I was asking burning questions from ChatGPT investors, and the CIO told me why the bot wasn’t going to challenge Wall Street’s top stockists anytime soon.
- I asked ChatGPT questions about the markets and showed the answers to Morningstar Investment Management CIO Dan Kemp.
- He called some of his knowledge “remarkable” but is not worried that top strategists will be out of work any time soon.
- “He gives answers but doesn’t ask questions like a good investment manager,” Kemp said.
ChatGPT’s intelligent language tool can write cover letters, generate dating app messages, and give investment advice.
Inspired by my esteemed colleagues Bea Nolan and Phil Rosen, I decided to find out how effective a bot’s view of the markets is.
I asked the OpenAI program four questions that investors are now worried about, and then shared my answers with Morningstar Investment Management Global CIO Dan Kemp.
Kemp, whose firm manages about $250 billion in assets, was impressed by the quality of ChatGPT’s knowledge and prose, but said he lacked the depth of analysis you’d find in a conversation with a top stock picker or financial advisor.
“The quality of his answers is remarkable,” he told me. “However, I don’t think it’s useful as an investment decision tool for either professionals or ordinary people.”
“He provides factual answers that are descriptive and general,” Kemp added. “But he doesn’t ask questions like a good investment manager does.”
Here are four questions I asked ChatGPT:
- How can I invest during a recession?
- What impact will the Federal Reserve’s interest rate hike have on the portfolio?
- What investments are good insurance against high inflation?
- Should you invest in cryptocurrencies?
The questions reflect some of retail investors’ biggest current fears — after the threat of a recession, Fed rate hikes and high inflation rocked stocks and sparked last year’s ‘crypto winter’.
ChatGPT quickly typed out a set of answers that you’ll find in a good primer on the markets – recommending “invest[ing] in companies that performed well during the recession and stating that “higher interest rates can make stocks less attractive to investors, which could lead to lower share prices.”
Kemp told me that he was impressed with the bot’s breadth of knowledge, especially its ability to avoid unnecessary jargon when creating stock exchange content.
“It’s amazing how ChatGPT can collect what the investment community knows about a particular subject and then communicate it in a very understandable format,” he said. “If you haven’t used ChatGPT before, it’s really amazing that the engine can do this with subjects as diverse as recessions and cryptocurrencies.”
But the bot can only generate what Kemp called “level one responses”—meaning that while its knowledge of the stock market is impressive, it can’t apply that knowledge to specific situations like a leading Wall Street analyst or an old-fashioned analyst. financial advisor would.
“He can tell you things that everyone knows,” he said. “When you asked about inflation hedges, it mentions inflation-linked assets – clearly that is correct, but it is a very limited help in making an investment decision.”
“When investing, you have to consider not only the fair return on investment, but also the price at which it trades,” added Kemp. “So you have to understand not only the basic characteristics of an investment, but also how that investment is perceived by other investors.”
“That’s what people call second-level thinking, and that’s what ChatGPT doesn’t seem to be capable of.”
Kemp was also concerned about ChatGPT’s response to my question about cryptocurrencies. The bot told me that “investing in cryptocurrencies is a risky venture with high returns”, but rising interest rates mean that most digital assets will not return at all in 2022, and the price of the largest bitcoin token has fallen by more than 60% to less than $17,000. .
“That worries me because ChatGPT has clearly learned that you usually have to take big risks to get high returns,” he told me. “That’s an interesting mistake that many investors made last year – not every high risk yields a big return.”
Kemp’s feedback is consistent with what people like – and don’t like – about ChatGPT.
A language tool can produce high-quality content at a frightening pace, but its words tend to lack personality and depth.
So don’t expect it to become a tool for getting investment advice anytime soon.
News Press Ohio – Latest News:
Columbus Local News || Cleveland Local News || Ohio State News || National News || Money and Economy News || Entertainment News || Tech News || Environment News
