Equity characteristics size. Equities and companies are generally divided into a handful of categories that assist in the investment process and size is likely the most common used characteristic. Now companies are typically grouped into different market cap categories and that's why size can also be referred to as market capitalization or capitalization now not everyone agrees on the same market cap cutoffs for each category within size. There are some common guidelines that most investors look at now. Let's first dig deeper into what market capitalization actually is. Well it just the value of the companies equity shares. And it's generally calculated by taking all the shares that are outstanding for the company and multiply it by the current price. Now a current price is easy to obtain for publicly traded companies, but market caps can also be estimated for private companies now an alternative method to calculate market cap is to use free float instead of total shares outstanding now instead of using all of the outstanding shares as we do with the full market capitalization method the float number excludes shares that are owned by insiders employees governments or other major long-term shareholders. And the free flow method is considered a better way of calculating market capitalization because it provides a better reflection of the actual market and market movements for the shares because it only includes the shares that are readily available for trading in the market. In fact many index providers like standard and pores will use the free flow method in calculating the weights for their market cap indexes for that very reason. Now let's dig deeper into the various categories within size first. We have mega cap companies and these are the largest publicly traded companies and it generally range between 200 billion dollars or more in market capitalization large cap. Alright behind them and they have a range of 10 to 200 billion now Mega cap and large cap companies and in addition to being the largest companies, they tend to be companies that are very stable and dominant in their industry these companies tend to hold a better in recessions, but they also tend to underperform some smaller companies when the economy emerges from a recession now large cap and may cap companies tend to be less volatile also and therefore considered less risky next. We have midcap companies in the range of two to 10 billion and small cap companies in the range of 300 million to two billion now many small cap. These Are Young with significant growth potential however, the risk of failure is greater for these companies than with their larger cap counterparts as a result smaller cap companies tend to be more volatile and therefore riskier than large cap mid cap and mega cap companies historically. They also tend to underperform large cap stocks during recessions, but have outperformed large cap stocks as the economy improves. And lastly we have micro cap and nano cap companies and these are obviously the smallest companies in the universe and they're even riskier than small cap stocks and while the opportunity for these companies to experience extreme growth is present the risk to lose a large amount of money is also possible.