Even a smaller sum like $1,000 might be worth investing, especially if you’re a beginner investor who doesn’t quite know how to navigate through turbulent markets. Of course, dipping a toe with $1,000 and eventually working your way up makes a lot of sense, provided your commissions are low or non-existent. But what’s a good candidate for a first stock? Probably not the red-hot play you heard on television or the meme stock that’s been touted online. Instead, I’d encourage investors to follow in the footsteps of a great like Warren Buffett.
While sticking with easy-to-understand companies with “economic moats” might not be the most exciting thing to do in the world, I do think that investing in what you know can be a great way to reduce the chances that you’ll panic once the broad stock market heads lower. Indeed, sometimes, a stock will start marching lower for no good reason. And if you know the business and can separate the noise from the actual business itself, you might be able to know the right move in a moment of market-wide panic.
In any case, if I were to put a $1,000 sum to work today, I’d have a closer look at the tech scene, especially the blue-chip names that may still be misunderstood by most investors amid the meteoric rise of AI.
Now, you don’t need to buy the enterprise software companies with the agentic edge if you can’t even explain in two sentences what such a firm does. That said, I do think it’s a wise idea to consider some of the names you know well and ask yourself if it’s able to recover from a dip, which may be more fear-based and irrational.
Source: Getty Images
Microsoft stock: A bargain in a bear market moment
At this juncture, I’d look to names like Microsoft (NASDAQ: MSFT), which remains down 23%, even as the S&P 500 makes new highs, just north of 7,000. The enterprise software giant is behind all the products we’re probably well familiar with now. Whether that’s the Office suite, the Windows operating system, the Xbox gaming console, LinkedIn, or even Copilot.
Of course, the company is betting on the success of Sam Altman’s OpenAI. And according to the benchmarks, OpenAI’s ChatGPT isn’t an undisputed heavyweight champ anymore.
With Anthropic making the headlines these days, I do think that investors would probably pile into Dario Amodei’s safety-focused AI firm rather than Sam Altman’s OpenAI, especially since they’re spending quite aggressively to keep the gas on the pedal. Either way, I think Microsoft’s AI future is about more than just OpenAI. It’s already got a game plan with its own frontier models and an AI team that might just be able to keep up with or beat OpenAI’s ChatGPT.
Shares go for around 21 times forward price-to-earnings (P/E). That’s cheap for Microsoft standards. And I think it might not take long before the market is willing to pay over 30 times P/E for the name again. Either way, Microsoft is a terrific AI innovator that is definitely worth a second look here.
