The total dollar value of a company's outstanding shares, calculated by multiplying the current stock price by the number of shares. It represents the market's assessment of a company's total worth and determines its size classification.
The term emerged in the early 20th century as stock markets became more sophisticated. 'Market' comes from Latin 'mercatus' meaning trade, 'capitalization' derives from 'capital' (Latin 'capitalis' meaning of the head or chief), referring to the head sum or principal amount of wealth represented by the company's total value.
Market cap categories have created an almost caste system in investing - companies graduate from small-cap to mid-cap to large-cap like students advancing through school, with each category attracting different types of investors and fund managers. The largest companies by market cap have become so valuable that Apple and Microsoft have each been worth more than the entire GDP of most countries.
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