The potential for high profits from investing in small-cap stocks is there, but so are significant risks. Companies with a market capitalization of under $2 billion are considered small-cap stocks. They are sometimes unpredictable and prone to sudden price changes. Small-cap companies may be more susceptible to economic downturns, industry changes, and competition because of their size and limited resources. Small-cap stocks may also be harder to sell rapidly due to their lower liquidity. Small-cap stock holdings should be well investigated and diversified because a single investment might significantly affect your portfolio. When making an investment in small-cap stocks, it is crucial to consider the potential risks and rewards.
Risks of investing in small-cap stocks.
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