The most dangerous and deceptive term in investing after STRONG BUY!!!!!!!!! has to be BLUE CHIP.

If you hear it, head for the hills.

Here we are, deep in the throes of a killer bear market, and I still hear people boasting that their investments are not at risk because they’re invested in blue-chip stocks.

Only problem is, one can scarcely unearth a blue-chip stock these days, particularly in Canada. Blue chip is mostly a myth dreamt up by fund managers, analysts, brokers and editors of magazine covers with vivid imaginations.

A tip of the fedora goes to the financial community for its brainwashing of the unwashed, many of whom still believe blue chip spells safe haven.

Blue chips are generally defined as common stocks of companies that are household names with reliable business models and proven track records of profitability.

Defining blue chip is easy – but try to find one these days.

Although the TSE 60 index is often loosely referred to as a blue-chip index, it’s anything but blue chip. Most of Canada’s so-called blue chips have become nothing more than poker chips and anything-but- appropriate investments for widows and orphans (ironically, the term blue chip came from the most valuable poker chip).

Putting out an APB on the TSX, I can locate only 10 bluish-chipped companies that have been able to outperform the index year to date.

Of those, only four have appreciated in price year to date, and only marginally.

Loblaws (L), Royal Bank (RY) and Bank of Montreal (BMO) are all up about five per cent while Molson is up seven per cent. The latter is far too volatile for a blue chip, having swung in a 30-per-cent range and moved 25 per cent off its year high.

CNR (CN-TSX) is a household name often associated with the term blue chip, but can a stock that has lost 20 per cent of its value in one year call itself a blue chip?

If you think Hudson’s Bay (HBC-TSX) is blue chip, open your portfolio statement. Trading in the $7 range, the retailer has lost about 80 per cent of its value in the past four years.

This hardly ranks as a sleep-at-night investment. Bombardier (BBD.B) had blue chip written all over it until its recent fall from grace, about 80 per cent over two years. Now, it’s about as blue chip as a penny stock.

A couple of years ago, before Nortel Networks (NT-TSX) came crashing down, the word blue chip was even being bandied about in connection with the company that bet the farm on telecom and wireless communications.

Some jokers even trumpeted Enron as a blue chip before it became a cow chip.

When all is said and done, nothing with a ticker symbol should be treated as blue chip. A stock is a stock is a stock.

Once New York attorney general Elliott Spitzer gets finished throwing the book at Wall Street’s shady characters, maybe he can throw ol’ Blue Chip in the slammer, too.

Believe it or not, there are even some Canadian mutual funds that have had the nerve to name themselves after Mr. Blue Chip.

Yet, the TD Canadian Blue Chip Equity Fund is weighted in volatile energy stocks that trade at the mercy of commodity prices. The robust energy sector has helped this fund outperform the TSX with a gain of 2.7 per cent in the past 12 months.

The Scotia Canadian Blue Chip and the Clarion Canadian Blue Chip are playing the blues, both down about 14 per cent in the past 12 months.

If the eyes aren’t deceiving us, Nortel is listed as one of the top 10 holdings in the Clarion fund!

It’s time blue chip was disassociated with the stock market. It’s time it was banished from the investing vocabulary. It’s time blue chip got the boot.

Next broker who pumps a stock as a blue chip gets nailed with a hefty fine.

Or, better still, the broker gets to do lunch with Elliott Spitzer.

* HIGH TECH HEAVEN: The death of tech stocks has, indeed, been greatly exaggerated.

Guess who’s leading the recent resurgence?

The most volatile of techs, Sierra Wireless (SW-TSX) and Nortel Networks (NT-TSX).

The action and the fast money is still in tech. Sierra was the biggest weekly winner on the TSX, rampaging 86 per cent, while Nortel, which is supposed to be the most hated company in Canada, was the runner-up, charging 79 per cent.

Nortel traded 271.2 million shares.

With Nortel a double in less than two weeks, the short sellers must be frothing at the mouth.

* SAGE WORDS: “Never invest in anything that eats or needs repairs.” )

– Billy Rose.



HOT ALBERTA STOCK: Biomira
BRA-TSX $2.19
Up 91 cents (+71.1%) on 1,280,000 shares (for week ending Oct. 25).
Suddenly, out-of-favour Biomira was the flavour of the week in biotech, but why? Nobody knew for sure.
What’s certain is that the stock in the Edmonton company was long overdue for a snapback after plunging about 75 per cent in the past two months, since announcing disappointing results for its lead cancer-treatment drug, Theratope.



COLD ALBERTA STOCK: Synsorb Biotech
SYB-TSX 66 Cents.
Down 19 cents (-22.4%) on 5,400 shares (for week ending Oct. 25).
While some beaten Canadian biotechs have been staging decent recovery rallies, Synsorb, the one-time darling of Alberta biotechs, continues to flounder as the Calgary-based company explores its options and attempts to initiate a new strategy. Synsorb ceased its drug-development program earlier this year.