ChatGPT en tant qu’assistant à l’investissement

ChatGPT peut-il vraiment créer une stratégie d'investissement qui fonctionne bien pour un investisseur privé ?

ChatGPT peut-il enseigner la culture financière, donner des conseils généraux en matière d’investissement et aider à créer des portefeuilles diversifiés ? Remplacera-t-il la créativité ou la prise de décision en matière d’investissement ?

In today’s dynamic world of investing, the ability to quickly analyze market trends, identify potential risks and opportunities, and create effective investment strategies is crucial. It’s no secret that a lot of the decisions made on Wall Street are made by artificial intelligence algorithms. Thanks to AI, investors have access to powerful tools that can help them make better trades or create investment portfolios. While not everyone can create complicated algorithms with the help of AI, there are plenty of other tools that are easier to use for non-professional investors. Among these tools, we find the very famous ChatGPT, accessible to everyone. With its ability to process large amounts of data and deliver actionable insights, ChatGPT could become a valuable resource for investors. But can ChatGPT really create an effective investment strategy for a private investor? Let’s check it out.

Many users, when using ChatGPT for the first time, face common issues when they ask specific questions and get answers like, « As an AI language model, I can’t help you :

« As an AI language model, I have no personal opinions or biases… »;

« As an AI language model, I don’t have access to up-to-date financial information… »;

« As an AI language model, I cannot provide financial advice… ».

ChatGPT is not a tool that will give you inside information or a step-by-step plan to get rich. First of all, ChatGPT’s database is from 2021, and before that, it didn’t have up-to-date financial market information. Moreover, even if it had this information, it would not be wise to suggest a user to invest in specific products. Even financial advisors don’t do this until they have an overview of the client’s financial goals and risk profile. You need to be more specific in your expectations. So the best strategy is to start with a more general approach and use ChatGPT to the best of your ability.

ChatGPT as an Investment Advisor

Some studies show its effectiveness in portfolio management, especially in asset allocation and diversification. Some results showed that the ChatGPT asset selection was more diverse and had fewer correlated assets than the randomly selected portfolios. This reduces risk and improves the performance of a portfolio.

When the AI ​​tool is asked “How should I invest $10,000?” here is the typical response one gets:

“How to invest $10,000 depends on your investment goals, risk tolerance, and time horizon. Here are some general suggestions to consider:

  1. Start with an emergency fund: Before investing, it’s important to put money aside in case of unexpected expenses or emergencies. Consider setting aside 3-6 months of living expenses in a high-yield savings account.
  2. Invest in a diversified portfolio: A well-diversified portfolio can help reduce overall risk and provide long-term growth potential. Consider investing in a combination of stocks, bonds and other assets, such as real estate or commodities.
  3. Consider low-cost index funds or ETFs: Index funds and ETFs are a low-cost way to gain exposure to a wide range of assets. They also offer the benefit of diversification and can provide good performance over the long term.
  4. Don’t put all your eggs in one basket: Avoid investing all your money in a single stock or asset class. Diversification is key to reducing risk and maximizing potential returns.
  5. Consider tax-efficient investments: Depending on your tax situation, consider investing in tax-efficient instruments, such as a Roth IRA or tax-efficient ETFs, to maximize your after-tax returns.
  6. Seek professional advice: If you’re not sure how to invest your money, consider seeking the advice of a financial advisor who can guide you based on your specific needs and goals.

Remember that investments always involve a certain level of risk. It is therefore important to consider your personal circumstances and do research before making investment decisions. « 

So that’s the most common advice you might hear from an investment expert. ChatGPT can be a good assistant for those who want to learn more about general approaches to investing and, in a way, replace financial coaches who teach financial literacy to newcomers. But what if you want more specific recommendations?

Well-diversified ETF portfolio

Asking to create a well-diversified ETF portfolio for a 10-year investment period with an initial investment of $10,000, we get:

“Here is an example of a diversified ETF portfolio that might be appropriate for a long-term investment period of 10 years, with an initial investment of $10,000:

  1. Vanguard Total Stock Market ETF (VTI): This ETF provides exposure to the entire US equity market, including small, mid, and large cap stocks. It has a low expense ratio of 0.03% and is a staple investment for many investors.
  2. iShares Core MSCI EAFE ETF (IEFA): This ETF provides exposure to developed markets outside of the United States and Canada, including Europe, Asia and Australia. It has a low expense ratio of 0.07% and is a good way to diversify globally.
  3. Vanguard Total Bond Market ETF (BND): This ETF offers exposure to the entire US bond market, including government bonds, corporate bonds, and mortgage-backed bonds. It has a low expense ratio of 0.035% and can bring stability to a portfolio.
  4. iShares US Real Estate ETF (IYR): This ETF provides exposure to US real estate investment trusts (REITs), which can provide diversification and income potential. It has an expense ratio of 0.42% and can act as an inflation hedge.
  5. Invesco DB Commodity Index Tracking Fund (DBC): This ETF offers exposure to a basket of commodities, including oil, gold and agricultural commodities. It has an expense ratio of 0.85% and can act as a diversification and hedge against inflation.

It is important to note that this is just one example of a diversified ETF portfolio, and the specific allocation should be based on individual goals, risk tolerance and time horizon. Also, past performance does not guarantee future results and investing always involves risk. It is important to do your own research or consult a financial advisor before making any investment decision. « 

As the answer shows, we get a well-diversified portfolio from asset classes such as stocks, bonds, real estate and commodities, while following the previous tips in the conversation. The historical performance of this portfolio over the past 10 years (March 2011 to March 2021) has been 6.94%, assuming an equal allocation to each of the five ETFs. Taking into account the decline in inflation over this period, the performance is quite good for such a diversified portfolio, but historical performance cannot always guarantee the same future performance. It is therefore rather up to the investor to try to predict it.

However, ChatGPT can help by suggesting some general trends in the market. It assumes that the technology (AI, cloud computing), e-commerce, healthcare (e.g. telemedicine), renewable energy and entertainment sectors will be the fastest growing in the next ten years. He can also give you examples of stocks from each of these sectors as an investment idea.

Code with ChatGPT

And if you want to go further? It becomes more interesting if you already have some investment experience, in particular, you can analyze the data yourself and you need more help in making decisions. ChatGPT can, for example, write code in Python that can download the data needed for analysis, build financial models to predict results, create charts or even reports. It can be useful for data scientists as it optimizes algorithms for data analysis and even takes advantage of additional AI models using ready-made programming codes.

Many of us have heard that ChatGPT can beat some programmers in the job application process, but it won’t help if it doesn’t understand the codes it writes. It’s more of a helper than a replacement for some analytical jobs because it always makes mistakes and can’t optimize models.

ChatGPT is a revolutionary product and can be a useful tool in the investment process by teaching users financial knowledge, giving them suggestions on where to start, how to create a first investment portfolio, or helping professionals to be more effective with existing tasks and strategies, but it certainly can’t do all the work for you or replace creative thinking and decision-making.

Tetyana Kohansal ist Finanz-und Versicherungsmathematikerin und Managing Partnerin bei ks actuaries. Ihr Credo: foster young leadership in future mathematics. Sie ist spezialisiert auf Software-Entwicklung für quantitative Lösungen im Bereich Banken und Versicherung. Darüber hinaus beschäftigt sich Tetyana mit Machine Learning Algorithmen in Portfolio Management und verantwortet gleichzeitig die Investing Community „investingpossible“ für junge Menschen mit dem Zweck anderen bei der Erreichung ihrer finanziellen Ziele zu unterstützen.

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