Many of us have wondered if artificial intelligence (AI) will revolutionize the world and benefit investors. Will it be able to take the place of human financial advisors and journalists (Disclosure – writers may have a bias)? So far, we are not sure yet if ChatGPT, the AI search engine, is able to replace these roles. We decided to do some research ourselves to better understand the uses of AI in the world of investing.
John Rekenthaler, a colleague of ours, already tried ChatGPT in one of his columns. He concluded that the AI was reliable when it came to the baseline of investments and somewhat uncommitted when it came to the more complex aspects. However, it forms an ever-growing collection of fundamentals, which are very identical to the content we have on our Morningstar website. Additionally, it is capable of condensing information into smaller, digestible pieces of knowledge.
My colleague Sunniva Kolostyak and I thought it would be interesting to see how ChatGPT would answer our questions involving AI and investing. Therefore, we asked the question: what is a good basic investment strategy? ChatGPT suggested that investors should diversify, keep their cost low, focus on the long-term, be disciplined and think about their risk tolerance.
Knowing that ChatGPT was comfortable discussing such abstracts topics, we decided to ask a more specific question: what areas of AI show the most promise? In response, ChatGPT listed five areas of AI which have been making headlines and leading developments; these included Natural Language Processing, Computer Vision, Deep Learning, Reinforcement Learning and General Adversarial Networks.
We thought this was a solid start, so we decided to ask an AI-specific investing question: which companies are leading the way in AI? This question pushed the boundaries of ChatGPT, as it could not provide us with direct financial advice. However, it recommended that investors should research companies with a strong track record in terms of AI development, a solid financial position and a visionary capacity. It then listed a selection of big players as well as project-specific companies within the AI industry, such as Deep Dream, StyleGAN, TensorFlow, PyTorch, MXNet, and CNTK.
Finally, we wanted to see how ChatGPT would respond if an investor asked a direct question. We asked: what is the best way to favor AI investments? Once again, the AI engine proved cautious in its response, warning investors of the potential volatility of the technology, especially considering its rapidly changing dynamics. As well as the more general pieces of advice such as doing your own research and consulting a financial advisor, the engine also listed some risks associated with investing in AI.
From this experiment, we have seen that ChatGPT is emerging as a tool to help investors. It summarises concepts clearly and can be used to generate content for websites. Nevertheless, before investing it is key to understand the risks around AI in order to make the most informed decision.
Company mentioned in this article
An AI language model like ChatGPT is powered by companies like Google, Amazon, Microsoft, IBM, Facebook, and Baidu who have been investing heavily in the development of AI. Many of them are developing their own AI technologies and applications. These companies are considered the leading players in the AI industry, however, this is a rapidly evolving sector and new companies may come to the forefront.
Person mentioned in this article
The article mentions John Rekenthaler, a colleague of ours, who already tried ChatGPT in one of his columns. He concluded that the AI was reliable when it came to the baseline of investments and somewhat uncommitted when it came to the more complex aspects. Additionally, the article mentions Kenneth Lamont, Morningstar’s Passive Expert, who explains that by the time an investor has heard of a thematic and there are funds ready to track it, the larger part of the growth potential may be priced in.
