It was in the 1920s when the term, “blue chip”, came into existence, having been coined by Oliver Gingold of Dow Jones & Company. It was derived from poker since blue chips are the most expensive chips in the game.
Staying true to that notion, Blue-Chip Stocks are the stocks of the largest and most financially stable companies that have been operating for years. Examples of these would be SM, Ayala, and other big players in the economy. When you invest in the stocks of these companies, you somehow become one of the owners of a corporation. Every trading day in the stock market, investors buy and sell stocks with changing prices. If you sell a stock with a higher price as compared to buying it, it’s known as a capital gain. Otherwise, it’s a capital loss.
People invest in the stocks of these well-established companies because it entails a safe and sure return. However, rationality must always come into play. Do research and study on these stocks before throwing your money in, because it takes the involvement of a great brain for a great gamble.
Sources: Investopedia March 12, 2008, Dow Jones internal news item “Ever Wonder How ‘Blue-Chip’ Stocks Started?”
Text by: Nikki H. Lim
Graphics by: Monica Dimapilis