Stock Trading and Other Things

What is market capitalization in relation to the stock market?

every time i check the stock market i see the abbreviation mkt cap, and I dont know what it means.

Public Comments

1. Its the price per share multiplied by the number of shares outstanding.

2. as said above. its the share price X the number of shares. Its the amount of money you would need to buy every share of that company being traded.

3. Large, Mid and small caps is also what you want to understand and pay attention to as an investor. The large cap firms typical are valued over 1 billion, small caps typically valued under 500 million. Even micro caps have a category value under 100 million.

Large caps tend to do better during harder economic times (becuase they are better funded), mid, small, micro are not as better funded.

4. Market capitalization is a term used to describe the absolute value of a company at any given point in time, but it does so in a somewhat arbitrary way.

The figure is arrived at by multiplying the current price quote by the total number of shares that were issued.

Bear in mind that it is not correct to say the number of shares that are traded - many companies have issued several billion shares of stock, but only released 40-50 million shares for actual trading - they are able to then retain hundreds of millions of shares in their vaults, which they can use for collateral for loans, for employee bonuses, etc.

Also remember that this is not a legitimate way of valuing a company, since the price would quickly fall to zero if all shares were put up for sale at once.

However, it does allow an arbitrary way of ranking company size for an index like the S&P 500 or Dow Jones Industrial Average.

5. Share price times shares outstanding