You see the terms large cap, mid cap, and small cap when describing a company, mutual fund, or ETF. What do they actually mean? How do they impact an investment strategy?
The “cap” portion of these terms is short for market cap or market capitalization. A company’s market cap is the total market value of a company. This is found by multiplying the stock price by the total outstanding shares of the company.
What is a Large Cap?
Large cap refers to the largest companies traded on the stock market and have a market cap of $10 billion or more. They, also, tend to be the most followed by analysts and investors.
Historically, large cap companies experience a slower growth rate and have less risk due to their size and stability. Because of this many large caps are given the Blue Chip designation. A few well known large cap companies include Microsoft, Walmart, Amazon, and Nike. Continue Reading…