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Why Size Matters More for Tech Stocks

December 18. 2021. 6 mins read

Our end-of-the-year portfolio review meeting ran into a brick wall almost immediately when one of our MBAs sparked up some Slurricane creeper that could have killed Elvis. Nonetheless, we powered our way through that hurdle, and started down the path of thinking more like portfolio managers and less like stoned MBAs. As risk-averse investors, we’re always interested in better understanding what risks we’re taking and further refining our tech investing methodology.

A common way to analyze risk for any given portfolio is by grouping the constituents into similar buckets. Some common factors to evaluate include value vs. growth, size (big caps, medium caps, small caps), and industry. Tech investing, by definition, is all about growth. That’s why our simple valuation ratio focuses on how fast revenues are growing. As for industry and size, these are two factors we haven’t evaluated for our own portfolio. First, let’s look at size.

Big vs. Mid vs. Small

Many index providers like MSCI (MSCI) define size as a target that moves along with the overall universe. Their size buckets adjust to the ebb and flow of the markets. For our own purposes, fixed-size buckets will work just fine. ARK Invest analysts put together a breakdown for the ARK Innovation ETF (

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