Motley Fool Discovery 2017 was born out of a simple observation: Small-cap stocks have driven far more growth and outperformance for Motley Fool newsletters than large-cap stocks. Seeing this, Motley Fool CEO Tom Gardner and longtime analyst Bill Mann decided to put together a portfolio of 30 stocks with the aim of enormous long-term outperformance.

If you join the service and check out the stocks, you'll note that Tom and Bill aren't recommending any of the big household names that many Fool members have grown to know and love – AmazonBerkshire HathawayAppleStarbucks, etc. That's because, although they're great companies, they believe their high-growth days are likely far behind them. Discovery 2017 is about finding future big winners long before the market has appreciated their potential. 

Small-cap stocks carry huge risks...

Small-cap stocks are volatile, so Fools investing in Discovery 2017's picks can likely expect enormous and frequent price swings. And perhaps more importantly, small-cap stocks are inherently riskier than their larger brethren – they have less capital, less stability, and fewer fallbacks if things don't pan out. Put a different way, there's a significant chance that an investor will lose a lot of money in small-caps if they don't have a good plan for managing their risk.

Small-caps aren't for the faint of heart, and anyone considering investing in them has to be willing to stomach a rollercoaster of highs and lows, as well as the distinct possibility that some of these companies will go out of business.

...and huge potential rewards.

A study of 1,492 Motley Fool stock recommendations found that about 10% of the stocks drove 80% of the returns – meaning that it's highly likely that most of the 30 stocks in Discovery 2017 will be losers...and that three or so of the stocks could be massive winners, making up for the losers and then some.

Consider this extreme example for a second: If you put $1,000 behind each of 30 stocks, three of whom became hundred-baggers and the remaining 27 of whom went out of business, your overall investment would be worth $300,000. That's a nice 10x gain...even if 27 of the 30 stocks simply ceased to exist and you lost everything on them!

To illustrate this in a different way, take a look at the performance of different investment types over different holding periods (data courtesy of an Ibbotson Associates study).

Reduction of Risk Over Time-1926-2010

Small-cap stocks returned 12.1% on average, as compared to roughly 9% for large-cap stocks.

Big returns.

Over the long term, the winning share class is pretty clear: Small-caps.

Motley Fool Discovery: High-conviction home runs

Now, we talked earlier about the (very real) risks small-cap investors face. Fortunately, Discovery 2017 aims to equip investors with a plan for reducing that risk: A long-term holding period (at least five years, preferably forever), mixed with the substantial diversification that a 30-stock portfolio brings. We believe in this so strongly that Tom Gardner has committed $300,000 of The Motley Fool's money to this 30-stock portfolio.

Tom and Bill are two fantastic stock-pickers and have a special connection with small-caps. They used to helm Motley Fool Hidden Gems, our premier small-cap service, and they bring all of that experience and passion now to Discovery 2017.

Learn more here.

The Motley Fool owns shares of and recommends Amazon, Apple, Berkshire Hathaway (B shares), and Starbucks. The Motley Fool has the following options: long January 2018 $90 calls on Apple and short January 2018 $95 calls on Apple. The Motley Fool has a disclosure policy.