No Cap

Did you peep the double entendre? The phrase “No Cap” is slang for “I’m not lying or exaggerating”. HOWEVER, when discussing stocks the word Cap is a reference to Market Capitalization or Market Cap.

Market capitalization, “is the market value of a publicly-traded company’s outstanding shares. Market capitalization is equal to the share price multiplied by the number of shares outstanding” (Investopedia).

When looking at a stocks market cap, it’s important to know the stocks are often ranked and sorted by market cap because, in the most basic form, a stocks market cap describes how large a public traded company is.

Knowing a stocks market cap allows a clever investor to deduce things like how prone to manipulation the stock is or how frequently the shares trade hands. The stocks of most companies that we all know and trust are generally found within the large-cap or mid-cap range.

Although most major reputable publicly traded US companies fall within the large to mid-cap range, some very great companies can be found within the other market cap ranges, which ranked from largest to smallest and is made up of at least 5 other market-cap sizes.

Market Capitalization chart (from Mega to Micro):

  1. Mega-cap
  2. Large-cap, “or big-cap, companies typically have a market capitalization of $10 billion or more.” -Investopedia
  3. Mid-cap companies generally have a market capitalization of between $2 billion and $10 billion.” -Investopedia
  4. Small-cap
  5. Micro-cap

Apple ($AAPL) is the world’s largest publicly traded company and therefore the largest of the mega-cap stocks with a $2 trillion market cap. When you look at Apple’s $2 trillion market cap, it should become immediately obvious that Apple is a large company.

As a large company, it is unlikely that any single investor, or even a group of investors, would have trouble buying up all of Apple’s stock. At 2 trillion dollars, Apple’s market cap is almost as large as the economy of Italy 🇮🇹, which has a GDP of about $2 trillion.

Being such a large company (as measured by market capitalization), Apple is almost immune to most types of manipulation. In other words, the Reddit-army or a group of hedge funds would find it almost impossible to sway the price of $AAPL in the same way they have done smaller stocks like $GME or $AMC.

Because I mostly invest in the largest of the large-cap companies, I am not concerned with the coordinated manipulation attacks orchestrated by Main Street investors (retail investors, Reddit-army, or Wall Street bets) or the coordinated attacks of Wall Street investors (hedge funds & professional investors).

For diversification purposes, I sometimes invest in small-cap stocks; however, after having a few bad experiences, I no longer invest in individual micro-cap stocks. My first bad experience was investing in a boiler room stock that was hyped on internet chat rooms but turned out to be a pump and dump scheme. My second attempt of buying a micro-cap stock failed because I purchased it in an account that had trading fees and my brokerage added hidden fees to the transaction, in addition to my $8 buying and selling fee, just because it was a pink sheet stock.

On my first two attempts, I made the mistake of taking all of the risk and putting all of my eggs in one basket. Since my first two over-the-counter trades backfired, I was hesitant to try a third time. Before jumping back in and repeating my mistake a third time, I reevaluated my options and realized my mistake was not investing in OTC stocks. My mistake was exposing myself to single stock risk without first doing my due diligence. Had I done my due diligence, I would have been able to spot the pump and dump on my first investment and I would have researched my brokerage’s fee structure and OTC trading guidelines.

On my third attempt, I avoided the aforementioned risk by choosing to instead purchase my OTC stock using a trusted intermediary. That trusted intermediary was BlackRock’s iShares ETF, specifically the iShares Microcap ETF ($IWC). $IWC is an ETF designed to give me exposure to those awesome micro-cap stocks that trade on the “pink sheets” without the risk of single stock investing.

⚠️Warning: This is not investment advice and I do not endorse or recommend this ETF. My decision to invest in this ETF is my own and I’m not being compensated for my opinion. This investment was inspired by a Bloomberg TV segment that aired on July 7, 2021, and covered micro-cap stocks. After reading a few articles and reading the ETF’s prospectus, I figured this one was “worth a try”, whatever that means

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