Stock Market Tips - 5

Large companies generally offer better investment opportunities than do smaller ones. This is because large companies can make use of economies of scale which smaller companies cannot. The former are thus able to reduce costs and establish a clear competitive edge over smaller companies. How does one decide whether a company is large or small? Where does one draw the dividing line? Again, though there is no rigid and universally applicable rule in this regard, we would suggest that as a rule of thumb companies with an equity capital of less than $10 million and sales of less than $25 million could be considered very small and by and large, you should avoid investing in such companies.