Why High Quality Stocks Are Called 'blue Chip'
You hear the term "blue chip stock" used ubiquitously in the media to describe the equity of large companies whose profitability tends to be stable, regardless of swings in the business cycle. The Dow Jones Industrial Average is often described as an index of high quality, blue chip stocks. But do you know the origin of the term?
Oliver Gingold, one of the early employees at Wall Street Journal publisher Dow Jones, is widely credited with coining the term in the early 1920s. According to one account, Gingold was standing by a rolling stock ticker at a brokerage firm and noticed several trades of stocks valued at more than $200. He told those nearby that he planned to head back to the office and “write about these blue chips stocks.”
Gingold probably was a poker player. In poker, bets are made with white, red, and blue chips — and the blues are typically the highest in value.
Circa 2013, the term "blue chip" is still in common currency. But given the more rapid rise and fall of companies in this age of disruptive technological change, market participants have come to question whether any stock can today be considered rock solid in the way blue chips once were. Consider the travails that visited the once bluest of the blue corporations like General Motors (GM), Lehman Brothers and Eastman Kodak (EK).
In today’s global economy, there are precious few sure bets.Photo Credit: daveynin
The post Why high quality stocks are called 'blue chip' appeared first on Smarter Investing
Covestor Ltd. is a registered investment advisor. Covestor licenses investment strategies from its Model Managers to establish investment models. The commentary here is provided as general and impersonal information and should not be construed as recommendations or advice. Information from Model Managers and third-party sources deemed to be reliable but not guaranteed. Past performance is no guarantee of future results. Transaction histories for Covestor models available upon request. Additional important disclosures available at http://site.covestor.com/help/disclosures. For information about Covestor and its services, go to http://covestor.com or contact Covestor Client Services at (866) 825-3005, x703.
Select the service that is right for you!COMPARE ALL SERVICES
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV