ChatGPT beats top investment funds in stock-picking experiment

According to recent media reports, ChatGPT, a chatbot powered by Artificial Intelligence (AI), has significantly outperformed some of the most popular investment funds in the UK with its selection of stocks. According to a recent experiment conducted by financial comparison site finder.com between March 6 and April 28, a dummy portfolio of 38 stocks selected by ChatGPT gained 4.9 per cent, while 10 leading investment funds clocked an average loss of 0.8 per cent. CNN reported on the results of the experiment, highlighting the potential for ChatGPT to guide the decisions of retail investors.

As a benchmark for evaluating the performance of the ChatGPT-generated fund, Finder's analysts chose the 10 most popular UK funds available on the Interactive Investor trading platform. Funds that were managed by HSBC and Fidelity were included in the selection. The analysts tasked ChatGPT with selecting stocks using common criteria, such as choosing companies with a history of growth and low debt levels. Microsoft, Netflix, and Walmart were among the companies that ChatGPT selected based on these criteria.

The potential for ChatGPT to guide the decisions of retail investors was emphasized by Jon Ostler, Finder's CEO, who stated that it wouldn't "be long until large numbers of consumers try to use (ChatGPT) for financial gain." This sentiment was echoed in a survey of 2,000 UK adults conducted by Finder, which showed that eight per cent had already used ChatGPT for financial advice, while 19 per cent said they would consider doing so.

Although major funds have been utilizing AI to aid their investment decisions for several years, ChatGPT has democratized this technology, making it accessible to the general public. Nevertheless, as per a CNN report, a significant 35 per cent of individuals surveyed claimed that they would not consider employing the chatbot to assist them in making financial decisions.

Aside from surpassing investment funds, a study released in April by the University of Florida researchers revealed that ChatGPT was capable of predicting the stock price movements of particular companies more precisely than some elementary analysis models. This demonstrates the potential of AI-powered chatbots like ChatGPT to help investors make informed investment decisions.

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