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News is one of the most important factors affecting financial markets. They provide investors with information to evaluate the value of assets and make informed investment decisions. However, the abundance of available information confuses many private investors. This is where Chat GPT comes into play.
The natural language processing (NLP) capabilities of AIs like Chat GPT are good at looking for patterns in a sea of information, such as specific stocks. But is Chat GPT good enough to help retail investors pick better stocks? Yes, researchers Matthias Pelster and Joel Val’s “Can ChatGPT Help With Stock Picking?” In their study titled:
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This article was first published on the paid service of handelszeitung.ch. Blick+ users have exclusive access as part of their subscription. You can find more exciting articles at www.handelszeitung.ch.
Pelster and Val conducted two separate studies over two months at the end of last year. First, they asked Chat GPT to predict whether its next quarterly results for each S&P 500 company would beat analyst forecasts. Chat GPT must take into account all available information, especially analyst forecasts but also social media discussions, for example.
Artificial intelligence beat analysts
This first query was about whether Chat GPT was forecasting quarterly numbers better than analysts. Indeed, Pelster and Val’s results show that Chat GPT has mastered this task.
In a second query, researchers asked Chat GPT to rate a stock’s “attractiveness” on a scale of -5 to +5 in terms of expected stock performance over the next month.
And artificial intelligence succeeded in the second task as well. Portfolios with high attractiveness ratings significantly outperformed portfolios with low ratings.
A promising tool for private investors
This is promising news for private investors. The results suggest that Chat GPT can be a useful tool when making investment decisions. Investors can use Chat GPT ahead of the release of quarterly figures, for example, to weed out companies for which Chat GPT predicts particularly negative surprises.
They can also use AI to narrow down the pool of stocks they want to take a closer look at. For example, because they think only the stocks that Chat GPT approves are highly attractive in terms of price increases.
Chat GPT is much more than a chatbot. It is an artificial intelligence that can help investors cope with the intense flow of information and make better investment decisions. But this should also be clear: It is unwise to blindly trust Chat GPT. Your own analysis and risk management should always come first. But as additional support, Chat GPT can offer real added value. Maybe it’s time to ask Chat GPT a few questions about your portfolio.
Source :Blick
I’m Tim David and I work as an author for 24 Instant News, covering the Market section. With a Bachelor’s Degree in Journalism, my mission is to provide accurate, timely and insightful news coverage that helps our readers stay informed about the latest trends in the market. My writing style is focused on making complex economic topics easy to understand for everyone.
