What if you could beat the market with the help of a chatbot? That’s what ChatGPT, an AI-powered conversational agent, did in a recent experiment by finder.com, a financial comparison site. ChatGPT picked 38 stocks that outshone 10 top investment funds in the UK, gaining 4.9 per cent in eight weeks while the funds lost 0.8 per cent on average. Finder’s CEO, Jon Ostler, said he expects more people to try to use ChatGPT for their financial advantage soon. The chatbot’s portfolio also surpassed the S&P 500 index, which tracks the 500 most valuable companies in the US, and the Stoxx Europe 600 index, which covers the largest firms in Europe. The S&P 500 rose 3 per cent and the Stoxx Europe 600 climbed 0.5 per cent in the same period.
How investment funds work
How do investment funds work? They are pools of money from many investors, managed by a professional who decides where to invest that money.
To compare the ChatGPT-generated fund with some of the best funds in the UK, Finder’s analysts used the 10 most popular funds on Interactive Investor, a trading platform. These funds included ones from HSBC and Fidelity. The analysts gave ChatGPT some basic guidelines to pick stocks, such as choosing companies with low debt and high growth. Some of the companies that ChatGPT picked were Microsoft, Netflix and Walmart.
ChatGPT’s potential and challenges
ChatGPT has shown its ability to beat some basic analysis models in predicting the stock prices of specific companies, according to a study by the University of Florida in April.
ChatGPT has amazed users with its sophisticated and lengthy answers to questions since Open AI made it available in December. The chatbot has many potential uses, from writing essays for high school students to giving medical advice. But some people worry that the technology could spread false information, help students cheat on tests, and take away jobs from real people.
Ostler at Finder said that individual investors should do their own research or talk to a qualified financial adviser, rather than trusting AI with their money. He warned that AI was still too new for investors to rely on. However, Ostler said that AI was likely to disrupt and transform the financial industries by making it more accessible to everyone.
I’m a fan of ChatGPT and AI in general, and I think AI could make better predictions based on all the data available but there are some limitations to it especially when it comes to stocks, it is unable to take into account certain situations such as human intentions or feelings, which is important when it comes to stocks. It can be a powerful tool but we should not rely on it too much and honestly I wouldn’t trust ChatGPT with my money, at least not yet.