A blue chip is stock in a '' stock corporation'' (contrasted with non-stock one) with a national reputation for quality, reliability, and the ability to operate profitably in good and bad times.

Origin

As befits the sometimes high-risk nature of stock picking, the term "blue chip" derives from the

card game A card game is any game using playing cards as the primary device with which the game is played, be they traditional or game-specific. Countless card games exist, including families of related games (such as poker). A small number of card ga ...

poker. The simplest sets of

poker chips Casino tokens (also known as casino or gaming chips, checks, cheques or poker chips) are small discs used in terms of currency in casinos. Colored metal, injection-molded plastic or compression molded clay tokens of various denominations are us ...

include white, red, and blue chips, with American tradition dictating that the blues are highest in value. In the United States, blue chips were traditionally used for higher values such that "blue chip" used in noun and adjectival

senses A sense is a biological system used by an organism for sensation, the process of gathering information about the world through the detection of stimuli. (For example, in the human body, the brain which is part of the central nervous system rec ...

are attested since 1873 and 1894, respectively. This established connotation was first extended to the sense of a blue-chip stock in the 1920s. According to Dow Jones company

folklore Folklore is shared by a particular group of people; it encompasses the traditions common to that culture, subculture or group. This includes oral traditions such as tales, legends, proverbs and jokes. They include material culture, ranging ...

, this sense extension was coined by Oliver Gingold (an early employee of the company that would become Dow Jones) sometime in the 1920s, when Gingold was standing by the stock ticker at the

brokerage firm A broker is a person or firm who arranges transactions between a buyer and a seller for a commission when the deal is executed. A broker who also acts as a seller or as a buyer becomes a principal party to the deal. Neither role should be confu ...

that later became Merrill Lynch. Noticing several trades at $200 or $250 a share or more, he said to Lucien Hooper of stock brokerage W.E. Hutton & Co. that he intended to return to the office to "write about these blue-chip stocks". It has been in use ever since, originally in reference to high-priced stocks, more commonly used today to refer to high-quality stocks.

United States

The most popular index that follows

United States The United States of America (U.S.A. or USA), commonly known as the United States (U.S. or US) or America, is a country primarily located in North America. It consists of 50 states, a federal district, five major unincorporated territori ...

blue chips is the

Dow Jones Industrial Average The Dow Jones Industrial Average (DJIA), Dow Jones, or simply the Dow (), is a stock market index of 30 prominent companies listed on stock exchanges in the United States. The DJIA is one of the oldest and most commonly followed equity inde ...

, a price-weighted average of 30 blue-chip stocks that are generally the leaders in their industry. All companies in the Dow Jones Industrial Average are blue-chips, but the Dow Jones Industrial Average is an index that does not include all companies that are blue chips. Nevertheless, it has been a widely followed indicator of the stock market since October 1, 1928.

References

{{DEFAULTSORT:Blue Chip (Stock Market) Stock market

Origin

United States

See also

References