Unlocking Investment Efficiencies with ChatGPT: A Revolutionary Development in Processing Information
Artificial intelligence (AI) has become a hot topic in the investment world, with many firms exploring how it can help reshape their business operations. New technological developments such as ChatGPT, derived from large language models (LLMs), have the potential to help analysts process information more efficiently and accurately than ever before.
Not a Replacement for Human Analysis
While ChatGPT and other LLM-driven tools are significant advancements in AI, they cannot replace human securities analysis or fundamental research aimed at developing a long-term outlook on a company’s business prospects and equity return potential. However, these tools can perform many mundane, time-consuming tasks for investment professionals that currently exhaust disproportionate resources, or don’t get done at all, freeing up analysts for deeper research dives armed with more information than they could ever process alone.
Breaking Down Data Processing Bottlenecks
Equity analysts are often overwhelmed by the sheer volume of material that needs to be processed to gain insight into a company. There are news reports, official filings, and earnings calls, generating an endless stream of information. This forces investment teams to focus deep research on a limited number of higher-priority holdings or strong investment candidates. However, what if an analyst had 10,000 highly competent interns at her side? This would be a revolutionary development in processing information that could sharpen investing capabilities.
LLMs can help analysts do their jobs better, and can identify significant changes in corporate filings, extract themes from longer texts, and clean up raw notes into defined user-friendly formats, such as complete sentences or bulleted takeaways or key points. ChatGPT can condense Zoom transcripts, helping analysts instantly make sense of a rambling conversation, and can also be used to extract themes automatically and send out alerts.
The True Power of AI for Investment Firms
With this type of in-house database, LLMs could be used to generate proprietary insights. In our view, here lies the true power of AI for investment firms. In the future, we may be able to direct ChatGPT to process and interpret an internal collection of analyst notes, for instance, to generate a quick synopsis of the firm’s bear case or bull case for specific companies. This shows how Q&A can become a valuable tool for chief investment officers when monitoring investment theses or when automating quarterly commentaries for clients.
Technical and Cultural Hurdles to Overcome
ChatGPT is still a nascent technology, and data security issues and copyright and sourcing concerns must be addressed. Beyond the technical issues, ChatGPT poses a cultural challenge. Data science teams must actively promote the benefits and show tangible examples. Analysts need to discover what they can automate, get comfortable with the technology, and understand its limitations. Crossing these hurdles will allow teams to embrace the technology.
By combining the human brainpower of investment analysts with the processing power of ChatGPT, we can upgrade an AI arsenal, improve research efficiency, and ultimately make better investment decisions.
