ChatGPT Beats Human Fund Managers in Stock-Picking Challenge – Are We Witnessing the End of Wall Street?

ChatGPT outperforms leading UK investment funds with a whopping 4.9% gain, leaving the stock-picking competition in the dust with an average loss of 0.8%.

In a recent stock-picking experiment by Finder.com, the leading AI chatbot, ChatGPT was asked to create a theoretical fund consisting of over 30 stocks. The AI chatbot picked 38 stocks and created a dummy portfolio which was analyzed for a period of eight weeks, from March 6 to April 28.

The portfolio created by ChatGPT significantly outperformed the top 10 investment funds in the United Kingdom. The dummy portfolio fund successfully beat the performance of these funds and recorded a gain of 4.9%, meanwhile, the top UK funds ended up registering an average loss of 0.8 %.

After the results of this experiment, Finder’s CEO, Jon Ostler stated,

“It’s not taken the public long to find creative ways of getting ChatGPT to help them in areas where it shouldn’t technically do so. It wouldn’t be long until large numbers of consumers try to use it (ChatGPT) for financial gain,”

The top 10 stocks were picked from the leading trading platform Interactive Investor including the funds managed by HSBC and Fidelity to compare against the performance of ChatGPT-generated funds performance.

Netflix, Walmart, and Microsoft were among the stocks picked by ChatGPT. The AI chatbot was prompted by the analysts to choose stocks on basic criteria like lower debt levels and the growth track record of the companies.

Can ChatGPT Make Better Financial Decisions Than Fund Managers?

Even though most funds have been managed with the help of AI over the years, it was limited to professionals who use analysis models to take financial decisions. With the rise of ChatGPT, being used for getting answers to anything and everything today, it has enabled retail investors to take the assistance of AI in taking crucial financial decisions.

According to a research study from the University of Florida, ChatGPT has the potential to predict the stock price movements of specific companies more accurately as compared to some basic analysis models being used for the purpose.

As per Jon Ostler, it is still early to trust an AI chatbot for financial recommendations. He voiced, “Big funds have increasingly been using AI for years, but the public using a rudimentary AI platform that openly says its data is patchy since September 2021 and lacks the intricacies of market psychology doesn’t sound like a good idea.”

In the latest news, OpenAI’s language model ChatGPT has been turning heads with its ability to provide sophisticated and detailed responses to questions. Since the company opened up access to the chatbot in December, many have been amazed by its potential uses, from writing high school essays to dispensing medical guidance. However, concerns have also been raised that the technology could lead to the spread of misleading information and even allow students to cheat on exams.

According to experts, individual investors should still conduct their own research or speak to a qualified financial adviser when it comes to their finances. 

While the democratization of AI may revolutionize the financial industry, it is still too early for investors to fully trust AI with their money. Despite this cautionary advice, many believe that AI’s potential to disrupt and revolutionize the financial industry cannot be ignored.

With easy public access to AI technology, it will be crucial to determine whether chatbots like ChatGPT can help retail investors make well-informed and wiser financial decisions in the long run.