I know what a blue-chip stock is, but I don’t know why they are called that. Can anyone give me an answer?
Poker players use colored chips to replace money in bets. Generally, the white ones are the smallest value, the red ones an intermediate value, and the blue chips are the most valuable. You don’t throw those around. When you have a very good hand, (or a particularly strong desire to bluff) you use the blue chips.
Blue chip means valuable. Over time, the most valuable of stocks are the ones most likely to retain, and gain value. Rapid growth is nice, but it is volatility. Reliable is better, in the very long term. So, large, established, historically well positioned, well managed companies, with ample real holdings, and predictable markets are the blue chips.
Tris
The most valuable companies are called the blue chips because the most valuable pocker chips were the blue chips. That’s how I’ve always heard it, anyway. I play the stock market but not poker.
From the 1928 Saturday Evening Post “the white chips were ordinarily worth $1, red chips $5,blues $10,yellows $100.”
I don’t think yellow chips were around at the turn of the century and before. So a blue chip was the highest value or best.