Blue Chip Stocks
Blue Chip Stocks
Blue chip stocks
are stocks in companies that historically have exhibited unparalleled and
unquestionable strength; such companies are the stalwarts of American business. Stocks of
this type include companies such as IBM, AT&T, and General Motors. These are the stocks
whose long-term success is guaranteed. These are not stocks in any one particular industry,
computers for example, but rather the most stable and solid stocks on the market regardless
of the products they produce or services they offer. The focus here is on the behavior of the
stock.
For example, IBM and General Motors produce vastly different products but, regardless of
their production, the stocks of both are very stable as the companies are such behemoths
that very little can cause their corresponding stock to fluctuate much. As a general rule, these
companies tend to have been in business a very long time, although Intel, for example, is
considered a blue chip stock and has been in business a short time, relatively speaking.
Blue chips almost guarantee that novice investors will not lose money while enabling them to
learn and practice their investment strategies with real stock. In addition, blue chip profits are
based on investors purchasing the stock and holding on to it for an extended period of time, a
highly desirable strategy for novice investors.
