Here’s Where to Invest $ 3,000 in a Nasdaq Bear Market

This has been one of the most challenging years for Wall Street and the investing community. Since all three major US indexes hit their all-time closing highs, the Dow Jones Industrial Average, S&P 500and growth-dependent Nasdaq Composite have respectively tumbled by as much as 19%, 24%, and 34% through June 20, 2022. With declines that are now well in excess of 20%, the S&P 500 and Nasdaq Composite are mired in a bear market.

Although the markets are uncertain, they also bring a unique opportunity to buy into high-quality stocks at a discount. Even though we do not know exactly when the market is going to start or end, it is clear that all notable declines, including in the Nasdaq, have finally been cleared away by bull markets.

A slightly askew stack of one hundred dollars bills set atop a clipping of a falling stock chart.

Image source: Getty Images.

Best of all, investors don’t need a mammoth amount of cash to take advantage of these declines and build wealth on Wall Street. If you have $ 3,000 to cover bills or emergencies, here’s where to invest in a Nasdaq bear market.

Alphabet

One of the smartest investors investors can buy with $ 3,000 as the growth-oriented Nasdaq plunges is FAANG stock Alphabet GOOGL -0.05%)(GOOG) 0.02%). Alphabet is the parent company of internet search engine Google and streaming-platform YouTube.

For the past couple of months, Alphabet’s share price has taken it like most tech- and consumer-focused businesses. But what Wall Street and investors are looking for are competitive advantages that aren’t going away anytime soon.

For example, Google is practically a global monopoly when it comes to internet search. Data from GlobalStats shows that Google has accounted for 91% to 93% of worldwide internet search over the past two years. Businesses are better aware that as many users or targeted eyesballs as possible. It’s why Alphabet has such incredible ad-pricing power, and illustrates how double-digit percentage for more than two decades.

Alphabet’s dominance also extends into the social media space and cloud services. Streaming-platform YouTube is the second-most-visited social site on the planet, which has boosted ad revenue and subscriptions.

Meanwhile, Google Cloud is the global No. 3 in terms of cloud infrastructure spending. The latter is particularly intriguing, considering that cloud service operating margins are usually much higher than advertising operating margins. In the years to come, Google Cloud has the potential to double Alphabet’s annual operating cash flow many times over.

Intuitive Surgical

Innovative healthcare-company Intuitive Surgical (ISRG) 3.24%) is the ideal stock in which to invest $ 3,000 during a Nasdaq bear market. Even though the company has multiple earnings in the very short term, Intuitive Surgical’s sustainable competitive edge should allow long-term investors richer.

For more than two decades, Intuitive Surgical has been installing its surgically assisted da Vinci robotic systems worldwide. When the curtain closed on the first quarter of 2022, 6,920 of these systems were installed globally. Not only is this very often more than any of the competitors, but coupled with the many hours of training given to the surgeons operating them, it makes it very likely that the Vascular surgeons have a strong system.

The company success is also a reflection of its razor-and-blades operating model. Throughout the 2000s, most of the company’s revenue came from selling its price, but mediocre margin, da Vinci systems. As the installed base of these systems has grown, it has the sales of instruments used with each procedure and the servicing of these systems. These segments offer a significant amount of margins and have the benefit of the market.

As a final note, da Vinci is still in its early innings for capturing soft-tissue surgery-market share. Although it’s the premier choice for urology and gynecology procedures, it has a long running way to pick up share in colorectal, thoracic, and general soft-tissue surgeries.

A bank employee shaking hands with prospective clients in an office.

Image source: Getty Images.

Bank of America

Money-center giant Bank of America (BAC) -0.76%) is another perfect stock in which to invest $ 3,000 amid heightened bear market volatility. While BofA makes a standout stock to buy.

Generally, bear markets are characterized by a weak investor sentiment, the Federal Reserve monetary easing. Altogether, these factors often result in falling bank profits.

But that’s not the case this time around. For the first time ever, the nation’s central bank is raising interest rates – aggressively, might I add – into a falling stock market. The Fed has left its foot on the accelerator for too long and now has no choice but to raise it rapidly. Bank of America is the most interest-rate sensitive of the big banks.

According to the company first-quarter investor presentation, a 100-basis-point parallel shift in the interest-rate yield curve would produce an estimated $ 5.4 billion in added net interest income over 12 months. In just the past three Fed meetings, it has been increased by an aggregate of 150 basis points.

Bank of America is set to enjoy an interest income but is currently trading its book value. The time for opportunistic investors to strike is now.

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