Blue
Chips

Blue Chip:
Is a term which is widely used
and perhaps the least understood by novices.

It basically refers to large, stable stocks
that are well known, have had great earnings in the past,
and will continue to do so in the future.

The term "Blue Chip" is derived from casino gambling,
in which the blue chips are typically the ones with the highest value.

The following are two more terms with the somewhat similar meaning:

Bellwether:
Is s stock of a company which is recognized as a leader in its industry.
For example, IBM is considered a bellwether stock in the computer industry.
Often times, the performance of a bellwether is an
indication of how that industry is doing as a whole.

Large Cap:
These are companies who have extremely large market capitalizations.
Market cap is simply the number of shares outstanding x the price of the stock.
[e.g. If a stock is selling for 1, and it has 10 million shares outstanding,
then its market cap is 10 million]

Back to the First Page | Back to the Investor Education