12 blue chips you wish you'd bought in 1998

Blue-Chip Stocks

"Blue chips are companies that pay a dividend and increase it over time."

Blue Chips

Blue chips are the cream of the common stock crop.

They are stocks issued by companies that have a long track record of earning profits and paying dividends.  

Blue-chip stocks are issued by large, well-established firms that have impeccable financial credentials.

These companies are often the leaders in their industries.




Not all blue chips are alike.

Some provide consistently high dividend yields; others are more growth oriented.

While blue-chip stocks are not immune from bear markets, they are less risky than most stocks.

They tend to appeal to investors who are looking for quality, dividend-paying investments with some growth potential.

Blue chips appeal to investors who want to earn higher returns than bonds typically offer without taking a great deal of risk.



Examples:

Good examples of blue chip growth stocks are:

• Nike,
• Procter & Gamble,
• Home Depot,
• Walgreen's,
• Lowe's Companies, and 
• United Parcel Service.

Examples of high-yielding blue chips include such companies as:

• AT&T,
• Chevron,
• Merck,
• Johnson & Johnson,
• McDonald's, and 
• Pfizer.

The excitement of blue chip value investing

The excitement behind blue-chip value investing doesn't reside in life-changing tales of a stock that moved up 800% in a year or two.

Those stories were common during the late 1990s with Internet stocks, but as we saw in 2001 and 2002, what rises dramatically and rapidly often falls with equal fury.

The excitement of blue-chip value investing comes from looking at long-term charts of what value stocks do as a group over a period of decades - or what they have done for Warren Buffett.

That extra 2 % or 3% a year in returns, multiplied over a lifetime of investing, makes for some heart-pounding piles of cash down the line.  It will give you your million-dollar portfolio - and much more.

One of the biggest dangers with Investing is Overconfidence

Quote:   

Re: uyafr selection October 2010 batch
« Reply #45 on: October 27, 2010, 10:16:15 AM »
Reply with quoteQuote
Quote from: smartinvestor on October 27, 2010, 10:09:42 AM
Agree with Uyfar...
GenY...please tell the MANY company that also doing well too...
DIGI? KPJ? Genting?
Here is the place we share information and earn $$$ together

yep, do u know how much is DIGI, KPJ Gentings ? hehehe if suddenly those counter drop.. kena kaw kaw, if go up.. the most 5-10%

BUT LCTH, I dont see how it can drop much, but if go up... even if go up 100% it is still cheap and good. So think for yourself, is it worth risking on those counter already too high up or buy a counter which is still rock bottom and rock solid.

http://www.investlah.com/forum/index.php/topic,11510.msg195753.html#msg195753


The above was a post in October 2010 in a blog that I participate.

Here are the 5 Years charts of DIGI, KPJ, Gentings and LCTH performance.



Digi Share Price
Oct 2010  RM 2.50
July 2013  RM 4.70
Capital Gain 88%




KPJ  Share Price
Oct 2010  RM 3.80
July 2013  RM 6.50
Capital Gain 71%



Genting Share Price
Oct 2010  RM 10.50
July 2013 RM 10.50
Capital Gain 0%

versus



LCTH Share Price
Oct 2010  RM 0.28
July 2013  RM 0.18
Capital Loss  - 35.7%

From October 2010 to July 2013:
1.  The prices of the shares of Digi, KPJ have performed very well.
2.  Genting share price remained relatively unchanged over this period.
3.  The share price of LCTH has tanked significantly.


Questions I pose:
1.  Are higher priced stocks more risky than penny shares?
2.  Are higher priced stocks more risky because they have a longer way to drop?
3.  Are penny shares less risky because should their prices correct, the drop will be less?
4.  Why are higher priced stocks priced such, and why are penny stocks priced such?
5.  What are the fears that kept this "investor" away from Digi, KPJ and Genting?  Are these fears rational or irrational?
6.  What drives his enthusiasm to penny stocks?  Greed?  Ability?  Confidence?  Past gains?   Are these emotions rational or irrational?
7.  What single characteristic, if any, distinguishes the gains in Digi, KPJ and no loss in Genting, compared with LCTH?


What lessons can we derive from the above observations?
Please feel free to post your comments.

Virtues of Major Stocks (Blue Chips)

- Blue chip companies are not likely to go bankrupt.

- They have their troubles, but they are big enough to hire a CEO who can bring them back to life. Among the 30 companies in the DJIA, for instance, such companies as IBM, Eastman Kodak, AT&T, Sears, United Technologies, and Allied Signal were restructured in recent years by a few dynamic executives.

- Major corporations are also found in most institutional portfolios such as mutual funds, pension plans, bank trust departments, and insurance companies. One reason they like these big-capitalization stocks is liquidity.

• Since institutions have huge amounts of cash to invest, they feel comfortable with these stocks. The reason: The number of shares outstanding is huge, which means they won't disturb the market when they buy or sell.
• By contrast, if a major institution tries to invest a million dollars in a tiny Nasdaq company, the stock will shoot up several points before they complete their investing. It could be just as disruptive when they try to get out.
• As a consequence, major companies are in demand and are not left to drift.
• On the other hand, there are thousands of small companies that no one ever heard of. The only investors who can push them up are individuals - not institutions.

- Big companies can afford to hire top-notch executives and they have the resources to allocate to research and marketing.

- Also, their new products, acquisitions, management changes, and strategies are discussed frequently in such publications as the Wall Street Journal, the New York Times, Barron's, Fortune, Forbes, and Business Week, all of which are easily available.