Financially Speaking: Colorful Financial Slang
By LouAnn Schulfer, AWMA®, AIF®
Accredited Wealth Management Advisor®
Accredited Investment Fiduciary
Last week, my article Fun Financial History explained the origins of a few of my favorite and the most frequently used financial references: bull and bear markets, Wall Street and ticker symbols. If you missed that one, you can find it online at www.SchuflerAndAssociates.com | Meet Us | Blog. Continuing the spirit of financial fun, here are some colorful financial slang terms you’ve likely heard.
Blue Chips. What exactly is a “blue chip” stock and how did blue chips get their name? Nasdaq defines a blue chip stock as “Common stock of well-known companies with a history of growth and dividend payments.” 1 A blue chip is stock of a very large company, typically with a market capitalization (number of outstanding shares x the price per share) in the billions and is a recognizable household name. The nickname “blue chips” is a poker reference, where they are worth more on the table than white or red chips. It is believed that the term was first used as far back as the 1920’s to reference the most expensive stocks. Now, we tend to use the term to reference the highest quality stocks.
Not to confuse you, but if you hear the term “red chips” as a reference to the stock market, the term has no relation to the blue chip nick-name or poker. Red chips are stocks of companies based in Mainland China, listed on the Hong Kong Stock Exchange, incorporated internationally. Being listed on the Hong Kong exchange allows investors from outside of China to become stockholders of these companies, which are controlled either directly or indirectly by governments of the People’s Republic of China. The term was coined a little over twenty years ago as a play off “blue chips”, but rather the “red” is a representation of the Chinese Flag.
Black Monday. The day of the stock market crash on October 19, 1987. Black Tuesday. The day the stock market crashed on October 29, 1929. This was the pivot point of which the roaring ‘20’s swung to the great depression. Black Friday. Contradictory to Black Monday and Black Tuesday, in which black is used as a negative, Black Friday is the infamous shopping day after Thanksgiving. Black Friday got it’s name because retailers are profitable, or “in the black”, as opposed to “in the red” which means they are losing money.
There you have it. Fun financial history in a colorful way.
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