Lux Investing
What does "US Small Cap Stocks" mean?
And how does one invest in it?
Public Comments
- US Small Cap Stocks refers to a group of small sized companies. Mid Cap would be medium companies and large cap would be large companies. Every mutual fund company is the country has a fund dedicated to small cap companies.
- A generally accepted definition is a stock with a market capitalization of less than $2 billion. Just goes to show you how bad inflation really is. $2 to 10 is considered mid cap. Greater than $10 large cap. There is also a category known as micro cap about less than $500 million. There are all kinds of options for investing in small cap stocks. There are mutual funds that specialize in them. One of my favorites is PENNX. There are also index funds that you can buy based on generally accepted small cap indexes such a the Russel 2000 index. IWM is the ticker. You can also invest in individual small cap companies. To do so it helps to have a screening tool to sort out the small caps. Yahoo has a fine one. If you do not like the $2 billion cap limit you can adjust it up or down with the screening tool. You can also filter out most of the dogs by setting profitability limits. Here is a link to the Yahoo screening tool. http://screen.finance.yahoo.com/newscreener.html Yahoo lists 130 small cap companies that have a better than 15% return on assets. That would be a start for you. Unless you are somewhat of a risk taker or have a fairly substantial portfolio, you will improve your chances by investing in a small cap mutual fund rather than in the individual small cap stocks. They come with a great deal of individual risk.
