Hello,

If I buy stock in a small cap and it performs exceptionally, to the point that it’s market cap now is in midcap territory such as Graco (GGG), isn’t it a case of the small cap index’s loss is the mid caps gain?

Could it be the superior small caps perform so well that the index suffers when their capitalization is too large and they become mid and large cap stocks?

Large cap performers rarely see their capitalization fall below their large cap status and if they do, they get acquired.

The same can be said of small caps. Once their growth appears on everyone’s radar, large caps acquire some of them.

What this says is good research is likely to beat indexing when it comes to small caps