Recently I got myself sucked into an argument about what is or is not a "blue chip" stock. I am very much afraid that I may be wrong, so I wanted to poll everyone else and get their input. (And yes I know people can just look at my post history to see what side I am on, but I will try and present the choices objectively.)
A blue chip stock will is 'too big to fail' regardless of its age.
- The theory is that it will be around for a long time in the future simply do to the fact of its enormous size and so much of the economy being dependent on it. The amount of time it has existed in the past is irrelevant. It could very well be a new company that haven't weathered any major bear markets yet. Examples would be Tesla or Facebook
A blue chip stock will is old regardless of its market cap.
- Again, the theory is that this will be around a long time in the future. But the reason is because it has been around for a long time in the past. It has lived through bear market after bear market after bear market and just simply refuses to die. The overall size and market cap does not factor in. Examples would be Hormel Foods or Emerson Electric.
A blue chip stock is just fucking expensive.
- Here, the future longevity is beside the point. The word origin comes from a bit of folklore where a traded back in the 1920s was looking at ticker tape and made an offhand comment about realy giant numbers being shown in the print. In poker, the "blue chips" have the highest value so likewise the stocks that are "blue chips" have the largest per share price. Could be an old company or new. Could be a big company or small. Examples would be Berkshire.A or Chipotle.
I am curious to hear other peoples opinion.
Submitted August 31, 2022 at 07:31AM by jackelfrink https://ift.tt/Cl6OVI5
