Investopedia did a brief experiment comparing different AI tools in picking stocks. They tested Bard, Bing, and a human stock picker.
Despite these results, generative AI alone may not be the most effective approach in selecting stocks to buy.
Stock selection requires a multifaceted analysis that involves considering financial data, market trends, company fundamentals, industry analysis, and macroeconomic factors, among other things. While generative AI models can assist in certain aspects of this process, they have limitations.
Generative AI models, such as language models, are trained on existing data and learn patterns from that data to generate new content. They lack the ability to evaluate the quality or reliability of the information they generate, especially in complex and dynamic domains like the stock market.
Stock selection involves a high degree of uncertainty and risk, and it requires comprehensive analysis and expertise. Generative AI models can’t replace human judgment, experience, and domain knowledge, which are crucial for making informed investment decisions.
That doesn’t mean AI cannot be useful in stock selection, however. Machine learning and AI techniques can be applied in combination with traditional financial analysis to enhance the decision-making process. For example, AI models can help analyze large amounts of data quickly, identify patterns or correlations, and provide insights that can assist investors in their research and decision-making process.
It would be interesting to see a broader experiment than what Investopedia did. At the same time, my guess is that investment companies already use very sophisticated AI tools far better than the free versions of ChatGPT or Bard available on the Internet. There is just too much money to be made.
Although all the portfolios rose over the course of the trial, the clear winner was Bard, whose combined picks rose 5.15% over three weeks, trouncing both Bing and its human opponent as well as outperforming the S&P 500.
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