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Trading and Investment Terms

Blue Chip

A blue chip can be defined as a nation wide recognized, well-established, and financially solid organization.

 

Blue chips by and large sell high quality, broadly accepted goods and services.

 

Blue chip organizations are known to endure downturns and function beneficially even with unfavorable financial conditions, which assists with adding to their long record of steady and solid development.

 

The expression ‘blue chip’ was initially used in order to describe high priced securities in the year 1923 when Oliver Gingold, an employee at Dow Jones, saw a few securities trading at $200 or more per share.

 

Blue, white, as well as red chips are used by poker players in betting. The blue chips have more value in comparison to both red and white chips.

 

Presently, blue chip securities don’t generally refer to securities with high prices, but more accurately to securities that are of high quality organizations that have endured the test of time.

 

A blue-chip security is typically a part of the most trustworthy market indices or averages, like the NSE Nifty 50, BSE Sensex in India; DJIA, S&P 500 and the NASDAQ-100 in the United States of America, the TSX-60 in Canada or the FTSE in the United Kingdom.

 

How big an organization needs to be qualified as a blue chip security is open to discussion. A typically agreed-upon benchmark is a market cap of $5 billion, although market or industry leaders can be organizations of all sizes.

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