A blue chip is

capital stock In economics, capital goods or capital are "those durable produced goods that are in turn used as productive inputs for further production" of goods and services. A typical example is the machinery used in a factory. At the macroeconomic level, ...

of a

stock corporation A joint-stock company (JSC) is a business entity in which shares of the company's stock can be bought and sold by shareholders. Each shareholder owns company stock in proportion, evidenced by their shares (certificates of ownership). Shareholder ...

with a national reputation for quality, reliability, and the ability to operate profitably in both 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 that uses playing cards as the primary device with which the game is played, whether the cards are of a traditional design or specifically created for the game (proprietary). Countless card games exist, including famil ...

poker Poker is a family of Card game#Comparing games, comparing card games in which Card player, players betting (poker), wager over which poker hand, hand is best according to that specific game's rules. It is played worldwide, with varying rules i ...

. The simplest sets of

poker chips Casino chips (also known as poker chips, gaming tokens, or checks/cheques) are small discs used as currency in casinos. Larger, rectangular gaming plaques may be used for high-stakes games. Poker chips are also widely used as play money in ca ...

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 surroundings through the detection of stimuli. Although, in some cultures, five human senses were traditionally identified as su ...

are attested since 1873 and 1894, respectively. This established

connotation A connotation is a commonly understood cultural or emotional association that any given word or phrase carries, in addition to its explicit or literal meaning, which is its denotation. A connotation is frequently described as either positive or ...

was first extended to the sense of a blue-chip stock in the 1920s. According to

Dow Jones Dow Jones is a combination of the names of business partners Charles Dow and Edward Jones. Dow Jones & Company Dow, Jones and Charles Bergstresser founded Dow Jones & Company in 1882. That company eventually became a subsidiary of News Corp, an ...

company

folklore Folklore is the body of expressive culture shared by a particular group of people, culture or subculture. This includes oral traditions such as Narrative, tales, myths, legends, proverbs, Poetry, poems, jokes, and other oral traditions. This also ...

, 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 entity that arranges transactions between a Purchasing, buyer and a sales, seller. This may be done for a commission (remuneration), commission when the deal is executed. A broker who also acts as a seller or as a buyer b ...

that later became

Merrill Lynch Merrill Lynch, Pierce, Fenner & Smith Incorporated, doing business as Merrill, and previously branded Merrill Lynch, is an American investment management and wealth management division of Bank of America. Along with BofA Securities, the investm ...

. 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 (USA), also known as the United States (U.S.) or America, is a country primarily located in North America. It is a federal republic of 50 U.S. state, states and a federal capital district, Washington, D.C. The 48 ...

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 indice ...

, 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 A stock market, equity market, or share market is the aggregation of buyers and sellers of stocks (also called shares), which represent ownership claims on businesses; these may include ''securities'' listed on a public stock exchange a ...

since October 1, 1928.

References

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

Origin

United States

See also

References