ChatGPT Fund: AI-Powered Investing [June 2023]

Introduction of the ChatGPT fund, the general public now has access to this transformative technology, leveling the playing field. The use of artificial intelligence (AI) has been a long-standing practice among hedge funds for guiding investment decisions.

The ChatGPT fund has unlocked a range of exciting possibilities that can empower individual investors to gain an advantage over Wall Street’s traditional approaches.

It’s important to remember, though, that AI technology is not flawless and can sometimes provide inaccurate or misleading information. Therefore, it’s essential to approach tools like ChatGPT with caution and intelligence when incorporating them into our financial strategies.

In this article, I will explore the concept of the ChatGPT fund in detail and delve into effective ways you can leverage ChatGPT for stock trading.

Let’s jump right in!

Disclaimer: Please note that I am not a financial advisor, and the content provided here is for educational purposes only.

What Is the ChatGPT Fund?

The ChatGPT fund is an experimental fund that allows ChatGPT to select stocks based on commonly used financial metrics such as revenue growth history, debt coverage, and profitability.

Additionally, ChatGPT takes into account sentiment analysis of market news related to specific stocks. For instance, negative coverage or a poor earnings report might trigger a recommendation to sell a position or avoid investing in a particular stock.

How Does the ChatGPT Fund Work?

The ChatGPT fund operates by granting ChatGPT or one of OpenAI’s APIs access to a brokerage account, enabling it to execute stock trades for buying and selling. An initial experiment conducted in the UK demonstrated promising results, with the fund outperforming a selection of UK investment firms and even the S&P 500.

However, it is worth noting that this experiment ran for a relatively short duration. To thoroughly assess the effectiveness of an investment strategy, it is ideal to have a performance history spanning several years.

GPT Portfolio

One of the recent iterations of the ChatGPT fund is known as The GPT Portfolio. This project aims to determine whether ChatGPT can outperform hedge funds in stock selection.

The investment process involves the following steps:

• The ChatGPT API analyzes over 10,000 market headlines.
• Each headline is assigned a sentiment score (positive or negative).
• ChatGPT examines the financial statements of the top 100 graded stocks.
• The fund invests in the top 20 stocks.
• Buying and selling activities occur 1 to 2 times per week. The portfolio initially started with $50k and is managed through a service called Autopilot, which allows users to copy trade or follow various investment strategies. Currently, approximately 25,000 people have invested a total of $14.5M in the GPT portfolio strategy.

Leveraging ChatGPT for Stock Investing

While many hedge funds employ algorithmic or high-frequency trading to achieve market-beating returns, ChatGPT can now access real-time data.

However, for it to have a realistic chance of outperforming the S&P 500, it still requires extensive prompt engineering and proprietary data.

Once again, it is important to emphasize that I am not a financial advisor. However, I can suggest some ways in which you may incorporate

ChatGPT into your research process:

Information Retrieval:

Utilize ChatGPT to retrieve general information about financial topics, stock trading concepts, financial analysis, and more. It can provide insights on how stocks function, the factors influencing their prices, financial ratios, and other foundational knowledge. Understanding these core financial principles is crucial for safeguarding your capital.

Explaining Financial Reports:

ChatGPT can assist in comprehending the terminologies and elements found in financial reports such as balance sheets, income statements, and cash flow statements. A solid understanding of these reports is vital for making informed investment decisions.

Investment Strategies:

Various investment philosophies exist when it comes to investing your money. ChatGPT can simplify this universe by explaining different investment strategies, such as value investing, growth investing, or dividend investing.

Risk Assessment:

Use ChatGPT as a devil’s advocate to help identify potential risks and downsides associated with specific investment decisions. This will aid in managing these risks effectively and avoiding unnecessary losses.

Scenario Analysis:

When weighing the pros and cons of an investment decision, it can be helpful to have a thought partner. ChatGPT can engage in discussions about hypothetical scenarios related to trading, enabling you to gain a better understanding of potential outcomes and strategies.

Technical Analysis:

Trading stocks based on price charts can be challenging, but there are numerous online resources available to learn technical analysis if you are interested in exploring this path. ChatGPT can serve as your personal 24/7 teacher, explaining various technical analysis concepts such as chart patterns, indicators, and more.

Behavioral Finance:

It is easy to be influenced by the investment hivemind on social media platforms. By consulting ChatGPT, you can assess how cognitive biases might be affecting your investment decisions. Loss aversion and herd mentality are common biases that can lead to capital losses.

Interpreting Economic News:

As mentioned earlier, ChatGPT can be utilized to evaluate the sentiment and potential impact of various economic news on the stock market.

This is a key aspect of the ChatGPT fund and several related projects. 

Automating this process through the ChatGPT API allows you to assess hundreds of news headlines simultaneously. You can access this functionality via the OpenAI playground.

Conclusion

To conclude, the ChatGPT fund experiment has highlighted the potential of harnessing large language models like ChatGPT to guide investment strategies. However, it is not advisable to blindly trust ChatGPT with your funds at this stage.

Trading bots are not a new concept, and often automated strategies become outdated rapidly due to market dynamics. The best approach for utilizing ChatGPT in investments is to consider it an educational tool and thought partner that can help shape your own investment philosophy.