speaks to the fact that companies in China are willing to pay up to have their ads hosted with Baidu.

Two other big developments
Two other developments of note occurred for the portfolio in May. First, Intuitive Surgical won a major lawsuit last week. The defendant had claimed that the company was liable for not training a surgeon properly when complications arose from a da Vinci procedure. The jury found that the fault lied with the surgeon, who had been repeatedly warned not to operate on obese patients until he became more familiar with da Vinci.

The second development was my announcement that Coca-Cola would be leaving the portfolio soon -- not because it represents a poor investment, but because I have trouble holding the company,  knowing that I'll be profiting from unhealthy products that I don't use.

At some point in June, I will be announcing the company that will be taking Coca-Cola's place.

What are the best buys?
Every month, I pick out three stocks that are the best buys from this group of 10. Keep your eyes open next week, when I'll tell you what those three stocks are.

In the meantime, I encourage you to read about the 3 Companies Ready to Rule Retail in The Motley Fool's special report. Two of the three companies are in my retirement portfolio already. Uncovering these top picks is free today; just click here to read more.


Read/Post Comments (7) | Recommend This Article (7)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On May 28, 2013, at 9:06 PM, ligett wrote:

    What does the "Vs S&P 500" column show?

    The index is up 47% since 6/26/2011?

    But only up 1% since 6/21/2011?

    Confused...

  • Report this Comment On May 29, 2013, at 10:13 AM, TMFCheesehead wrote:

    @ligett-

    It shows how each stock has performed (in percentage points) vs. the S&P 500. So, the 6/26 date is for GOOG, which has returned about 81%. That's 47 percentage points better than the S&P, and so on...

    Hope that helps!

    Brian Stoffel

  • Report this Comment On May 29, 2013, at 11:10 AM, todamo13 wrote:

    Nice to see someone investing "with a conscience."

    I also won't own Exxon, Monsanto, Dow, McDonalds, etc stock for the same reason. I realize I'm "missing out" on profits, but profiting on causing pollution, disease, and misery is a pretty intolerable idea for me. Also I'd like to put my money toward companies that are making things at least a little better (Whole Foods for example).

  • Report this Comment On May 29, 2013, at 7:09 PM, ligett wrote:

    Brian, yes, thanks for the explanation.

    But, I think I prefer what David & Tom do: the S&P is up 40%; we're up 172% and 64%.

  • Report this Comment On May 30, 2013, at 12:11 AM, TMFCheesehead wrote:

    @ligett-

    Fair enough. So I think it would read:

    The S&P is up 31.2%. I'm up 36.3%.

    Brian Stoffel

  • Report this Comment On May 30, 2013, at 2:35 AM, Risky88 wrote:

    This is one reason I sign up for your guy's services.

    Your blunt on your good and bad returns and you say exactly why you like them.

    Plain and Simple.

  • Report this Comment On May 30, 2013, at 5:20 PM, ligett wrote:

    Nice work. Carry on!

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