One of the portfolio diversification principals I have picked up over the years is to diversify by company size. I can't remember the source of this principal(NAIC?), but it seems to me that 25% of a properly balanced portfolio should be small companies (under $500million revenue), 50% of portfolio mid size companies ($500 million to $5billion revenue),  and 25% large companies ($5billion revenue and up).

   Is this rule of thumb still a valid inventment diversification principal? Are revenue classification still in the ranges I have cited? I wonder if it is because it seems company revenues have grown over the years and the stock classifications may have grown with revenue increases and inflation.

   I am confused somewhat because of terminology. When investors talk about capitalization they usually speak of market capital invested - not revenues. They are apples (revenues) and oranges (capital). It seems to me NAIC principals really mean company revenue, in terms of company size, rather than market cap.

   I couldn't find an authoritive discussion in the NAIC Investors Manual about company size diversification. Any suggestions where I might find more information about size diversification. Any opinions about size diversification in general. It seems to me that choosing companies with adequate revenue and earnings growth would trump capital considerations.

I found how NAIC classifies companies...

<$400million in revenues = small

$400million to $4 billion = medium

>$4 billion large

but I am still unable to find NAIC's reccomendation on portfolio diversification for allocations to small, medium and large companies.