|
| |
5 Hot Internet Businesses For 2005
If you are planning to start a new business in 2005, you should seriously consider one of the many Internet based businesses available today. The online businesses have numerous inherent advantages in comparison to their brick and mortar counterparts. ...
Is Accumulating a Net Worth of $1,000,000 Easy? Yes and No
After purchasing Anthony Robbin's Get The Edge program, I was a bit skeptical that it would provide much value. I can honestly tell you that it has dramatically changed many areas in my life. Many of my new or old goals are finally in clear focus, I've ...
Online Business: Work Smarter, Not Harder
Online business is probably the fastest growing market on the planet. With over 34 million web pages out there and more being created every day it seems like an almost hopeless prospect for the solo home business owner to achieve any sort of success. ...
|
|
|
|
| |
Small cap common stock historically returned a higher rate of return than its big cap counterpart. All household names that you are familiar with were a small cap stock. Microsoft, Dell, IBM, Johnson & Johnson were all small companies. When a company is small, a few millions of additional sales may contribute to explosive growth in earning. Therefore, the reward of investing in small cap stock is high. How about the risk? The risk is plenty. 90% of all new business will fail during the first five years of operation. The statistic for the number of small cap public companies that fail are not widely available. But, my guess is it may involve about half of the publicly traded companies.
Big cap stock is a bigger and steadier companies. For some, bringing in one billion dollar of sales may not move the profit meter. Therefore, earning growth has slowed and the potential return is lower than small cap
investing. The risk in investing in big cap stocks however is low. Sure, some companies fail from time to time. Polaroid, Enron and Worldcom came to mind. But for most occasion, big cap stocks can turn the ship around when they are in trouble. The phrase 'they are too big to fail' comes to mind. IBM, Altria, Bestbuy, General Electric, Walmart, Chevron have its ups and downs. All of them recover. Some of them were acquired later on. Therefore, the risk of failing is lower with these companies. Perhaps, it is as low as 10 - 20 %.
Now, it is your decision time. Which one do you prefer? I am more comfortable in investing in big cap stock. I still had plenty of investing time but big cap stock helps me sleep better. It matters more to me than higher potential return. The best solution of course is to mix your portfolio with both big cap and small cap common stocks. However, do not over diversify to the point where your return will be mediocre no matter what your stock prices do.
About the author:
Distribute your finance/investing content for free at our article submission service. Meanwhile you can list your site for free at our web directory service.
|
|
|
|
|
|
A Business Forced to Shrink May Be StrongerNew York Times, United States - 9 hours agoPaul B. Brown on the changing world of small business and the colorful characters who inhabit it. Writing on his blog, Jarkko Laine, a software developer, ... |
small business - Google News
|
