Recapping Market Capitalization
In 2008, some of the major market indexes reset the limits by which they separate large-cap, mid-cap, and small-cap stocks. The S&P 500, which is considered a benchmark for large-cap stocks, lowered the limit for inclusion in the index from $4.5 billion to $4 billion. Meanwhile, another index publisher, MSCI Barra, revised its large-cap definition to $7.5 billion, down from $11 billion.1 Similarly, falling stock prices allowed some money managers to buy stocks that were previously too big for their objectives while forcing them to sell others that no longer fit their portfolio rules. We may see more forced buying…