Blue Chip And Mid-Cap Stocks

Although there are classifications for stocks, the following classifications are not determined by any governing body. There is nothing etched in stone here. These terms are used so people can categorize them so they can come up with effective strategies for making money in the markets. These terms are by no means definitive and they can be useful as a studying aid or for when you are talking to other people about them.

Blue Chip Stocks

These are stocks in companies that are well established with long histories of sustained growth. The prices of blue chip stocks are fairly stable and tend to be unlikely to move up or down very suddenly. With that been said, they can be affected by major news or economic trends.

Many beginners who are new to investing in the stock market stick with blue chip stocks because of their low volatility (which can make them less risky) and their regular dividend payments.
Often times, newbie investors will start out by investing in blue chip stocks which allows them to learn and practice implementing real live trades without a big risk of losing money in the learning stage.

Blue chips stocks are not relative to a particular industry or sector. They are the businesses that are the most stable with low volatility, no matter what service or products they sell. Stocks of this type include AT&T, IBM and General Motors. With these businesses, people can be more assured of their long term success.

Blue chips are supposedly very financially solid companies that have been around for years. Typically, their stocks are held by many professional and private investors.

Mid-Cap Companies

These are still up there with investor confidence. They are not in the same league as the blue chip stocks but they have good products, an expanding market share and there potential for growth in profits and earnings is above average.

Mid-Cap stocks tend to be a bit more volatile than blue ship stocks, which means that their prices rise and fall a bit more sharply and unpredictably than blue chip stocks. If you choose the right stocks, the opportunity for profit is substantial. Their also can be more substantial losses as well with these stocks.