What Are The Disadvantages Of Blue Chip Stocks?

What Are The Disadvantages Of Blue Chip Stocks?

1 Answer

  1. Blue chips are indeed great stocks to invest in but everything has its pros and cons. Some of the disadvantages of blue chips are:
    1.Low Volatility: As blue chip stocks are quite stable with a robust financial position so they aren’t really a good option to make money with speculative motive.
    2.Low Returns: As the companies have stable growth and hence the stocks provide regular returns, but the dividends are usually of little value and not that impressive.
    3.Conservative At Times: This is clearly not an option for the investors who don’t have low risk profile as stocks belong to big brands which hold a high reputation in the market and therefore are resistant towards high risk involved in taking up new business opportunities.
    4.High Value or Expensive: The price of these stocks is quite high since they belong to large-cap companies and have appreciated over the years of consistent performance.
    5.High Downside Risk: Bad news tends to be unexpected and can cause significant damage to the share price.There is a considerable market risk associated with the blue chip companies too. The reason being, some of these organizations fail to keep up with the competition, leading to the downfall of their stock prices.

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