Large-Cap Stock: Is There Such a Thing as Too Big?

A large-cap stock is one that is a share of a very large company. Here are the basics of large-cap stock and how you could be affected when a company gets too large.

Large-Cap Stocks

This type of stock represents the largest companies in the world. In order to qualify as this type of stock, a company typically has to have at least $5 billion in assets. These types of stocks make up the vast majority of the money in the stock market. You need to be aware of the stocks due to their immense weight and influence in the market.

Getting Too Big

Although a company's goal is to grow, it is possible for a company to get too large. When a company becomes too large, they tend to saturate the market. When this happens, there is a good chance that the company will not be able to grow at the rate that it once did. If you are one if its investors, this means that the price of your shares will not grow either. Many investors purchase the stocks in order to maintain their wealth with a safe form of investment. It can also be difficult for these large companies to adapt to the changing market, as a smaller company could. This could eventually negatively affect the price of your stocks.

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