Collaboration Matters!

Market Capitalisation is calculated by multiplying the current share price by the total number of outstanding shares.

This term is meant to indicate the "public" opinion of the net worth of a company. Unfortunately as many shares are either grossly over or under valued, and the share price at any given point in time often indicates an expectation of future earnings by the public, it can often vary enormously from the actual net worth of a company.

I personally don't hold much stock in Market Capitalisation as a measure of value, I prefer to look at long term growth, historical performance and actual divident performance. After all there are many examples of companies with high market cap values that have never made a profit, or are unlikely to make a profit in the near future or have invested in high risk strategies that may never come off.

Also if you recall the multi-billion drop in the market capitalisation of Exxon some years back after the Exxon Valdez disaster in 1989 and compare it with the worlds largest ever declaired divident by Exxon last year, you will see that market capitalisation is prone to huge variations, which have little connection to the actual worth of a company.

But the big numbers sound very impressive don't they?