What are Blue Chip Stocks?

Blue Chips refer to long-term stable growth, large-scale, traditional industrial and financial stocks. The term "blue chip" comes from western casinos. In western casinos, there are three colors of chips, of which blue chips are the most valuable. In the securities market, those stocks of companies with better operating performance and stable and high cash dividend payments are called "blue chip stocks".

Basic Information

Chinese name

Blue chips

Foreign name

blue chip stock

Origin

Western Casino

On behalf of

Blue chips

Classification

Four

Features

Occupy a dominant position

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There are many blue-chip stocks, which can be divided into: first-line blue-chip stocks, second-line blue-chip stocks, excellent blue-chip stocks, blue-chip blue-chip stocks; and blue-chip funds.

Quantitative investment requires extremely complex model calculations and informatization support.

May 2012

According to research, the industry rotation in each stage of the Japanese bull market in the 1980s showed the following rules:

Before February 1987: revalued asset industries, such as power and natural gas, real estate, banking, and securities; February 1987 to December 1988: cyclical industries driven by external demand, such as paper, steel, and transportation Transportation equipment, machinery, etc .; after 1989: consumer service industries based on domestic demand, such as mining, construction, metal products, information services, commercial trade, technology stocks, etc.

The basic thrust of this round of movement is the reduction in trade surplus, inflation, and domestic demand caused by the appreciation of the yen. The essence is the change in the economic structure, which means that the above-mentioned liquidity is transmitted to the real economy. It is worth noting that the cross-industry of the real economy and the virtual economy has been repeatedly strong. For example, the trend of real estate can basically overlap with the Nikkei 225. Our research found that the trend of real estate in the global market and the trend of the stock market have a strong positive correlation But not synchronized; housing price movements are relatively less volatile than the stock market.

Asset revaluation also follows three sequences. Commercial real estate and resource assets have been the focus of mining in 2006, and the market is currently hot. The mining market has also been the most dazzling. The listed, planned or listed banks, insurance, and brokerage stocks are The main financial assets; there is a concept of cross-shareholding that has greater scale effect in the future, and one of the branches is the current bombing of the concept of venture capital.

The third step of asset revaluation has greatly enlarged the bubble and supported some "pseudo-blue-chip" performance growth. It has been pointed out that the equity investment in 2008 will affect the growth of listed companies by 30%. With caution.

The blue-chip differentiation after asset revaluation is extremely serious, and blue-chip games will swing to the cyclical industry. Investors are very wary of cyclical companies, so the stock prices of cyclical companies tend to be much lower than they should be. However, the role of economic law is irresistible. A report from Changjiang Securities (19.11, -0.04, -0.21%, it) states that after 1987, a large amount of funds flowed into the real economy and the performance of blue chips rose, the most surprising of which is the cyclical industry in the Japanese bull market. Performance: The conclusion shows that cyclical industries such as steel, air transportation, machinery, coal, and securities have obtained significant excess returns in the late bull market. The US stock market statistics also reached the same conclusion. After 1989, the performance of cyclical stocks weakened, while the performance of other types of stocks can still be maintained, such as technology stocks and consumer stocks. The power of funds on the stock market has become less and less, and funds have started to turn to some small-cap and growth stocks.

Generally speaking, people think that "blue chip stocks" are first-rate and best stocks, but they are not. The definition of blue chip stocks on the website of the American Stock Exchange is: The so-called blue chip stocks are the stocks of companies that have won national reputation for the quality of their products or services and the profitability and reliability of the economic boom. It sounds good, but you can find a few key words: well-known big companies, stable profit records, dividend growth, management quality and product quality. There is probably a vague concept. In fact, there is no unique and accurate definition of blue chip stocks. It exists in some indexes, in reports of securities analysts, and in the minds of some consumers.

The stocks of large companies are not necessarily blue chips, but blue chips must be stocks of large companies.

Small cap stocks are not blue chips

Generally speaking, small-cap stocks are not blue chips. Because small-cap stocks are often controlled by a small number of investors, commonly known as "bankers", and because blue-chip stocks have a large circulation and market value, ordinary investors can also actively participate, which makes it difficult to have "bankers" in the market. Can control this type of stock, so it has high liquidity and non-market property.

Differentiation method

Blue chips are not good stocks

After the market in 1996 and 1997, the most chilling stock is the best stock. Hubei Xinghua fell, and Sichuan Changhong's sword could not be cut, and the stock price was also cut. However, superior stocks are not necessarily blue-chip stocks. High-performing stocks reflect history; blue-chips must not only review history: performance should not be too bad, medium to upper level (limited to 0.20 yuan per share in the screening below), but also look to the future. Without the steady growth of future performance, raising the stock price will become a high-rise building on the beach, which will eventually collapse. Therefore, growth is unforgettable.

Are big company stocks blue chips?

The stocks of large companies are not necessarily blue chips, but blue chips must be stocks of large companies. A large company is not necessarily a good company, but large scale is a necessary condition to become a blue chip company. Blue-chip companies have received long-term attention and favor from major and mainstream capitals in the capital market. Measured by indicators such as asset size, operating income and company market value, the size of an enterprise is huge.

Blue chip stocks are not asset restructuring stocks

stock market

Asset reorganization, the company's performance has greatly improved, this is a general law. But this growth is not another growth. The growth of blue chip stocks is reflected in the profit growth of the company's superior resources based on superior management.

After a company restructures assets, we have to recognize it as the birth of a new economic entity. Its growth is reflected in the establishment of new entities, rather than between the transformation of new and old entities.

Blue chips will not be diversified companies

Diversified companies, especially hodgepodge-type diversification, will inevitably lead to the company's inability to devote all its efforts in every field. The blue-chip stocks reflect the development context of the entire macro-economy, and reflect the basic characteristics of various industries. Therefore, they must have a large operating scale and play an important role in the industry. They have a leading role in technology and pricing. Such a company is destined to be a specialized operation, not a diversified operation, at least not a horizontal diversified operation.