Trusting Funds with ChatGPT? Think Again
ChatGPT, the popular chatbot, has been making its way into various work domains, including HR, Legal, Data Science, and even managing funds, which is a precarious step in stock management. According to finance website Finder, ChatGPT picked a theoretical stock portfolio of 38 companies that outperformed the S&P 500. However, this experiment alone cannot be conclusive to prove the chatbot’s ability to predict stocks.
While the results are promising, comparing its performance with actively managed funds may not necessarily be a proper benchmark. In fact, over a 20-year period, 95% of large-cap actively managed funds have underperformed their benchmark. Also, the experiment was anecdotal, and a two-month period is too less to determine anything conclusively. ChatGPT is trained on data up to September 2021, and its performance in the last two years is not tested, which is another setback.
The CEO of Finder, Jon Ostler, is apprehensive of the idea of using ChatGPT for investing research. Because even though big funds have been adopting AI for years, it’s not a good idea for the public to rely on a “rudimentary AI platform” that has claimed its data to be ‘patchy’ since September 2021 and does not have the knowledge of market psychology. He believes that researching through known primary sources or a qualified advisor would be a recommended approach.
Moreover, there have been multiple problems of hallucinations and incorrect information that the chatbot produces. In addition, considering how input datasets can be maligned through activities such as data poisoning and prompt injections, the output of the chatbot can be compromised. In stock predictions, if the training data is skewed, the predictions will be faulty as well.
In conclusion, while ChatGPT has shown promising results in managing funds, it is not a reliable fund manager. Trusted primary sources and qualified advisors are the recommended methods for financial advice.
