Shares of blue-chip companies are ideal bets for investors with low-risk appetites because they usually don’t react significantly to short-term market fluctuations and deliver steady returns over the long term given their huge market shares and reputations. So, to dodge short-term market fluctuations led by concerns such as rising inflation, we think it could be wise to invest in fundamentally sound blue-chip stocks Alphabet (NASDAQ:GOOGL), Johnson (JNJ), Caterpillar (CAT), and Colgate (CL) for the long haul. Let’s discuss.Dominant market positions and strong and dependable financials typically ensure the shares of blue-chip companies remain relatively steady amid market volatility. This feature makes them ideal bets for long-term investors who have relatively lower risk appetites. Given current market volatility on concerns over rising inflation, many investors are gravitating toward blue-chip stocks. This is evidenced by the T. Rowe Price Blue Chip Growth ETF’s (TCHP) 10.3% returns over the past three months versus the SPDR S&P 500 Trust ETF’s (SPY) 6% gains.
Shares of blue-chip companies are typically favored in times of market volatility. Even though the United States and some other advanced economies have brought the COVID-19 pandemic under control, several economies continue to be severely affected by the deadly virus. Furthermore, St. Louis Federal Reserve President James Bullard told CNBC on June 18 that he sees an initial interest rate increase happening in late-2022 as inflation picks up faster than anticipated. These factors could sustain market volatility in the coming quarters.
So, we think it could be wise to buy and hold shares of fundamentally-strong blue-chip companies Alphabet Inc. (GOOGL), Johnson & Johnson (JNJ), Caterpillar Inc. (NYSE:CAT), and Colgate-Palmolive Company (NYSE:CL). They have the potential to deliver steady returns over the long run based on their continuing product and business innovations.