Placing funds in the stock market becomes one of the options to invest. An experienced investor can reap profits from tens to hundreds of millions of rupiah. Running an investment in the stock market can bring in a lot of money.
However, before actually plunge into this investment, you should better understand the leading stock in the stock exchange, namely blue chips stock. Is that a blue chips stock? Here is the review.
What is Blue Chips Stocks?
Speaking of blue chips, you need to know the history of the blue chips stock itself. Blue chips or Lapis One stock is the type of stock with the highest market capitalization above Rp10 trillion. Companies whose shares fall into this category have a reputation in terms of fundamental.
The use of the term blue chips itself comes from one game in the gambling world, namely poker. In this game, bets are used using three pieces of coins with red, white, and blue. The blue color generally has the greatest value.
The term was first introduced in 1923 by Oliver Gingold. At that time he was observing the movement of stocks in the stock market. There are some interesting transactions that occurred at that time with shares worth USD200-USD250. The stocks became a stock that attracted many investors.
Coming home from the stock market he asked his colleagues to write about blue chips stock (blue chips stock). Until now the term is still used.
Blue Chips Share Characteristics
There are several characteristics of blue chips, among others:
1 .Blue Chips Shares Has Large Capitalization
Shares can be regarded as blue chips stocks if the stock of the company has a large market capitalization. Value up to trillions of rupiah. The value of this market capitalization will make the stock players or investors difficult to manipulate the price.
2. Blue Chips Stocks Have Good Liquidity
In addition to the large capitalization value, it is necessary to see how large shares of the company are publicly owned or circulated in the stock. If public ownership is too small, it is likely that the stock price is easy to manipulate, making it illiquid in the stock market. Conversely, if the stock has a high level of ownership, that means the stock is somewhat liquid.
3. The Older Is In The Stock, The Shares Allow to Sign Blue Chips Shares
The longer the company’s stock is on the stock is also an important category in the determination of the stock can be regarded as blue chips stock or not. Usually the benchmark taken is a minimum of five years.
4. Company Performance is the Benchmark of Blue Chips Shares
The fourth category is how the performance of a company that sells its shares in the stock. Can it make a profit every year? Can I earn an ever increasing profit every year? Is the value of profits generated can be quite large compared to the company’s capital?
By taking the benchmark five-year period, please note how the stability of the company’s performance. Companies that always make profits every year if one year has decreased, the next year should be able to rise. This ensures that shareholders can still earn dividends annually. Stock companies like this can be regarded as a blue chip stock.
Window Dressing phenomenon: Advantages for Blue Chips Shares
Entering December or coinciding with the end of the year there will usually be an increase in stock prices, especially blue chips. This phenomenon is commonly referred to as window dressing or conditions in which the traded stock prices tend to strengthen ahead of the end of the year, ie December.
This phenomenon that not only happened in Indonesia can also happen all over the world. Not only the stock market experienced window dressing, but also equity funds. The following causes the phenomenon of window dressing that makes stock prices strengthened.
Corporate action to boost sales targets by the end of the year significantly so that the company’s year-end report could post earnings beyond expectations.
Speculative profit taking action by investors seeking to pursue profits in the short term as stock price forecasts are up by the end of the year.
The action of investment managers increases stocks to boost the performance of the mutual funds they manage so that the overall performance looks good in the eyes of investors.
Advantages of Blue Chips Stock Investments
Is the investment in blue chips stocks will always get a profit? The answer is no. Because if it is always and surely a profit, no investor will invest in the shares of a small company or the Lapis Three Shares. As a result small companies are becoming difficult to grow and it is impossible to enter into blue chips.
In the stock market, every stock of the company …