Stocks are classified according to a number of criteria,
including company size and company sector.
Large Cap, Mid Cap and Small Cap
Stocks can be classified according to the market
capitalization of the company.
The market capitalization of a company represents the total
dollar value of the company's outstanding shares. This is equal
to the current market price of its stock multiplied by the
number of shares of stock that it has outstanding. That number
gives you the market value of the company, which is one measure
of the company's size. Roughly speaking, there are three basic
categories of market capitalization: large cap, mid cap, and
small cap (although some analysts include others such as mega
cap at the large end and micro cap at the small end). The
definitions for each of these might vary somewhat depending on
whom you're talking to, but usually they are as follows:
•Large cap: market cap valued at more than $10 billion
•Mid cap: market cap valued between $1 billion and $10
•Small cap: market cap valued at less than $1 billion
In general, the larger the cap size, the more established
the company, and the more stable the price of its stock. Small
cap and mid cap companies usually have a higher potential for
future growth than large cap companies, but their stock tends
to fluctuate more in price.
It's very important to know in which category or sector your
stocks belong to. Owning several stocks in one category is one
sure way to set your portfolio on fire. When there is bad news
in a given sector, all the stocks in that sector get affected.
Having said that, always do your due dilligence to know your
Below is a list of the different industries...
- Oil & Gas
- Basic Materials
- Consumer Goods
- Health Care
- Consumer Services
The best place for you to learn about stock categories is to
www.bigcharts.com and click on