Tips & Hints on how to find blue chip stocks

Have you ever thought about stock market investing and considered how blue chip stocks  might help in attaining your ultimate goals financially? In the game of poker, the most valuable poker chips are the blue ones, which is where the term Blue chip stock got its name. When individuals invest in these valuable blue chip stocks, they are in fact investing in well established, reputable companies. These companies have minimal liabilities, stable earnings and high credit ratings.  Additionally, they have a well established customer base and wide ranging lines of product.

Blue chip stocks are considered quite stable, safe investments and that is their biggest advantage. Individuals are fairly sure of positive returns on their financial investments, when they procure stocks and shares in well established companies like Coca-Cola, Wal-Mart, Microsoft, Disney or McDonalds.  In the stock market, blue chip stocks are often thought of as a sure winner, a home run. Because of this, blue chip stocks are eagerly sought by non-profit organizations with small budgets and the need for safe financial risk, as well as retirees looking for conservative, solid investments in planning their future.

The biggest problem with purchasing blue chip stock, however, is of course, the high price per share. Small investors, therefore, have a more difficult time trying to base their portfolios on these desired blue chip stocks. Since the returns on these stocks are known to be relatively modest, individuals would not enjoy the thrill of being able to state that they were a part of the rise of some unknown organization to the top of that industry, nor would they have the opportunity to become overnight millionaires.

What are bellwether stocks

Sometimes, blue chip stocks are called bellwether stocks, even though they are not precisely the same and are not exchangeable. A company that is a leader in its industry and often used by analysts in determining or forecasting the performance of that industry, are referred to as bellwether stocks. As highly valued companies are usually industry leaders, bellwether stocks are usually blue chip stocks as well.  This does not, however, mean that a blue chip stock is a bellwether stock.

The most well known and established listing of blue chip stocks  in the world, is believed to be  the Dow Jones Industrial Average. It was created be Charles Dow, editor of the Wall Street Journal and the founder of Dow Jones & Company.  It is an index of 30 stocks used and quoted by analysts to provide a depiction of the overall performance of the stock market.

There are a number of ways for individuals to purchase shares and stocks if they wish to invest in blue chip stocks.  Some of these methods are through a stock broker, a direct purchase stock plan or a dividend reinvestment plan. Individuals could choose, instead, to invest their money in a mutual fund made up of numerous blue chip stocks which would lower their risk even more.