Get to know Blue Chip Stocks

If you pay close attention to news on online news portals or TV talk shows about stocks, the term Blue Chip is no longer foreign to your ears. Usually novice investors tend to play "safe" by investing in the leading stocks on the Indonesia Stock Exchange, namely Blue Chip stocks. What is the reason? Before exploring its potential, it's a good idea to first understand what is meant by Blue Chip stocks.

 

Get to know Blue Chip Stocks

Blue Chip Shares or Tier One Shares are a type of stock that has a large market capitalization, reaching over IDR 10 trillion. You know, the term Blue Chip originally came from the game of poker. In a poker game, blue coins (chips) have the highest value compared to red and white. The term Blue Chip is used and widely known in the world of stocks after being introduced by Oliver Gingold. At that time, Gingold saw a trend that stocks worth USD 200-USD 250 attracted investors. Since then, the use of the Blue Chip terminology has been used for leading stocks in the capital market world.

 

Characteristics of Blue Chip Stocks

Blue Chip stocks share several characteristics. One of them is having a large capitalization. The capitalization value of a company can reach trillions of rupiah. The large market capitalization makes it difficult for investors to manipulate prices.

In addition, Blue Chip shares also have good liquidity. Usually this liquidity is influenced by the number of shares owned by the public or circulating on the stock exchange. The more public ownership of shares, the more liquid the shares will be. Shares that fall into the Blue Chip category have usually been listed on the Indonesia Stock Exchange for a long time, with a minimum period of five years.

 

Suitable for Long Term Investment

The large capitalization of Blue Chip stocks makes these stocks tend to move steadily and not too wild. You don't need to be afraid of investing in Blue Chip stocks because usually companies whose shares are classified as Blue Chip are no longer growing companies, but are already included in established and strong companies.

For those of you who wish to make long-term investments, this kind of stock is ideal. Blue Chip stocks typically have a reputation for being reliable throughout erratic market fluctuations. While Blue Chip stocks can endure falls, they often do so more quickly than small or mid-cap firms. However, because the price per lot is typically higher than that of other equities, investing in Blue Chip stocks needs more capital.