People often slip into using the jargon of their industry, we fall into this trap too. We try to educate to help make the jargon less fuzzy so that we are all talking about the same information. The investment universe is divided up into many different boxes – stocks, bonds, private markets, public markets, growth, value, etc.
For the public equity market, we put stocks into the Large Cap, Mid Cap and Small Cap buckets. First, Cap is short for capitalization. It is the measurement of a company’s total value in the market, calculated by multiplying the total number of shares by the share price. As an example, Microsoft has 7,432,000,000 shares with a share price of $502.04, so its market capitalization is $3.73 trillion. This ranks them second in the S&P 500. Nvidia is currently number one with a market cap of $4.4 trillion. (More on Nvidia below)
What do the market cap categories mean:
- Large Cap – Companies with a market cap of at least $10 billion.
- Mid Cap - Companies with a market cap between $2 billion and $10 billion.
- Small Cap - Companies with a market cap of less than $ 2 billion.
Some will also add Mega Cap that includes companies over $200 billion and Micro Cap that are companies less than $300 million. To give you a frame of reference, the S&P 500 is all Large Cap companies and covers 75% of the US equity market. In fact, if you take a list of US companies and sort them by market cap, you have to go all the way to number 892 before you are into the Mid Cap range. That tells you that the US has 891 public companies that each have a market cap of over $10 billion! There are about 1080 US Mid Cap companies and around 1500 US Small Cap companies. All these numbers change as the market moves. And remember, these are all publicly traded companies. Privately owned companies are not included. All U.S. Listed Stocks, Ranked by Market Cap Ranked: 50 Most Valuable Companies in the World in 2025
What does all of this mean for investing? We have always believed that being diversified is important. We invest across the equity markets using a broad-based index to get exposure to all market caps. Recently, the market has been compressing with the largest companies comprising a larger portion of the market. Currently, the top five stocks account for over 28% of the S&P 500.
The other side of that is the performance differences between the categories. As you can see from the chart below that starting before the pandemic, US Large Cap stocks have outperformed the Small and Mid Cap stocks. The outperformance has gained momentum in the last five years. It has been difficult, if not impossible, to beat US Large Cap stocks over the last decade. The question, and the reason we stay diversified, is how long that will continue and what will happen when/if it stops.
Nvidia:
I mentioned Nvidia above as being the largest US company by market cap. Its market cap is currently $4.4 trillion. On Wednesday, they announced earnings, and they outperformed market expectations, but not enough to get the market excited, so the stock price dipped slightly. Nvidia is the most-watched earnings report, and it is being looked at to see if there are signs of a slowdown in the AI economy. Why is one company so important – Nvidia is currently 3% of the global stock market, and its biggest customers are the other top ten companies in the S&P 500. Axios Charted: Nvidia’s Stock Performance (2019-2025) Axios Markets
Financial Planning/Investment Strategy Corner:
One Big Beautiful Bill Act – Changes in Donor-Advised Funds:
There are some changes to the tax-deductibility of gifts to Donor-Advised Funds that have not gotten much press. There is a new charitable deduction floor. Starting in 2026, charitable deductions will only be deductible once they exceed 0.5% of your Adjusted Gross Income (AGI). As an example, if your AGI is 250k, the first $1,250 that you donate will not be deductible. And there is a new cap on the tax benefits of donations. Starting in 2026, the maximum tax benefit from charitable donations will be limited to a 35% tax rate, even if you are in the 37% bracket.
These might seem like small changes that will only affect a small number of people, but often it’s the people with the largest AGI and in the highest tax brackets that give the most to charities. And the charities count on those donations.
The bill did add an above-the-line deduction for people who do not itemize for up to $1k for cash gifts directly to charity. UI Charitable Advisors
Cybersecurity Resources NEW!!
Composed by Wendi Smith
RSWA is adding a new Cybersecurity Resources section to the newsletter each month in response to the on-going threat from cyber crimes. We will highlight current warnings, offer tips for identifying and avoiding scams, as well as recommended steps to follow if you are victim to one. In today's rapidly evolving digital world, there is no one fixall so it becomes most important to be informed about threats you may encounter and how to prevent them. We welcome your feedback and experiences because knowledge is power!
- Current Warning: Apple has released iOS 18.6.2, along with a warning to update your iPhone now. iOS 18.6.2 comes with a single fix for a serious hole already being used in real-life attacks. Forbes Apple Support. It is suggested you initiate this download instead of waiting for automatic updates.
- Cyber Tip: Protect your passwords to combat online fraud. Follow this advice from Microsoft to help keep your accounts out of the wrong hands. Microsoft Support
- Current Scams: Here is a list of current scams to be aware of compiled by the FTC. FTC Consumer Advice
Quick Hits:
- I can’t believe it’s Labor Day Weekend, but here are some ideas to make your weekend tasty: 57 Best Labor Day BBQ Recipes My 55 Best Labor Day Recipes
- And with fall around the corner, here are some fall gardening tips: 8 Fall Gardening Chores You Should Never Skip 10 Garden Chores to Prepare for Next Year's Bloom
- Fairs and Festivals are in full swing. Here is a great list of what Maine offers: Maine Fairs and Festivals, Craft Shows, Art Fairs, Events And here is one for NH: New Hampshire Fairs and Festivals, Craft Shows, Art Fairs, Events
- Apple picking! Home - Maine Apples Apple Picking In New Hampshire
- And back-to-school tips (sorry kids 😊): Back-to-School Tips for Families 30 Hobbies for Empty Nesters: How to Fill Your New Free Time
A Few Quotes to Consider – Happy Labor Day!
- “It’s hard to beat a person who never gives up.” — George Herman “Babe” Ruth
- “I’m a greater believer in luck, and I find the harder I work the more I have of it.” ― Thomas Jefferson
- “Hard work should be rewarded by good food.” — Ken Follett
Thank you for reading RSWA Financial Advisor Insights! We welcome feedback and please forward this to a friend! Be well, take care, and stay safe!
