A basket of stocks selected by ChatGPT, an AI-powered chatbot, has significantly outperformed some of the most popular investment funds in the United Kingdom, according to an experiment conducted by financial comparison site finder.com.
Between March 6 and April 28 of this year, a dummy portfolio of 38 stocks selected by ChatGPT gained 4.9%, while 10 leading investment funds clocked an average loss of 0.8%.
“It wouldn’t be long until large numbers of consumers try to use (ChatGPT) for financial gain,” Jon Ostler, Finder’s CEO, said in a statement earlier this week.
Over the same eight-week period, the S&P 500 index, which tracks the 500 most valuable companies in the United States, rose 3%. Europe’s equivalent, the Stoxx Europe 600 index, ticked up 0.5% in that time.
It is worth noting that investment funds serve a different purpose than stock picking. A typical investment fund pulls together money from multiple investors and is overseen by a fund manager who decides how to invest that money. The ChatGPT-generated fund, on the other hand, was purely an experiment in stock selection.
Finder’s analysts took the 10 most popular UK funds on the trading platform Interactive Investor as a benchmark for assessing the performance of the ChatGPT-generated fund. Funds managed by HSBC and Fidelity were among those selected. These results suggest that AI-powered stock picking may be an effective alternative for investors looking to achieve strong returns.
The analysts asked ChatGPT to select stocks based on some commonly used criteria, including picking companies with a low level of debt and a track record of growth. Microsoft (MSFT), Netflix (NFLX) and Walmart (WMT) were among the companies selected.
Furthermore, according to a survey conducted by Finder, 8% of 2,000 UK adults have already used ChatGPT for financial advice, while 19% said they would consider using it. However, 35% of respondents said they would not use the chatbot to help them make decisions about their money.
A study by the University of Florida published in April showed that ChatGPT was able to provide more precise predictions of stock price movements for individual companies compared to some of the more simplistic analysis models.
Finder’s CEO, Jon Ostler, advised individual investors to follow a “safe and recommended” approach by conducting their own research or seeking guidance from a qualified financial advisor. He warned that it was still early for investors to fully rely on AI for their finances.
However, Ostler acknowledged that the democratization of AI has the potential to disrupt and revolutionize the financial industry. It could lead to more widespread use of AI in financial decision-making, thereby changing the landscape of the investment world.
Source here
Discussion about this post