Microcap stock 5001901 204446001 2008-04-09T13:31:48Z NeilN 409043 Reverted 2 edits by [[Special:Contributions/Laicsssp|Laicsssp]]; Spam. using [[WP:TWINKLE|TW]] {{unreferenced|date=January 2008}} The term '''microcap stock''' (also '''micro-cap''') is used to describe publicly traded companies which have a [[market capitalization]] of roughly US$250 million or less. The vast majority of U.S. [[stock]]s fall into this category, but they make up only a small fraction of the total [[stock market]] value. Most are traded on over the counter exchanges, and their prices are quoted on the OTC Bulletin Board ([[OTCBB]]) or the [[Pink Sheets]]. Larger, more established microcaps are often listed on the [[NASDAQ]] Small Cap or [[American Stock Exchange]] (AMEX). Other common exchanges for U.S. microcaps include the Alternative Investment Market (AIM) in London, the Toronto Venture Exchange, and the Frankfurt and Berlin stock exchanges. The AIM has become a popular alternative to listing on U.S. exchanges since the [[Sarbanes-Oxley Act of 2002]] greatly increased the accounting and legal costs of a U.S. stock listing, which are disproportionately high for small companies. Microcap stocks are notorious for their [[volatility]], and a high percentage of these companies fail to execute their business plans and go out of business. Fraud and market manipulation are not uncommon, and the transactions costs in trading can be quite high. However, many investors believe that these risks are outweighed by the large percentage returns that come with success. Pricing is more likely to be inefficient, since fewer institutional investors and analysts operate in this space, due to the relatively small dollar amounts involved and the lack of [[liquidity]]. The microcap and [[Market capitalization|smallcap]] sectors have outperformed larger stocks in the years since 2000, and new [[index]]es have been created to track the performance of microcaps as an asset class. These include the Russell Microcap Index, the Dow Jones Select Micro-cap Indexes, and the Dow Jones Wilshire U.S. Micro-Cap Index. ==See also== *[[Penny stock]] *[[Microcap stock fraud]] *[[OTCBB]] *[[Pink Sheets]] [[Category:Stock market]]