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How To Invest In Blue Chip Stocks

By Jason Markum

Investing in the stock market is not the easiest thing in the world to do. Even when you do absolutely everything right, you can still get smacked with a recession that drives down your profits. Make the wrong move and you can see years of hard work and savings evaporate before your eyes.

One way that some people have tried to mitigate failures in stock market investing is to invest in blue chip stocks. Blue-chip stocks usually pay high dividends and are thought to be safer or at least less risky than other stocks.

Another great benefit is that when the economy dives into a recession, blue chips usually stand up better than other stocks! This isn’t always the case, but it is much of the time. That’s why they call them conservative stocks as they can act as a cushion for your portfolio in times of trouble.

I don’t recommend that you invest only in blue chips, because there is such a thing as being too conservative… but if you keep blue chips to around 30% of your overall portfolio, you should be okay. Some people feel a little safer at around 40%, and that’s okay to… just don’t overdo it.

Blue-chip stocks generally won’t increase in price very much or very often. You’re going to make a lot of your money on the stocks in the form of dividend payouts. Still the secret to making money with blue-chip stocks is to engage in rapid turnover. Any time one of these stocks increases, even just a little bit, you need to sell immediately and reinvest the money into another blue-chip stock.

That’s right; sell your successes as quickly as you can because if one of these conservative stocks goes up, chances are it’s not going to go up again anytime soon and in fact may drop back down to its previous levels. But if you’ve sold as soon as it increased, you can take that money and reinvest it into other blue chips that haven’t yet gone up and are poised to.

From time to time these stocks will drop out of the sky if the fundamentals of the company have changed dramatically. That means you should always run constant stock analysis on each company in your portfolio and keep abreast of news so that you know how your companies are doing with their overall strategy and market share. Yes these companies can implode… it doesn’t happen often, but it can happen and you need to watch out for this just like you would watch any other stock in your portfolio.

Technology changes all the time and sometimes conservative companies are so set in their ways that they aren’t quick to re-explorer their strategies to change with the times. I guess this is the definition of conservative. Whatever you call it, it’s something you need to be aware of and keep an eye on so that your money stays protected.

So there you have several ways to profit from conservative stocks. Like any investment strategy, be sure to do your own due diligence and strategic fundamental analysis before investing any of your hard earned money.

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