A collection of stocks curated by ChatGPT, an AI-driven chatbot, has significantly outperformed several well-known investment funds in the UK.
In a financial experiment by comparison website finder.com, between March 6 and April 28, a simulated portfolio consisting of 38 stocks experienced a 4.9% gain, while 10 top investment funds suffered an average loss of 0.8%.
Finder’s CEO, Jon Ostler, anticipates that numerous consumers will soon leverage ChatGPT for financial advantage.
During the same eight-week timeframe, the S&P 500 index, representing the 500 most valuable US companies, increased by 3%. Meanwhile, Europe’s counterpart, the Stoxx Europe 600 index, saw a 0.5% uptick.
Conventional investment funds pool resources from multiple investors and entrust a fund manager to allocate the funds. To evaluate the performance of the ChatGPT-generated fund, Finder’s analysts utilized the 10 most popular UK funds on the Interactive Investor trading platform as a benchmark. Selected funds included those managed by HSBC and Fidelity.
The analysts prompted ChatGPT to select stocks based on widely-used criteria, such as low debt levels and consistent growth. Companies like Microsoft (MSFT), Netflix (NFLX), and Walmart (WMT) were chosen.
Major funds have employed AI to aid investment decisions for years, but ChatGPT makes the technology accessible to the general public, potentially guiding retail investors’ choices.
A Finder survey of 2,000 UK adults revealed that 8% had already sought financial advice from ChatGPT, and 19% would consider doing so. However, a larger 35% expressed they would not use the chatbot for financial decision-making.
Ostler suggests that fund managers may be feeling the pressure from this development.
Disrupting Finance In an April study, the University of Florida researchers discovered that ChatGPT could predict stock price movements for specific companies more accurately than some basic analysis models.
Since OpenAI granted access to ChatGPT in December, the chatbot has amazed users with its ability to generate detailed, articulate responses. Its potential applications—from composing high school essays to providing medical advice—have raised concerns about spreading misinformation, facilitating academic dishonesty, and replacing human jobs.
Ostler advises that the “safe and recommended” approach for individual investors is to conduct personal research or consult a certified financial advisor. He warns that it is too early for investors to rely solely on AI for financial decisions.
Nonetheless, Ostler believes the democratization of AI could potentially disrupt and revolutionize the financial industry.
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