Definition of Blue Chip Stock
What is meant by the term "blue chip"? What does the term "blue chip stock" mean?
A "blue chip stock" is a stock that is recognized as being a stable, well-respected and financially sound company. A "blue chip company" is a company that has been posting steady earnings results for a long period of time and is easily recognizable (they are a strong brand or sell products that have a strong brand).
A "blue chip stock" is a stock that is seen as a stable investment. A "blue chip stock" is a stock that can weather downturns and provide decent returns when the economy is doing well.
There is much less risk in holding "blue chip stocks" in your portfolio, as "blue chip" companies are usually very stable. "Blue chip stocks" don't provide the same potential returns as high-growth stocks, but there is also a much lower degree of risk in holding blue chip companies.
Examples of "blue chip stocks"? IBM, JPM and XOM.
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