If you follow the stock market, you have certainly heard of small caps. But do you know what their characteristics are, how investing in them works and which are the best small caps to invest your money in? These questions will be addressed throughout this article. From now on, it is worth understanding that small caps are shares in companies with a lower market value. But this does not mean that they are not attractive, especially because they can offer higher returns, although they also involve greater risk. And you deal better with this relationship between risk and profitability when you acquire knowledge and follow the guidance of experts. This is what happens when you check Rico's recommended portfolio on small caps and also understand everything about this type of shares. Interested? Continue reading our complete guide.
And if you have any questions at the end, just leave a comment. Click and download the guide to the stock exchange What is a Small Cap share? Meaning and Concept A computer with an investment platform and, below, a person is using a tablet, in reference to small caps Brother cell phone list Small cap stocks can offer attractive profitability opportunities Small caps are shares on the Stock Exchange with a smaller market capitalization. Furthermore, some definitions may also consider the company's revenue or trading volume. The aspects that determine a small cap share may vary from one market to another, but, in general, they are shares of companies whose market value is between US$300 million and US$2 billion. To find out the market value of a company, simply multiply the price of its shares by the total number of shares issued. In general, small caps include two types of companies: New companies, which may have sector diversification.
But are not leaders in their market Companies that have been in the market for longer, but are concentrated in smaller sectors and may or may not be leaders in the segment in which they operate. An interesting point about these assets is that, as they have a lower market capitalization, they have a greater potential for growth and appreciation in relation to the shares of large cap companies. However, it is important to highlight that these companies also have less liquidity on the stock exchange, which makes investments in small caps, naturally, more prone to fluctuations, which increases their risk. What are Bovespa blue chips and large caps? Zoom in on stock market variations in reference to small caps Blue chip stocks are also known as large caps. Unlike small caps, large caps refer to shares of large companies traded on the Stock Exchange.