Blue chip indicators are indexes comprised of the largest and best known public companies—in other words, blue chip stocks.
It is thought that whatever direction the wind is blowing for these companies, it can serve as a benchmark for the stock market, and the economy as a whole. Think of the Dow Jones Industrial Average, which is an index of 30 stocks with companies you may have heard of...such as IBM, Microsoft, Home Depot, Exxon Mobil, Wal-Mart, and Disney (GE got booted in 2018). They have a stable track record of earnings growth, usually offer dividends, and do not have a lot of big competitors.
Any guess as to why they are called blue chip stocks? A) You turn blue when you see the price to purchase them, B) It was once the highest value chip in poker, or C) You have to be a blue blood in order to buy them. If you carefully selected B, you are correct. Those approaching their retirement years like the security of blue chip stocks, while younger investors are looking for that “big bang” of high growth stocks.
Today, many investors look to the S&P 500 as a better bellwether for the stock market. It has a larger number of companies, obviously, and therefore a wider variety of industries to measure.
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Finance: What is a Blue Chip?18 Views
Finance a la shmoop, what is a blue-chip? Alright people think kids, plastic, poker
chipset, remember those cheap plastic poker chips? [Someone looking at their cards]
Yeah the the whites were supposed to be a penny [The money equivalents of the chips are shown]
the Reds were a nickel and the Blues the most highly valued chips in the set well
they were worth a dime and that's where the name came from the highly valued
blue chip and it refers to high-quality, highly valued companies Disney, Coke and [Logos of the blue chip companies]
in today's world Google, Amazon, Shmoop alright maybe not Shmoop. All right but
the rest of those companies are blue chips which have a long track record of [Blue chip stamp]
growing profits if not revenues for a very long period of time and they have
corporate cultures that are all about winning [People playing poker with their heads replaced by briefcases with company logos on them]
whatever game they're in so go blue, well sure them too... [Football player is tackled]
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