Get to know what a market cap is and its types and how to calculate it

zebrablog.net - In the world of capital, there is one term that is meaningful to understand, namely market capitalization or commonly known as mark market. The term which means market investment is one of the markers that can prove the appearance of the stock and is related to the elementary elements of an industry.

The size of the market number is a sign of an industry so one important aspect that investors usually think about before buying a stock. For that, understand in advance what a sign market is, its types, and how to calculate it.

What is a Market Cap?

Market sign or market investment is a dimension that is based on the accumulated results of an industry to take into account the characteristics and capabilities of shares in that industry. This figure is obtained from the total number of outstanding shares (shares) of the industry multiplied by the price of one share on the market.

Investors will generally use the mark market as a standard to calculate the quality of the issuer to be selected. By knowing the market numbers for an industry, investors can determine how much capital needs to be spent to buy shares of that industry.

Market Cap types

After understanding what the sign market is, it's time for you to know what types of sign markets you need to know before considering the capabilities and basics of an industry.

1. Large cap

This type of stock is a very large sign market type with a market investment of IDR 10 trillion or more. These early-packaged stocks are usually owned by large companies with normal financial conditions and an established line of business. Most of the major industries that have large stock marks or also known as blue chips include Microsoft Corp., Johnson & Johnson, Exxon Mobil, and others.

Because of the elements and very reliable capabilities, industries with this type of stock are not easily carried away by economic conditions, so the level of risk is also very small. Moreover, the ability of this type of stock can affect the Combination Stock Price Indicator (IHSG).

2. Middle cap

The next type of market sign is the middle sign, which is another valuable stock issued by the industry with a market investment of between Rp. 1 trillion to Rp. 10 trillion. Issuers with these market numbers are generally an industry that has grown rapidly, but has the potential to grow even more.

Although not as big as a large sign, stocks with this type of market share generally have good elements with fairly normal abilities and fall into the type of growing industry stock. However, the risk of losing business is also possible, so you need to be careful when choosing this type of stock.

3. Small cap

Small token stocks or commonly called third pack stocks are shares owned by an industry with a small market investment, which is at the base of IDR 1 trillion. Industries that fall into this type of sign market are generally new companies that have the potential to grow.

Although usually investors can get promising profits from these companies, you always need to think about the possible risks involved in the future. This type of stock is usually played by speculators and is often called fried stock.

Method of Dividing Market Cap

As explained earlier, you can divide the market value of an industry independently based on the product of the number of shares owned by the industry by the share price per share. To make it more clear, then the method of dividing the sign market with a mathematical method.

Market sign = number of shares spread on the market x share price per share

For example, if an industry has 100 million shares spread at a price of Rp. 500 per share, so that the market mark you get is 100 million x 1,500, which is Rp. 150. 000. 000. 000.

It should be noted that market figures are a sign of an energetic industry which can eventually change from time to time, although it doesn't happen that often. Therefore, make sure you share market signals in real-time before buying shares in the industry you choose.

Capital Strategy Suitable for Market Cap

Each industry that has a different type of market sign must have a different personality as well. Therefore, you need to use the right capital strategy if you want to diversify based on the type of market cap.

Getting the maximum profit from the issuer must be the dream of all investors. However, how do you find big profits from an industry with a small type of sign that has the ability to grow quickly?

To avoid losing when starting a small investment or fried stock, make sure you diversify by buying shares of a maximum of 10 percent of the total remaining shares owned by an industry. Meanwhile, you can share 60-70 percent of the total inheritance for large token type stocks.

Not only that, do a cut loss if the stock you buy has experienced depreciation and track how much profit you want to get from the shares you have. For example, when you buy a stock and set a profit of 50 percent of the total investment, then you need to collect profits.

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