What Are The Small Cap Stocks?

By Gilbert Stockton

Small cap stocks are when a companies has less than 500 million in market capitalization. The value of the stock does not measure the number of employees it is measured by the companies market value it holds.

Just like penny stocks, small cap stocks do not have a very good reputation in the stock market and therefore, are overlooked by many investors. However, these overlooked small cap stocks have the potential to make an everyday Joe a millionaire over a very short period of time. Of course like everything else 'small cap stocks' also have their pros and cons.

The Advantages: They have a larger profit margin because they are from small companies. These companies have a lot of growth potential and can increase the market value of an investor by a larger margin than a company that has been around for many years. Small cap stocks allow you to move up with them changing your small cap investment into large capitalization.

Disadvantages: Small cap stocks haven't been around as long as other companies. Their competition can often dominate a market and insure hard times for its competition. This involves a lot of risk. You do not know how stable the company is because you don't have the information you would like on a company that has been around for many years.

Small cap stocks can be a good investment if you are careful and do a lot of research on the company. Many in the media focus on the negatives and dark side of small cap stocks but there is a lso money to be made in this form of investment.

To conclude, before you invest in the often-overlooked small cap stocks, it would be wise to do your necessary research to ensure that you pick a winner and that your fortunes grow with that of the company! Good luck! - 23159

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