Most in the investing industry recognize three "size" categories for equities--small-capitalization stocks, mid-cap and large-cap. But there’s no standard level for where each level begins. Frequently, investors identify an arbitrary level--e.g., any stock over $10 billion or $20 billion is "large"--but without any fundamental reasoning behind the distinction.
Instead of having an arbitrary line in the sand that doesn’t provide a meaningful frame of reference, Ken Fisher considers size differently. He believes a better way to think about size is relative to the market's weighted average market cap. Fisher's research shows stocks with market capitalizations above the weighted average market cap act more like big stocks, whereas stocks smaller than the weighted average behave more "small"--even if that stock has a market capitalization of $40 billion or $50 billion. This more fluid but fundamental way of considering size yields categories that have more size properties in common.