dimanche 5 novembre 2017

Market caps

Every investor has an opinion about market caps. But few people have the same definition of market caps categories.

So, I've made a little journey on Wikipedia and here's what I've found. 

Nano Cap: market cap under 50 millions dollars
Micro Cap: market cap between 50 and 300 millions dollars
Small Cap: market cap between 300 millions and 2 billions dollars
Mid cap: market cap between 2 and 10 billions dollars
Large Cap: market cap over 10 billions dollars

I think we could add "Mega caps" for a market cap over 100 billions dollars.

For me, the categories look that way:

Nano cap: Suicidal.
Micro Cap: Risky but could be great if you're very selective and you chose stocks with a market cap close to the beginning of small cap category (200-300 millions dollars).
Small Cap and Mid Cap: Best place to look if you're an individual investor.
Large or Giga cap: Blue chips can stabilize your portfolio. It's a good idea to have a few of them on your portfolio, but not too much because amazing growth is usually not there (except for some exceptions like Amazon, Google, Netflix...)

Although market cap is not my first criteria before investing, on a portfolio perspective, I think it's a good idea to balance market caps in a reasonable way, with, of course, a place close to zero devoted to stocks with a market cap under 200 million dollars.

5 commentaires:

  1. I agree that the very small cap stocks are far inferior investments. sometimes there's no earnings. Sometimes there's not even a business...just a hole in the ground or a business concept that they have not put into action. Sometimes you can find mis-priced growth companies going for 8x earnings. That said, the ROE will be much lower and you're probably dealing with a commodities type business or a business with very many competitors. Some of us get bored and want to gamble a very small percentage of our portfolio on these very very small companies. Even Robin Speziale has penny stocks that he's experimenting with. He figured he'd start with 16 names, dump the losers and add to the few winners. The experiment is ongoing:



    any opinions anybody? It was over $12. It's now about $2.15. They are a penny stock now. LOL. Is there value at this price?

  3. Í’ve never liked CRH. I’d prefer to look at SRCL if you want to talk about stocks that experience serious weakness.

  4. I'm w/ Le Trator de Pene on this one. We owned it... I actually bought shares personally around $1 and sold around $3... I felt really stupid when it went to $12 but whatever. We owned it across all three of our models but I was always worried about the way they presented their financials. I never like when a company gives preferential treatment to items that aren't per share related. Whenever I would read their releases they would say 'we had record revenues or EBITDA' and then you really had to look and see their per share results weren't very good. I also stank when management was dumping a fair amount of shares at higher prices.
    We sold half at $11 and rest at $5.50 as it was tanking... so we made money but it scared the merde out of me.
    That said, I continue to watch them. They are completely busted technically. I would be interested in getting back in if they can re-take $3.30 on significant volume... my deux sous.