Dow Jones Wilshire Mid-Cap Index

  

See: Dow Jones Wilshire Large-Cap Index. It's...smaller.

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Finance: How do you Differentiate Betwee...35 Views

00:00

- a la shmoop. how do you differentiate between large-cap mid-cap and small-cap

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companies? all right well people it's all about the

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cap ,so what is the cap again? no no this cap. that's market cap. market [woman holds graduation cap]

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capitalization or rather the value that Wall Street investors are placing on the

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company's future earning hours- that's how you kind of value companies right?

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well simply put to make categorizing investing in these companies easier,

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mutual funds and index funds have somewhat arbitrarily created brackets

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for the three different sizes of companies. the presumption runs that

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smaller companies carry more risk but grow faster than very large companies.

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they're more volatile and they appealed to a certain type of investor. medium

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sized companies well yeah there's somewhere in the middle, shockingly. and [3 company sizes listed]

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well yeah large cap they don't grow as fast a dividend usually and kind of they

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are what they are. so what are the numbers. well this is how they were

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created. the first gradation was started at a billion dollars or so and it ended

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at about five billion like below a billion it's like a nano cap. or it's a

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really small cap company and many companies grow through all three phases

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of small medium and large cap. take a Netflix- please for 995 a month they pay

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those four to say that. all right well Netflix came public at a valuation of [man speaks to camera]

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around 300 million dollars, really small small cap. it then grew and grew and grew

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from being a small cap company to a mid cap company when it passed the valuation

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of five billion dollars, and then continued growing to the large cap

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behemoth it is today at 50 billion plus. Netflix did well. so Netflix generally

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kept its number of shares outstanding flat-ish few options there it got that

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looted a little bit, and as a stock price rose the market capitalization rose, as

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well or said another way investors valued the company more and more highly.

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so Netflix graduated from being a small cap to being a mid cap, a half dozen [Netflix logo with stocks and investors pictured]

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years or so after it went public, and a half dozen or so years later it

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graduated past the twenty five billion dollar threshold to being considered

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a large cap company. today and there's another casual class called mega cap

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which generally comprises companies with market valuations over a hundred or two

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hundred billion dollars. these companies are behemoths like ATT

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Apple Amazon and many other companies whose names don't start with the letter

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A. so that's it they differ between large mid and small cap companies you'll have

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to make like Goldilocks and choose the one that's just right for you. [Goldilocks smiles at three bowls of various sizes on a table]

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