[et_pb_section bb_built=”1″ _builder_version=”3.0.47″][et_pb_row _builder_version=”3.0.47″ background_size=”initial” background_position=”top_left” background_repeat=”repeat”][et_pb_column type=”4_4″][et_pb_post_title meta=”off” _builder_version=”3.0.90″ title_font=”Open Sans||||||||” title_font_size=”30px” title_level=”h4″]
\n[\/et_pb_post_title][et_pb_text _builder_version=”3.0.47″ background_size=”initial” background_position=”top_left” background_repeat=”repeat”]<\/p>\n

Large, Mid, Small\u2026<\/p>\n

Are we still talking about investments?\u00a0 As if investment terms weren\u2019t seemingly complicated enough, we throw in terms like: large-cap, mid-cap and small-cap. \u00a0 You may even hear micro-cap and nano-cap sprinkled in there.\u00a0 Really though, these terms are simply referring to the size of a company.\u00a0 A large-cap company has a value of more than $10 billion, a small-cap company less than $2 billion, and a mid-cap company falls somewhere in-between.<\/p>\n

What does that mean to you as an investor?\u00a0 Well, the size of the company can relate directly to the risks and rewards.\u00a0 Here\u2019s an analogy I like to use.\u00a0\u00a0 Take a company like Nike, who started out as a sneaker company but today is incredibly diversified offering not only sneakers but apparel, sports gear and even golf clubs!\u00a0 Not only have they built their own brand but they are also the parent company of Converse and Hurley.<\/p>\n

Let\u2019s say Nike brings a new sneaker design to market and it fails, as an investor, do you think you would be at risk for losing a substantial amount of value based on that sneaker alone?\u00a0 Probably not, since the company has so many other products. \u00a0One failed product will only have a minimal affect.\u00a0 At the same time, if that new sneaker design is wildly successful it will add to the bottom line but you probably won\u2019t see a huge jump in stock price.<\/p>\n

On the flip side let\u2019s look at a small shoe company like Crocs, Inc.\u00a0 They started out with one new innovative design.\u00a0 You know those waterproof plastic looking clogs?\u00a0 (Think Mario Batali\u2019s bright orange clogs.) \u00a0Crocs is predominately a shoe company.\u00a0 They don\u2019t have a diversified line of products or brands.\u00a0 If they bring a new shoe design to market and it fails, the impact of that failed product has a much larger impact on their bottom line.\u00a0 Yet at the same time as Crocs continues to evolve and develop new designs and products the success of those ventures will have a much more positive impact which could really make the value of their stock jump.<\/p>\n

As you can see a much larger, more diversified company is going to be able to absorb losses easier and although you may not experience significant jumps in stock value you will likely experience less volatility.\u00a0\u00a0 As an added bonus, since large-cap companies are usually in a position to retain some of its earnings they are likely to pay dividends.\u00a0 Small-cap companies are attractive for growth potential, yet certainly carry risks and can be quite volatile.<\/p>\n

 <\/p>\n

Disclosure: I am in no way affiliated with either Nike or Crocs.\u00a0 Although our family has purchased both Nike and Croc products, the use of these companies is for illustrative purposes only.\u00a0 By no means, am I making any recommendation or advising the purchase or sale of either company.\u00a0 Before making any investment, carefully consider the investment objectives, risks, charges, and expenses.<\/i><\/p>\n

[\/et_pb_text][\/et_pb_column][\/et_pb_row][\/et_pb_section]<\/p>\n","protected":false},"excerpt":{"rendered":"

[et_pb_section bb_built=”1″ _builder_version=”3.0.47″][et_pb_row _builder_version=”3.0.47″ background_size=”initial” background_position=”top_left” background_repeat=”repeat”][et_pb_column type=”4_4″][et_pb_post_title meta=”off” _builder_version=”3.0.90″ title_font=”Open Sans||||||||” title_font_size=”30px” title_level=”h4″] [\/et_pb_post_title][et_pb_text _builder_version=”3.0.47″ background_size=”initial” background_position=”top_left” background_repeat=”repeat”] Large, Mid, Small\u2026 Are we still talking about investments?\u00a0 As if investment terms weren\u2019t seemingly complicated enough, we throw in terms like: large-cap, mid-cap and small-cap. \u00a0 You may even hear micro-cap and nano-cap sprinkled in […]<\/p>\n","protected":false},"author":2,"featured_media":1468,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_et_pb_use_builder":"on","_et_pb_old_content":"

Large, Mid, Small\u2026<\/p>

Are we still talking about investments?\u00a0 As if investment terms weren\u2019t seemingly complicated enough, we throw in terms like: large-cap, mid-cap and small-cap. \u00a0 You may even hear micro-cap and nano-cap sprinkled in there.\u00a0 Really though, these terms are simply referring to the size of a company.\u00a0 A large-cap company has a value of more than $10 billion, a small-cap company less than $2 billion, and a mid-cap company falls somewhere in-between.<\/p>

What does that mean to you as an investor?\u00a0 Well, the size of the company can relate directly to the risks and rewards.\u00a0 Here\u2019s an analogy I like to use.\u00a0\u00a0 Take a company like Nike, who started out as a sneaker company but today is incredibly diversified offering not only sneakers but apparel, sports gear and even golf clubs!\u00a0 Not only have they built their own brand but they are also the parent company of Converse and Hurley.<\/p>

Let\u2019s say Nike brings a new sneaker design to market and it fails, as an investor, do you think you would be at risk for losing a substantial amount of value based on that sneaker alone?\u00a0 Probably not, since the company has so many other products. \u00a0One failed product will only have a minimal affect.\u00a0 At the same time, if that new sneaker design is wildly successful it will add to the bottom line but you probably won\u2019t see a huge jump in stock price.<\/p>

On the flip side let\u2019s look at a small shoe company like Crocs, Inc.\u00a0 They started out with one new innovative design.\u00a0 You know those waterproof plastic looking clogs?\u00a0 (Think Mario Batali\u2019s bright orange clogs.) \u00a0Crocs is predominately a shoe company.\u00a0 They don\u2019t have a diversified line of products or brands.\u00a0 If they bring a new shoe design to market and it fails, the impact of that failed product has a much larger impact on their bottom line.\u00a0 Yet at the same time as Crocs continues to evolve and develop new designs and products the success of those ventures will have a much more positive impact which could really make the value of their stock jump.<\/p>

As you can see a much larger, more diversified company is going to be able to absorb losses easier and although you may not experience significant jumps in stock value you will likely experience less volatility.\u00a0\u00a0 As an added bonus, since large-cap companies are usually in a position to retain some of its earnings they are likely to pay dividends.\u00a0 Small-cap companies are attractive for growth potential, yet certainly carry risks and can be quite volatile.<\/p>

\u00a0<\/p>

Disclosure: I am in no way affiliated with either Nike or Crocs.\u00a0 Although our family has purchased both Nike and Croc products, the use of these companies is for illustrative purposes only.\u00a0 By no means, am I making any recommendation or advising the purchase or sale of either company.\u00a0 Before making any investment, carefully consider the investment objectives, risks, charges, and expenses.<\/i><\/p>","_et_gb_content_width":"","sharing_disabled":false,"spay_email":"","jetpack_publicize_message":""},"categories":[3],"tags":[13,77,10],"jetpack_featured_media_url":"https:\/\/sarahcarrfinancial.com\/wp-content\/uploads\/2013\/07\/Size-Matters.png","jetpack_publicize_connections":[],"jetpack_shortlink":"https:\/\/wp.me\/p9rIpx-52","_links":{"self":[{"href":"https:\/\/sarahcarrfinancial.com\/wp-json\/wp\/v2\/posts\/312"}],"collection":[{"href":"https:\/\/sarahcarrfinancial.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/sarahcarrfinancial.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/sarahcarrfinancial.com\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/sarahcarrfinancial.com\/wp-json\/wp\/v2\/comments?post=312"}],"version-history":[{"count":11,"href":"https:\/\/sarahcarrfinancial.com\/wp-json\/wp\/v2\/posts\/312\/revisions"}],"predecessor-version":[{"id":1470,"href":"https:\/\/sarahcarrfinancial.com\/wp-json\/wp\/v2\/posts\/312\/revisions\/1470"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/sarahcarrfinancial.com\/wp-json\/wp\/v2\/media\/1468"}],"wp:attachment":[{"href":"https:\/\/sarahcarrfinancial.com\/wp-json\/wp\/v2\/media?parent=312"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/sarahcarrfinancial.com\/wp-json\/wp\/v2\/categories?post=312"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/sarahcarrfinancial.com\/wp-json\/wp\/v2\/tags?post=312"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}