Glossary
Blue Chip
Stock of a large, stable, well-established company
A blue chip is the stock of a large company with a long record of stable profit and a solid balance sheet. The name comes from the highest-value chip at a casino table.
They share a few traits: an entrenched position in their industry, resilience through downturns, and often a consistent dividend. Most of the household names you can list without thinking belong here.
The upside is peace of mind; the downside is that a company already this large rarely multiplies several times over. Investors chasing quick gains find them slow. In exchange, the odds of a devastating loss are lower.
No blue chip is permanent, though. Plenty of former leaders have collapsed under technological change or poor management. Trust the results rather than the reputation, and check that the performance is still there. A portfolio of only blue chips is steady but slow, so many investors pair them with growth names in a fixed ratio.