How-To Shortlist Which Stocks to Invest in ?
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Last time I checked, the Nasdaq had more than 3200 companies listed. Following all of them is simply impossible. So what do most investors do ? Short-list a bunch of stocks they like and stick to them. H 
ow do you short-list which ones to invest from so many options ? Where do you start ? Frankly, there is no straight answer to that. The best thing would be to break these stocks into smaller groups and then decide how to proceed. Ok so lets break them into smaller groups. But wait...what criteria to use to break them into smaller groups. I found few of the important criterias that make the selection process much more easy.
Company Size
Break up based on company size. By company size, i mean their market capital. Market capital is nothing but the total dollar value of the company's outstanding shares. Based on market capital a stock can be a large cap, mid cap or a small cap.
Large Cap = Market cap of anything more than $10 billion
Mid Cap = Market cap valued between $1 billion and $ 10 billion
Small Cap = Market cap of anything less than $1 billion
The larger the market cap, the more established the company, which means more stable stock prices. Small cap and mid cap companies usually have a higher potential for future growth than large cap companies, but their stock tends to fluctuate more. In short, volatility factor goes down as the market capital goes up. Large caps are less volatile as compared to small caps. For an aggressive portfolio trade in small/mid cap. For conservative portfolio trade in large cap. Exxon Mobil Corp XOM has the largest market cap at $427 billion.
Company Size
Break up based on company size. By company size, i mean their market capital. Market capital is nothing but the total dollar value of the company's outstanding shares. Based on market capital a stock can be a large cap, mid cap or a small cap.
Large Cap = Market cap of anything more than $10 billion
Mid Cap = Market cap valued between $1 billion and $ 10 billion
Small Cap = Market cap of anything less than $1 billion
The larger the market cap, the more established the company, which means more stable stock prices. Small cap and mid cap companies usually have a higher potential for future growth than large cap companies, but their stock tends to fluctuate more. In short, volatility factor goes down as the market capital goes up. Large caps are less volatile as compared to small caps. For an aggressive portfolio trade in small/mid cap. For conservative portfolio trade in large cap. Exxon Mobil Corp XOM has the largest market cap at $427 billion.