Artificial intelligence is spreading through our everyday lives – including tools that give AI-powered stock tips. What to make of them. And how AI can help with investing.
Imagine you want to prepare a special dinner for friends at the weekend. You ask ChatGPT for advice. In a flash, the AI bot puts together a menu suggestion for you. Along with the offer to create a shopping list. Soon it could go so far that afterwards it immediately orders all the ingredients from the supermarket around the corner. And coordinates the delivery time by checking it against your calendar.
In October, a cooperation agreement between OpenAI, the creator of ChatGPT, and Walmart, one of the world’s largest retailers, fuelled speculation about the future of shopping. „Agentic commerce“ is on everyone’s lips. „Agentic“ stands for the concept of using artificial intelligence (AI) as a more or less autonomous assistant in all sorts of situations in life.
AI as a „stock picker“
A lot is expected of AI. Especially on the stock market. According to an analysis by J.P. Morgan, since the launch of ChatGPT in November 2022, around 75 percent of the return in the S&P 500 is attributable to AI-related stocks. But it’s not only as an investment that everything to do with AI has become extremely popular. Leaving purchasing decisions to AI – that could become a topic when it comes to investing too. AI tools are, in any case, already being used more and more often to find investment tips.
Some ask well-known chatbots such as ChatGPT for them. Their answers then unquestioningly incorporate all kinds of supposedly hot tips, of which vast quantities float around the internet. Beyond that, however, the number of apps and websites that give AI-generated investment ideas and recommendations is also growing. Often this involves buy and sell signals for individual securities. In addition, special funds advertise that they build AI into the investment process.
AI can process enormous volumes of data in fractions of a second. The assumption: this can be exploited to analyse securities more soundly. One provider advertises, for example, that the algorithms it deploys take more than 2,000 variables into account in order to arrive at an assessment of the price development of individual stocks. Another enthuses that the AI it uses turns „hundreds of complex stock and ETF indicators and thousands of stock and ETF characteristics“ into an easily understandable score.
Old wine in new bottles
Ultimately, a very old model lies behind such offerings. They hold out the prospect of filtering out particularly high-return securities from the mass of them. Or of finding the best moments to buy and sell securities. Through targeted selection and the „right“ timing, you are supposedly able to outperform the market. There’s just one big catch: how prices will develop in the future cannot be calculated. No matter how large the data basis is.
Whether it’s decisions by companies, central banks, governments or consumers: many things can play a role in price development. AI, too, doesn’t know the decisions before they have been made. Nor can humans or machines know in advance how buyers and sellers on the stock market will react to them. „It’s not just that we don’t know the course of developments – with some of them we know absolutely nothing beforehand,“ notes Philipp Dobbert, Head of Wealth Management at quirion and Quirin Privatbank.
„Forecast-based investing is therefore always highly speculative – and thus unnecessarily risky,“ Dobbert warns. „That is not a new insight. Academic research has been confirming it for many years.“ Further evidence that you cannot reliably outperform the market comes from analyses of the performance of classic actively managed funds. According to a study by S&P Global from March, among euro-denominated, globally investing equity funds over a 10-year period, 97 percent performed worse than a comparable stock index. And should anyone object that AI-driven funds might perhaps do it better: an analysis by Scope from September comes to the conclusion that these predominantly achieve weaker returns than their „peer group“, that is, comparable funds.
AI as a smart helper
For investing, however, AI can certainly also be a great help. We demonstrate this with quirion.Ai, our own AI chatbot. Alongside conveying know-how, its focus is on helping users get closer to their personal investment goals. How do I build wealth for my children? How can I provide efficiently for my retirement? Once quirion.Ai has a few reference points, the AI can play through various scenarios in dialogue. quirion.Ai is free to use and requires no prior registration.
quirion.Ai doesn’t give tips on supposedly „hot stocks“. That’s because we trained quirion.Ai with our specialist knowledge. It is based on the current state of financial market research. „One of its key findings is that you are better off following the market than trying to beat it. And doing so with the broadest possible diversification,“ Dobbert explains.
Try quirion.Ai right now here.
