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Just like gamblers place bets on boxers who fight in divisions based on their weight, investors, too, put their money down on stocks that are grouped together by size. All publicly traded companies...
The "traditional" asset classes are stocks, bonds, and cash: . Stocks: value, dividend, growth, or sector-specific (or a "blend" of any two or more of the preceding); large-cap versus mid-cap, small-cap or micro-cap; domestic, foreign (developed), emerging or frontier markets
Large-cap stocks are generally considered to be safer investments than their mid- and small-cap stock counterparts because they are larger, more established companies with a proven track record.
Market cap is given by the formula =, where MC is the market capitalization, N is the number of common shares outstanding, and P is the market price per common share. [ 8 ] For example, if a company has 4 million common shares outstanding and the closing price per share is $20, its market capitalization is then $80 million.
Stocks can be split into categories such as small-cap, mid-cap, large-cap, value, defensive, cyclical, growth, international, regional, technology stocks, utility stocks, old economy or new economy, disruptive innovation, and so on. Classification of securities into categories is widespread in the financial field applying to other asset classes ...
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Long/short covers a wide variety of strategies. There are generalists, and managers who focus on certain industries and sectors or certain regions. Managers may specialize in a category — for example, large cap or small cap, value or growth. There are many trading styles, with frequent or dynamic traders and some longer-term investors.
When choosing which stocks to invest in, you may run into these terms: small-cap, mid-cap and large-cap. A small-cap growth fund invests in smaller companies whose share prices are growing steadily.