Large or Small?

Large or Small?

Large or small?

A further important decision now awaits us in our investment planning. In selecting our securities, are we to choose the large companies or the small? This is an issue which exercises the minds of many investors, including the experts. The deciding factors here are these: which of the two, large companies or small, are the more likely to offer security of your capital, and at the same time to afford the better opportunities for expansion, and whose shares have therefore the greater chance of appreciation by increasing both capital and income ?

At first sight a small company may seem to have greater room for expansion than a larger one, since its growth is yet to come. But in fact the large companies usually expand at a faster rate than the small ones, except for a very small minority of large companies. The majority of small companies either remain small or disappear. Under present-day conditions of high taxation and of high-powered companies wielding enormous resources and influence, the small company has little or no chance of competition. Given the rare combination of exceptional managerial talent, with certain fortuitous circumstances, a small company might expand although it is more than likely that any such talent would be snapped up by the more lucrative terms offered by the large concerns, whilst any chance advantage a small firm might initially possess could be more than counterbalanced by an equivalent product, marketed by a big concern, which could well afford to compete even at a temporary loss.

in the rare case in which a small company could retain exceptional talent combined with some happy chance, such circumstances would be beyond the capacity of most, if not all, investors to forecast and benefit from. The advantages of the large companies over the smaller ones can be seen from the following comparative tables:


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