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In the U.S, a stock is classified as a Large Cap Stock, when it has a total Market Capitalisation exceeding $10 billion. Market participants look to segment the Stock Market, classifying stocks by Market Cap is one method, into Large, Mid, Small and Micro-Cap Stocks.

The level of a Company’s Market Capitalisation, {Stock Price x Number of Shares} is one way the Stock Market is segmented. Market Cap is an important measure as it is the correct measure to understand the value of a Company as perceived by Investors in the Stock Market. Segmentation by Market Cap, commonly starts with Micro-Cap Stocks under $300 million. Then Small Cap from $300 million up to $2 billion, Mid Cap from $2 billion up to $10 billion. Once a Company has a Market Cap of over $10 billion, in the U.S., this is classified as a Large Cap Stock. The U.S. is by far the world’s largest Stock Market, so this classification can be relative. In other Stock Markets, a Large Cap Stock could be a Stock with a Market Cap of over $5 billion.

Large Cap Stocks represent the main percentage weighting of the Market Cap in the U.S. Several Large Cap Tech Stocks, have a combined weighting of around 10% of the overall Market Cap. In any Stock Market, Large Cap Stocks are the most widely held by Investors and they are the core holding for many broad-based Equity Funds which are not focused on more specialised strategies. They are also the most followed by the Analytical Community, issuing on a regular basis a deep library of Research and Earnings Estimates. The segmentation of the Stock Market is important for Comparative Stock Valuations and Industry Analysis. Market Cap is one method. Another way the Stock Market is segmented is by Industry and Sectors.

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Warren William

Meet the author behind Smartest-Data. Warren William has a career in Finance and Investments extending over 35 years, both on the Buy Side and Sell Side. His most recent roles include, developing Institutional Risk Management Programs for managing Equity and Fixed Income Risk.  Prior to this Warren William work in Alternative Investments, in Investment Management and as a Buy Side Equity Analyst. Warren William brings a wealth of knowledge and expertise to the table, providing in-depth analysis and commentary on the latest trends in the Stock Markets. Contact information: wwBLOG@smartest-data.blog or Telegram +393339034488

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