ChatGPT: The Intelligent Investor

Last month, an artificial intelligence research company OpenAI created a sensation in the Information Technology world. OpenAI released a highly powerful chatbot by the name ChatGPT. It is a conversational tool based on artificial intelligence (AI) system trained on enormous textual data. It uses machine learning (ML) algorithms to respond to user queries in a human-like language. What is more exciting is that it can answer follow-up questions, and understand the sentiments and relationships. It is one of the milestone achievements in the history of AI to date. It is worth noting that within a week, a million users subscribed to ChatGPT.

AI as a technology is not new. It is being effectively used in many industries. Few investment firms have already started using AI tools for advisory services as well. In the investment world, AI can be utilized as a facilitator to help undertake many mundane and rule-based tasks, however, it can never replace the man behind the machine completely.

Despite advancements in technology, the basics of investing will always remain the same. AI or no AI, these fundamentals will never change. Wealth creation is 90% emotions and 10% execution. Human bias and behavior have the potential to simultaneously create wealth and at the same time destroy it. It is a double-edged sword. It is up to us, how we use it.

However, it is surprising to note that the reinforcement learning of ChatGPT can match the age-old wisdom of investment wizards like Warren Buffet and Charlie Munger who have learned this through practical experiences. Even at this nascent stage, ChatGPT can answer investment queries maturely and wisely.

I have experimented with ChatGPT to understand its response to some of the critical aspects of behavioral investing. The responses I have received are very similar to what we are preaching all through. It feels nice to know that we are on the correct path. Let's take a look at these responses:-

But here is a catch. ChatGPT will not able to advise you what to do now. You have to take that call depending on the wisdom you have acquired by reading this blog. Though the execution is only 10% you must act to get the results.

To sight an example, in the previous 17 trading sessions, the Nifty 50 index crashed from the high of 18887 to 17779. A drop of more than 1000 points.

The reason for this sudden fall is the new Corona variant observed in China and its likelihood of affecting India. However, Corona is nowhere seen in the vicinity of India. There is no data to prove its resurgence yet. Still, the recency bias of past fear overpowered the sentiment of retail investors.

Greed and fear drive the market. Such swift market corrections provide an opportunity to create wealth. ChatGPT, AI, ML, Warren, Charlie, and lesser mortals like me will keep advocating these behavioral traits, however, it's the human mind which needs to behave and act diligently in such troubled times.

As usual, during this market fall as well, I suggested to my friends to invest surplus capital in a staggered manner. Few acted on my call, many did not. It is a well-known fact that the one who acts decisively at an opportune time will emerge as the winner.

Warren Buffet says, “Opportunities come infrequently. When it rains gold, put out the bucket, not the thimble.”