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We asked ChatGPT-4o to make a $1,000 stock portfolio

We asked ChatGPT-4o to make a $1,000 stock portfolio

The stock market has, overall, been doing well, with the major benchmark indices – the S&P 500 and the Dow Jones Industrial Average (DJIA) – continuously rising, with the exception of a brief correction in the second half of April.

S&P 500 YTD chart. Source: Google

Nonetheless, there have been some caveats to this performance, with one of the biggest – and perhaps the most worrying, given the historical parallels – being that much of the rise has been driven by a handful of mostly technology stocks, which have, in some cases, seen three-digit surges in 2024.

Under these circumstances, the strategy most commonly recommended to regular investors by Warren Buffett – an investment in a broad index fund – may not be the best option and Finbold, in its search for strong portfolio compositions, decided to consult the most advanced version of OpenAI’s flagship artificial intelligence (AI) platform – ChatGPT-4o.

ChatGPT-4o constructs a $1,000 stock portfolio

ChatGPT assessed that the best approach to constructing a $1,000 portfolio would be to pick one stock from each of the major sectors – technology, healthcare, consumer discretionary, energy, financial services, real estate, and basic materials.

The AI reasoned that such a portfolio would check several important boxes. It would offer strong diversification while balancing growth potential with stability and focusing on industries likely to boom in the future.

ChatGPT explains its approach to building a portfolio. Source: Finbold and ChatGPT

ChatGPT-4o selects stocks to invest in

The largest holding in the AI-build portfolio – accounting for $200 – comes from the technology sector. ChatGPT estimates that allocating one-fifth of the total investment to the stock of the biggest company in the world – Microsoft (NASDAQ: MSFT) – is a savvy choice.

Per the AI, MSFT’s biggest strengths are its diversified revenue streams and its continuous drive to innovate.

ChatGPT explains why it picked MSFT. Source: Finbold and ChatGPT

Johnson & Johnson (NYSE: JNJ) would, in this portfolio, receive $150 out of the initial $1,000. According to the AI, JNJ’s primary role would be to offer stability as the company is well-established and boasts stable financials and dividend payments.

ChatGPT explains why it picked JNJ. Source: Finbold and ChatGPT

ChatGPT also considers that Amazon (NASDAQ: AMZN) merits a $150 investment as it is a company that offers major growth potential thanks to its dominant position in the industry and its relentless pursuit of further expansion.

ChatGPT explains why it picked AMZN. Source: Finbold and ChatGPT

NextEra Energy (NYSE: NEE) is the AI’s most favored energy stock, primarily thanks to its role in the green transition and its focus on investing in wind, solar, and battery storage. ChatGPT would also allocate $150 to NEE.

ChatGPT explains why it picked NEE. Source: Finbold and ChatGPT

Investing $150 in Visa (NYSE: V) would also play an important role in this portfolio, given Visa’s crucial role in the global digital economy and its leading role in the payments sector.

ChatGPT explains why it picked V. Source: Finbold and ChatGPT

Per the AI’s analysis, the best for investors to get exposure to the real estate market would be by allocating $150 to the Prologis (NYSE: PLD) trust. ChatGPT described PLD as a major beneficiary of the e-commerce boom and identified its strategic properties and great occupancy rates as the company’s biggest strengths. PLD would be allocated a $100 investment.

ChatGPT explains why it picked PLD. Source: Finbold and ChatGPT

Finally, the AI identified Freeport-McMoRan (NYSE: FCX) as a strong investment in the basic materials sector and recommended allocating $100 to FCX. ChatGPT picked the firm given its leading role in the mining industry. 

The company was identified as one with substantial copper business, given that the commodity plays a crucial role in the renewable energy and electric vehicle (EV) industries.

ChatGPT explains why it picked FCX. Source: Finbold and ChatGPT

Finally, ChatGPT also offered a word of advice recommending investors keep a close eye on the portfolio and make adjustments as needed, but also to keep the focus on the long-term while trying to minimize their reactions to immediate volatility.

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