#Investor's vocabulary: Blue chips

The concept of "blue chips" came to the field of finance from the world of gambling. In English, the expression Blue Chips refers to the most expensive tokens for betting in a casino.

Similarly to roulette, blue chips in trading started to be used for naming the shares of the most liquid, successful and stable companies, as well as the issuers of these securities.

Organizations that match the definition of "blue chips" are characterized by long-term positive forecasts and considerable capitalization. For investors, it signals that the value of their assets is consistently high and not likely to fall in the future.

To become a blue chip, a company must meet several conditions:
- high and stable profitability indicators;
- constant growth and development;
- high level of capitalization;
- liquidity of the issued shares.

The blue-chip index is set by stock exchanges and is based on information about the transaction amounts.

Such companies as Boeing, Apple, Walt Disney, and Coca-Cola are among the American stock market flagships. In Russia, the shares of Rosneft, VTB Bank, LUKOIL and Yandex have high liquidity.

Why are blue chips a sign of a successful business? Their shares are getting more expensive not because of speculation on the stock exchange, but because of the good prospects for their own developments. At the same time, reputable reserve funds give them an opportunity to overcome a crisis without suffering from market fluctuations. Almost all the companies holding this status regularly pay dividends to the investors.

There is a flip side of the coin: the price of "blue chips" is growing steadily, but slowly, so it is worth investing in this type of securities only for long-term playing.