Business/Finance: What Do You Invest For?

Market capitalization isn’t the whole story of any company, but it
provides an interesting means of comparison. For General Electric’s
market cap of $383 billion (June 2007), one could buy Walt Disney
(DIS), Automatic Data Processing, Wrigley, Costco, Hershey, Tiffany
(TIF), Apple Computer, Molson Coors, Safeway, Xerox, and a small
country or two.
Each of these companies has its own problems developing new
products, fi nding new markets, and expanding market share. In
other words, growth is diffi cult for these icons of capitalism; imagine
how hard it is for GE.
However, if you buy a small-cap fund, you will miss the advantages
of well-run, dividend-producing giants like Johnson & Johnson
(JNJ). If you invest in both large-cap and small-cap funds, you
may earn average market returns, but with higher fees than a simple
index fund. What’s the point?