What is a "blue chip stock"?

A blue chip stock is a publicly traded company that is usually very large, may be distributing profits in the form of dividends for many years, is a leader in the sector in which it competes, has notable stability and growth, and has the ability to adapt to changing market conditions successfully.

Where did the term "blue chip stock" originate?

It is thought by many to be derived from gambling, specifically the card game "poker," where in betting, the use of the blue-colored chips represents the most expensive chip at the table.

When did The Wall Street Journal begin to publish a Dow Jones Industrial Average?

The Wall Street Journal began publishing an average of the prices of stocks listed on the New York Stock Exchange in 1896.

What is the Dow Jones Industrial Average (the"Dow"or"DJIA")?

The DJIA is a price-weighted average of thirty blue chip stocks traded on the New York Stock Exchange. It is often seen as a barometer of the health of the stock markets.

How important is the DJIA to the investment community?

The DJIA is widely regarded as the most important index to follow in the world. It broadly indicates stock prices and investor confidence.

Who picks which stocks are components of the Dow?

The editors of The Wall Street Journal decide which companies should be included in the Dow. They search for a balance of companies reflective of the U.S. economy as a whole.

Who created the DJIA?

Charles Dow created the Dow, picking 11 stocks, then increasing this number to 12 stocks before publishing the average in 1896 that made up the Dow.

How else do I use the Dow in order to analyze my portfolio?

You may use the Dow in order to compare the performance of your stocks, bonds, and mutual funds, and ask yourself whether you are outperforming or underperforming the Dow. It helps to see this comparison over different periods of time in order to assess the success of your investment choices.