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Companies worth $300 million to $2 billion. More growth potential but riskier.
Why It Matters
Small caps are where the next Apple or Amazon might be hiding. These companies have room to grow 10x or 100x - something Apple can't do from $3 trillion. But most small caps fail or stay small. They're more volatile, less liquid, and have less analyst coverage. Small caps have historically outperformed large caps over very long periods, but with much bumpier rides.
Key Points
- Russell 2000 is the main small-cap index - ETFs like IWM track it
- Small caps tend to lead during early economic recoveries and lag during downturns
- Less analyst coverage means more opportunity to find undervalued gems - but also more risk of bad surprises
Related Terms
Common Questions
Companies worth $300 million to $2 billion. More growth potential but riskier. Small caps are where the next Apple or Amazon might be hiding. These companies have room to grow 10x or 100x - something Apple can't do from $3 trillion.
Small caps are where the next Apple or Amazon might be hiding. These companies have room to grow 10x or 100x - something Apple can't do from $3 trillion. But most small caps fail or stay small. They're more volatile, less liquid, and have less analyst coverage. Small caps have historically outperformed large caps over very long periods, but with much bumpier rides.
Russell 2000 is the main small-cap index - ETFs like IWM track it
Small caps tend to lead during early economic recoveries and lag during downturns
Less analyst coverage means more opportunity to find undervalued gems - but also more risk of bad surprises