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REDDIT

How to I emotionally set aside market cap when looking at companies to invest in?

A
Aug 1, 2026 · 09:22

Whenever I'm looking to invest in a company with the intention of holding for 10 years, pretty much the first thing I do is look at the market cap and ask myself "is the market cap low enough that this company can grow significantly"?

And because of that, I pretty much always immediately rule out companies over the $100b mark, especially if they've got to that figure in 10 years or less.

It's a psychological barrier for me that I just can't get over. The reason for this is because I am picking stocks specifically to try and beat the S&P500, which averages about 11% CAGR with dividend reinvested.

So right off the bat I need the stock I'm picking to at least return an average of 15% CAGR just to make the risk worth it. So I do the math and for example let's take a random company like Lam Research with a market cap of $366b, if that compounds at 17% CAGR for 10 years, it will have a market cap of $1.76t.

However a smaller company like Astera Labs with a market cap of $53b would become $254b. Still a high valuation but is just feels more attainable.

And if we go down to much smaller companies like in the $5b range, a 15% CAGR would only give them a $24b market cap. $5b -> $24b just feels so much easier than $366b -> $1.76t.

But this mentality means I'm always leaning towards riskier smaller cap companies to try and get that good 17% CAGR.

Does anyone else do this? How do I get over this mental barrier?