Basic terms to be understood.

 

What Is a Portfolio?

A portfolio is a collection of financial investments like stocks, bonds, commodities, cash, and cash equivalents, including closed-end funds and exchange-traded funds (ETFs). People generally believe that stocks, bonds, and cash comprise the core of a portfolio. Though this is often the case, it does not need to be the rule. A portfolio may contain a wide range of assets including real estate, art, and private investments.

What is Market Capitalization?

Market capitalization refers to the total dollar market value of a company's outstanding shares of stock. Commonly referred to as "market cap," it is calculated by multiplying the total number of a company's outstanding shares by the current market price of one share.

Different Capitalizations

  • Small-cap is a term used to distinguish companies with relatively small market capitalization. A company’s market capitalization is the market value of its outstanding shares. In India, normally a company below market capitalization of Rs.5000 crores is classified as a small-cap company.
  • Mid-cap company is a company with a market capitalization above Rs.5000 crores and less than Rs.20000 crores are viewed as a midcap company.
  • Large-cap refers to a company with a market capitalization value of more than Rs.20,000 crores is recognized as Large-cap companies. Large-cap is a reduced version of the term large market capitalization.



Risk

Returns are not guaranteed – While stocks have historically performed well over the long term, there’s no guarantee you’ll make money on a stock at any given point in time. Although a number of things can help you assess a stock, no one can predict exactly how a stock will perform in the future. There’s no guarantee prices will go up or that the company will pay dividends. Or that a company will even stay in business.

You may lose money – Stock prices can change often and for many reasons. You have to be comfortable with the risk that you might lose all of your money when you buy and sell stocks, especially if you’re not planning to invest for the long term. If you use leverage to invest in stocks, like buying on margin or short selling, you could lose more than you invest.

reference: Investopedia

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