Blue Chip Stocks

What exactly are Blue Chip Stocks? Let's take a look at some of the background information, definitions and examples that are out there to find out.

First a little background: oddly enough, or maybe not that odd at all, the term "Blue Chip" comes from Poker. In Poker, using a standard 3 color chip set there are typically white, red and blue chips with blue having the highest value.

So if you look at the origin of the term "Blue Chip Stocks", you would realize that gambling has some sort of tie, at least by definition.

Just as the blue chips in poker represent the highest value in comparison to other chips when using a standard 3 color chip set, Blue Chip Stocks are supposed to represent the highest value among other stocks.

A definition from the NYSE describes them as such: A blue chip stock is stock in a company with a national reputation for quality, reliability and the ability to operate profitably in good times and bad.

Expanding on the definition provided by the NYSE you could consider stocks that are Blue Chips to be: 1) large cap stocks, 2) have a track record of performance and 3) profitable with good debt management and then run your own stock screener to come up with results that meet your requirements.

Typcially, the Dow Jones Industrial Average (DJIA), which contains stocks of 30 large companies (large cap stocks), is considered to include Blue Chip Stocks which many investors and traders look tawords when performing research and stock selection.

Here are the current stocks (as of 12/28/2010) that the DJIA consists of (you can check the current components at any time here:

Blue Chip Stocks

Return From "Blue Chip Stocks" To "Stock Trading Terms"

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