Rediscovering the value of blue chips

ONE of the best ways to understand past market cycles is through terminology that may have been popular at one time but is rarely heard today.

One such term is "blue chip". This term was once a byword for conservative, long-term investing in durable and sizeable businesses, but the term has had little resonance over recent decades. It is worth exploring why this is the case.

Looking back on the past 15 years, the chief buzzword globally has been disruption. We have witnessed both the shrinkage and elimination of long-established profit pools by nimbler, technology-enabled platforms. As a result, the life cycle of an average company has fallen from 50 years to around 15 - approximately two business cycles - essentially upending the notion of durable business.