I mean we've all seen this new wave of artificial intelligence that's taking over pretty much everything it's like a company can just throw the word AI into their marketing materials and everyone eats it up because AI is the future and it's revolutionary but even though it's recently turned into another generic SEO keyword maybe there's actually something to this or perhaps someone is actually crazy enough to put their money where their mouth is after all Chachi Boutique it apparently picks stocks better than your fund manager it's supposedly surprisingly accurate in predicting stock moves so with real life people being absolutely awful at picking stocks this could be the solution that we've all been waiting for introducing the chat gbt fund okay before you get too confused let's back up for a second chat gbt is a computer program that allows you to ask it almost anything and it'll spit back an answer using its artificial intelligence think of it like a robotic definitely not sentient being whose entire objective is to scour a database of information find precisely what you're looking for and give you a written response within a matter of seconds well evidently this was so popular that it got 1 million users in the first five days of launching it created a worldwide race of tech Giants to embrace the new technology or be left behind by Skynet and every other YouTuber including myself made videos on potential ways that you could profit from it except this was really only the tip of the iceberg see as sophisticated as the original Chachi BT was it was only programmed up until the year 2021 meaning anything newer than that wasn't able to be taken into consideration so on March 14th chat gbt4 was released which is pretty much like comparing the size of Earth to the size of the sun except here that basically means that Chachi bt4 is a lot smarter than all of us there's even full articles dedicated to itemizing every single difficult test that chat gbts passed like acing the SAT AP exam sommelier tests for medical exams and even the State Bar on the first try so why not apply this to investing again introducing the chat gbt fund all of this began with an article from CNN claiming that Chachi BT could pick stocks better than your fund manager and since it been rather disappointed with Jim Cramer's track record I thought it would be worth the read as the article explained between March 6 and April 28th a dummy portfolio of 38 stocks gained 4.9 percent while 10 leading investment funds clocked an average loss of 0.8 percent now don't get the wrong idea it's not like you could just ask chat gbt to help make back your losses for listening to basement dwelling dgns on Wall Street bets who had no idea what they were talking about Instead This researcher asked it to create a portfolio of stocks from high quality businesses with criteria taken from the leading 10 funds it's competing against this included low levels of debt sustained growth and assets that would generate a competitive advantage and wouldn't you know it nine weeks later this fund is still going strong outperforming the overall Market by five percent and creating a sensation of people who took this and now want to create their own portfolio from making a whole bunch of money however I do want to mention that In fairness fund managers aren't exactly the creme de La Creme to be competing against like not to be a party pooper here but it's been shown that throwing random darts blindfolded outperforms hedge funds fish beat the market by 14 and a half percent over three years a cat outperformed by eight percent and even a crypto trading hamster made a higher return than Warren Buffett oh and not to mention Fidelity did a survey on their most successful investors and they turned out to be a whole bunch of dead people anyway in all seriousness it's one thing to be right in the short term and it's another thing to be right consistently long term and so far nine weeks just isn't long enough to claim victory over Steve from accounting so A new challenge was born introducing the chat gbt fund again with this challenge chat gbt is given a simple prompt we are giving you a fifty thousand dollar investment account to point you to the test every Monday you will analyze and buy a new set of stocks and we will sell two weeks later you will repeat this on a weekly basis you win and as you know it's AI is in but but how exactly does this selection process work well this entire concept is based on a research paper that successfully used chat gbt to analyze which headlines were positive negative or neutral for stock prices their chat EBT recorded which headlines yielded the largest movements after being published Based On A String of keywords and what it found was that it was actually pretty good at predicting which stock prices were going to fall the most basically this chat gbt program found that negative articles yielded the largest immediate downward move in prices and when you concentrated that among smaller stocks you had the most upside if you shorted them or basically vetted against them now before you think that chat gbt could be the next coming of Warren Buffett keep in mind that once you begin looking into the details you'll realize the chat gbt was given six parameters to beat the market three of them lost money will the best increased by 500 percent so if you followed all of them you'd pretty much be even as of now try gbt simply taking in information determining whether or not that information is positive or negative relaying that against movements in the past and then making its best guess as to what might happen in the future for instance just recently chat gbt recommended Uber over Lyft based on the sentiment of recent news articles and even though basing your entire investment philosophy often news is well stupid you do have to admit it's pretty intriguing of course by now you're probably thinking to yourself but Grant how do they analyze real-time information when chat GPT isn't able to do that well I'm gonna have this guy answer it because he's a lot smarter than I am and yes his books are categorized by Heights let's take a look so the way you get around that problem is by fitting in the information that you wanted to consider the relevant macroeconomic information interest rates employment instead of the global economy basically whatever you think it's important in order to make a good decision separate from that though it's also shown that this challenge jailbreaks chat gbt to include news articles breaking information and individual stocks and so so many people trust it that it now has over two million dollars of capital following along so what did it end up buying well the first purchase occurred on Monday May 15th and with that it purchased 20 stocks including the likes of Berkshire Hathaway Google Amazon apple and a variety of others and on the first day it was already beating the s p 500. keep in mind even though it's too early to tell how this is going to play out it's not the first time that AI has tried to overtake traditional investing and a recent one is called portfolio pilot with this users could copy and paste their portfolios into the tool for analysis receive investment recommendations search for Market information and ask the bot questions all for free of course if you're about to comment but Graham who on Earth would trust this thing well the answer is wealthy people in fact 77 percent of them reported that they've utilized it for stock picks or the way I see it they have the disposable income to try it out for all of our Amusement in addition to that you also have the investment AI magnify which uses computer programs to provide personalized data-driven investment advice while democratizing intelligence in a personalized way essentially the publisher on CNBC tried it out and found it to be an effective way of answering questions giving specific advice and recommending companies depending on what you ask it but the difficult part is I see it is whether or not these companies would be liable for giving personalized investment advice in the event that one of their recommendations ends up losing money after all when you usually ask chat gbt about investing it emphasizes that when you build a portfolio you should incorporate your investment objectives time frame and risk tolerance and for personalized investment advice to a specific individual this is really the correct answer the fact is every situation is different what works for me might not be best for you some people want to take a whole bunch of risk while other people don't want the chance of losing any money you also have to consider that for most people investing is rarely ever logical instead as hard as it might be to want to admit investing is largely based on emotion this is nicely why dead people often make the best investors they don't panic sell when their stock gets a low they don't fomo into something when everyone else is jumping in they simply buy something and stick with it long term until eventually they die and end up in a survey on top of that I could also see issues with chat gbt recommending stocks that do well because it recommended them and people blindly Buy in this reminds me of What's called the Jim Cramer effect where stocks tend to go up after he mentions them doesn't mean that he knew that they were going to be going up in price and that he's a genius investor no but it does mean that his picks were able to generate enough attention for people to buy in causing the price to go up and thereby creating a self-fulfilling prophecy at the end of the day chat gbt is looking for patterns based on past performance and with enough data at its disposal it should in theory be able to form an opinion on what's likely to happen based on prior movements but if everyone gets those recommendations then whatever it recommends would be going up because everyone else is relying on the exact same information causing it to happen because it said it was going to happen but aside from that then let's assume that there are patterns available out there that can be taken advantage of in that case the efficient market hypothesis could kick in which states that when new information comes into the market it's immediately reflected in the Stock's prices and thus cannot generate excess returns so if everybody all of a sudden gets access to the exact same information it no longer works and there's no longer an advantage it's really important to realize that when it comes to investing your chances of making money are directly weighed down by your chances of also losing it and if there's ever a software that tries to exploit that eventually it's no longer going to work personally I tend to believe that investing should be as dumb as possible yes you could get all fancy with asset allocations based on age risk tolerance investment preferences and appetite for the unusual but for most people Warren Buffett recommends something as simple as an S P 500 Index Fund and that's it it's boring plain unsexy and basic but so far it's worked for those who have held long term and I have a feeling most people should probably look into something like that it also worries me that AI doesn't quite account for intuition reason and emotion it's the human factor that makes investing what it is there's always somebody who will believe that they could outsmart the system by finding inefficiencies that no one else sees and certainly some of them do end up doing exactly that but I highly doubt that something like Chad CBT would be able to replicate those exact same strategies long term and actually hold people accountable to follow them on the other hand I do believe that chat gbt would be incredibly useful for simplifying information and making it much more digestible for the average investor who doesn't have the time to read earnings reports charts and graphs from that perspective I am all for chat gbt taking over the world but as far as recommending stocks I just don't think it has what it takes unless it becomes self-fulfilling where it recommends everybody the same stocks and they cause it to go up in price because it's what it recommends so if you want to be kept up to date and see what happens with chat gbt's picks and if it actually can beat the market make sure to subscribe because it will be posting updates on this on a regular basis so with that said you guys thank you so much as always hit the like button don't forget to add me on Instagram or Snapchat and finally since we're on the topic of stocks you could get a free stock worth all the way up to a thousand dollars when you sign up with our sponsor public.com Down Below in the description with the code grand when you make a deposit enjoy thank you so much and until next time