What are "blue chip" stocks?

"Blue chip" stocks refer to shares of well-established, financially strong companies that have a track record of reliability, stability, and strong performance over time. These companies typically have a market capitalization in the billions and operate within industries that are considered stable and essential to the economy, such as consumer goods, healthcare, and utilities.

Investing in blue chip stocks is often viewed as a conservative strategy because these companies tend to provide consistent dividends and have a history of enduring economic downturns better than less mature firms. Their strong reputation and financial health make them appealing to both institutional and individual investors looking for long-term investments with lower risk.

The other choices do not accurately capture the essence of blue chip stocks. High-risk stocks with high potential returns are generally associated with growth or speculative investments, which is contrary to the reliable nature of blue chips. Stocks from startup companies in technology are often considered high-risk due to their unproven business models and fluctuating revenues. Lastly, stocks that are only traded internationally do not define blue chip stocks, as many blue chip companies are well-known domestic firms that can have worldwide operations but are primarily associated with their home market.