September 16, 2009

What Are Blue Chip Stocks




Blue Chip Stocks are quality stocks that have a proven track record. A Blue Chip stock is like a member of the family in the American pastoral landscape. The Blue Chip stock makes toilet paper, laundry soap, aluminum, steel, washing machines and just about every well known brand we used every day The Blue Chip stock is Bank of America, U.S. Steel, Proctor & Gamble and others we think of as being our companies.

In times of uncertainty and for long term investors the Blue Chip stocks are a part of every portfolio either in direct stock purchases or through mutual funds. The Blue Chip stock is a large cap company and has decades and even a century of presence on the stock market. Some Blue Stock stocks are relatively new players like Home Depot or the result of a merger & acquisition. If you look around your house and around your town the brand products you use or have come to rely on are Blue Chip stocks.

The fact is that we take for granted the Blue Chip stocks both in our familiarity as an end user, but often times in the stock market. The Blue Chip stocks make up the S&P500 index. These stocks as a whole can be purchased as an index fund. Some Blue Chip stocks make up the Dow 100. These stocks on the whole are a bell weather of how the overall market is doing.

Like any familiar item the Blue Chip stocks become like a comfortable old pair of sneakers. We know where they are and they are easy to slip into, but they may not be as exciting as say Google or Baidu. In recent months some of the Blue Chip stocks have been a flight to safety for some investors. Not all Blue Chip stocks are alike, but some have been grossly undervalued and therefore a good buy.

Ways to invest in Blue Chip stocks:

The investor can pick and choose a Blue Chip stock and buy it through a stock broker or on-line with a trading company like Scotttrade or E*Trade. This gives you access to the companies performance on the short term and charts going back at least 10 years. The investor can access the companies financial reports and quarterly earnings on-line. The investor can ask the company to send you a company prospectus.

There are index funds of Blue Chip stocks that can be bought through a financial brokerage house. There are mutual funds that are designated as Blue Chip Funds in most family of funds offered in all of the major mutual funds companies. There is even a mutual fund company that offers a spider fund comprised of Blue Chip stocks that is similar to the S& P 500.

The variety of ways to invest in Blue Chip stocks is endless. Spiders, Index funds, and hybrids in between. There are option contracts and some tricky investments that only a really savvy trader can advise you about.

The Blue Chip stocks merit a good review in all times not just in times of market uncertainty.

More on this topic (What's this?)
The Blue Chip Stock, R.I.P.
Today's Blue Chip Stock Market
Read more on Blue Chips at Wikinvest

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