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Large Cap Stocks

Large Cap stocks are units of ownership in larger, well established corporations.  ”Blue chip stocks” are a type of large cap stock, but that is also regarded as being very stable and high quality; a large cap stock is only characterized by its size.  The term “cap” is a reference to “market capitalization”, which is the aggregate market value of a firm.

Stock investments in larger corporations are often viewed as having less risk and return volatility than stock investments in smaller corporations, because they may be more mature , have stronger market positions, or may be in more developed industries or markets; however, they are often viewed as having less growth potential than small and mid cap stocks.

Adjusting the mix of stocks in your portfolio between large cap stocks and mid/small cap stocks is a way of adjusting the risk-return profile of your portfolio

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Glossary

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