Blue Chip Stocks

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Definition of 'Blue Chip Stocks'

A blue-chip stock (share) is stock in a company with a national reputation for:
  • quality
  • reliability
  • the ability to operate profitably in good times and bad.
The Dow Jones Industrial Average follows US blue chips.

The DJIA is a price-weighted average of 30 blue-chip stocks that are the leaders in their industry. It has been a widely followed indicator of the stock market since October 1, 1928

The name "blue chip" derives from poker where the highest value betting chip is blue, the lowest being white and in the middle is red. It is thought that the color blue was selected for the highest value poker chip because of its association with royal lineage.

The phrase was coined by Oliver Gingold of Dow Jones in either 1923 or 1924.

See also Green Chip Stocks.

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