We are all more advocative for novice investors to invest in the index**, because the index is less volatile and the risk is relatively lower than that of others**. But for novice investors, when they see the terms **, mid-cap, small-cap, small-cap, broad-based, and narrow-based, they don't know how they are divided.
First, let's take a look at what is an over/under market
The market here literally refers to the circulating share capital, representing the number of shares circulating in the market of each company, and can be divided into large and small caps according to the size of the circulating share capital.
However, in reality, everyone is more Xi to define the size of ** by total market capitalization (total share capital per share), and sorted from high to low by total market capitalization, the top large-capitalization companies are ** shares, and the low-ranking small-cap companies are small-cap stocks.
* Shares: The total market value is more than 50 billion.
Mid-cap stocks: the total market capitalization is about 100-50 billion yuan.
Small-cap stocks: The total market capitalization is less than $10 billion.
The mainstream broad-based indices are basically compiled according to the total market capitalization:
CSI 300: Contains the 1st-300th largest A-share stocks**, which are the representative indices of ** stocks.
CSI 500: Contains the 301st-800th largest A-shares**, which is a representative index of small and mid-cap stocks.
CSI 1000: Contains the 801st-1800th largest A-shares**, which is a representative index of small-cap stocks.
When investing, which is better, ** stocks or small-cap stocks?
In fact, ** stocks and small-cap stocks have different performances at different times:
From 2012 to 2015, small- and mid-cap stocks performed better than ** stocks;
From 2016 to 2020, ** stocks performed better than small and mid-cap stocks;
In 2021, small- and mid-cap stocks performed better again;
Large, medium and small caps have performed similarly in 2022.
Under normal circumstances, the first-class stock plate is relatively large, with many circulating chips, with sustainability and stability, and it takes a long time to pull up, which is suitable for medium and long-term investors. Small-cap stocks are smaller, less circulating chips, and the dealer is easy to control, once the dealer controls the plate, the market will rise sharply in a short period of time, which is suitable for investors with limited funds and like to operate.
Now that we understand the difference between large and small cap stocks, let's take a look at what is a broad-based index and what is a narrow-based index
In general, broad-based indices help us understand the overall performance of the entire A** market, while narrow-based indices help us understand the performance of a particular sector or theme.
In general, we refer to an index that covers multiple primary industries as a broad-based index, and an index whose constituent stocks come from a few primary industries as a narrow-based index or an industry-themed index.
When investing, is it better to choose a broad-based index or a narrow-based index?
Broad base is mostly suitable for regular investment or long-term holding, while narrow base is suitable for irregular and non-directional investment with a certain timing and fundamental judgment. For example, the SSE 50 Index in a broad-based index is often suitable for long-term holding or regular investment, as the distribution of constituent stocks is concentrated in industries with relatively stable valuations, high dividend ratios and high margin of safety.
From the perspective of historical development, most of the high-quality ** that are more than 20 years old are broad-based. As for the semiconductor and new energy industries, which have exploded in the past two years, they are more suitable for people who are willing to take risks and choose the right time and have studied fundamental judgments. In the past three years, the "bull base" is all a narrow base for investing in new energy.
This article is shared here, the views of the article are for reference only, do not constitute investment advice, investment is risky, choose carefully!