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Message: A what if scenario...

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SnugTheJoiner

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Re: A what if scenario... Market Cap

in response to Re: A what if scenario... by brattymack

posted on Feb 24, 11 08:55PM (Log in to use the IP Check tool) ^[?]

'Market Cap' means everything.

How many times I've heard this phrase? Many.

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Investopedia explains Market Capitalization
If a company has 35 million shares outstanding, each with a market value of $100, the company's market capitalization is $3.5 billion (35,000,000 x $100 per share).

Company size [underline mine] is a basic determinant of asset allocation and risk-return parameters for stocks and stock mutual funds. The term should not be confused with a company's "capitalization," [underline mine] which is a financial statement term that refers to the sum of a company's shareholders' equity plus long-term debt.

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Don't forget risk-return.

Risk-return analysis is much more complicated than the simple arithmetic of calculation
for market capitalization. Here's a link to a risk-return analysis by Value Expectations for Google Inc. http://www.valueexpectations.com/blogs/google-inc%E2%80%99s-nasdaqgoog-riskreturn-analysis01292010

Maybe I'm a simpleton; but I think it would be very challenging to calculation the risk-return for GNH.

So I think it is simplistic to say 'Market Cap means everything' and that a higher cap is indicative of strength... or time to buy... or that this stock is a sure fire winner.

If it is, why didn't a 98 cent share price attract more buyers?

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