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Rule Breaker Investing

The Market Cap Game Show: Battle of Champions

Rule Breaker Investing

The Motley Fool

Business, Investing, Invest, Rulebreaker, Stocks, Company, Growth, Stockmarket, Fool, Foolish

4.5928 Ratings

🗓️ 22 June 2022

⏱️ 70 minutes

🧾️ Download transcript

Summary

Yasser El-Shimy made a great first impression with his win in the last match, but now he's back to face our previous champ, Brian Stoffel. Guessing market caps great and small, of companies ubiquitous and obscure. Who will win? You will, Fool!

Transcript

Click on a timestamp to play from that location

0:00.0

A lot of people when they first think about stocks tend to lock in on the share price.

0:06.1

Maybe this was you or maybe this is a friend of yours.

0:09.7

They'll say, well, alphabet, it's at 2, 235 dollars a share that's expensive. By contrast

0:19.6

the same mentality when looking at penny stocks can get a lot more excited. Some penny

0:24.3

stock they're seeing promoted by someone, perhaps some near do well, and they'll

0:28.3

think, wow, the stock is at 22 cents, not 22,200 like alphabet.

0:34.4

22 cents, they'll think that's the one to buy,

0:37.2

the one at 22 cents, because if it just reaches a dollar,

0:40.4

you quadruple your money. Well, from the earliest days of the Motley Fool, we've tried to get people focused not on the price per share of the company,

0:48.0

but rather on the market cap of the company.

0:51.0

The price per share of a stock tells you almost nothing.

0:54.0

It's the price to buy one share of the stock.

0:58.0

But how many shares does the company have outstanding?

1:02.0

Well, in math, we multiply two multiplicans together but

1:06.3

the price per share is only one multiplicand. If you don't know the other one you

1:11.5

can't do any meaningful math or figure out much of the world around you.

1:15.0

F. Know that you need to know the shares outstanding and then multiply that by the price per share and now you know the actual full value of the company its full price tag, it's market capitalization, market cap.

1:32.0

Well, to teach this lesson inexorably and unforgettable

1:35.8

we invented a game.

1:37.8

That's what I do.

1:38.8

The date was August 9th, 2017, and we've been playing every quarter since you're playing too. You know this. You've been playing

1:46.9

along all the way through I hope and it's that time of the year again that time of the quarter ten new stocks two guest

...

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