One of the latest and most talked-about tools in the rapidly developing world of artificial intelligence is ChatGPT. This platform is owned by OpenAI and recently received a $10 billion investment from Microsoft. ChatGPT is taking the world by storm thanks to its abilities to process a seemingly infinite number of complex tasks.
ChatGPT was developed and trained with a deep-learning algorithm that allows it to pool knowledge and provide users with answers to questions, write computer code, come up with recipes, provide training regiments, and much more.
With its extensive knowledge base, ChatGPT has naturally become a highly sought after tool for curious investors hoping to beat the market and potentially even use it as their primary investment advisor.
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Known limitations exist
Unfortunately, while ChatGPT has access to vast amounts of information and can analyze data to provide insights, it has limitations when it comes to providing investment advice. For example, ChatGPT's knowledge cutoff is 2021, which means it doesn't have up-to-date information on current market trends or events that have occurred after 2021. Should you enter a prompt or ask it a question on recent events, you typically receive a response such as "My knowledge cutoff is September 2021, so I cannot provide information on events that occurred after that date."
Clearly not ideal for investing advice.
Additionally, ChatGPT does not have access to certain industry-specific information or the most up-to-date data that could be relevant to a particular investment opportunity. That means it doesn't have the ability to perform necessary due diligence such as comparing recent financial statements and earnings reports or measuring current trends in consumer spending and government policies, all of which could significantly impact a company's profitability.
Last and most importantly, ChatGPT is still relatively new and has lapses in its responses. Simply put, sometimes its responses are flat out incorrect. Although the AI model has been trained on vast amounts of data, ensuring responses are accurate usually requires additional follow-up research on behalf of the user.
Better suited for a different role
While ChatGPT is not quite ready to serve as your personal investing guru, it has some capabilities that can make it a valuable tool when conducting your investment research. The best way to utilize ChatGPT for investing would be as a supplement to your process.
For example, investors can use prompts to get answers to more general investment questions or to generate new ideas for investment opportunities. ChatGPT can also be useful in identifying potential risks and opportunities, such as emerging market trends or changing consumer behavior.
This could look something like asking ChatGPT which industries are projected to grow the most in the next decade. Or perhaps something more historical with a prompt such as, "Can you provide insights on how previous economic downturns have impacted the stock market, and which sectors tend to perform well during these times?" This type of prompt targets information within ChatGPT's knowledge base and can provide insightful general guidance to make more informed decisions.
While ChatGPT has the potential to be a valuable investment research tool, investors must exercise caution when using it as a source of investment advice. There are benefits to using it as a complementary tool in your investment research, but the technology is still unproven.
Keeping its limitations in mind, the best way for utilizing ChatGPT is to do so alongside your own research and due diligence. In doing so, investors can gain a more complete picture of potential investment opportunities and make better-informed investment decisions.
