Exec At World's Top Hedge Fund Shatters Stock-Picking Myths: Chatbots Not The Holy Grail

Greg Jensen, CIO at Bridgewater Associates, dispelled the notion of using chatbots to make stock picks.

It’s a “hopeless path,” Jensen says, highlighting the limitations of artificial intelligence (AI) in trading.

What Happened: AI has been a hot topic in the investment world, with many investors eager to harness its potential. However, Jensen — who works at the world’s largest hedge fund — is sounding a cautionary note. He has expressed his skepticism about using large language models like OpenAI's ChatGPT for trading equities. 

On Bloomberg’s Odd Lots podcast, Jensen warned against the futility of relying solely on chatbots for stock picks, citing their inability to accurately predict major market turning points. 

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Jensen is actually an ardent AI supporter. He’s even an early investor in OpenAI’s ChatGPT and AI startup Anthropic. When it comes to stock trading, there are significant shortcomings of using LLMs, he explained.

These language models have shown promise in certain areas, but fall short when it comes to identifying crucial shifts in the macroeconomic landscape, he says.

Jensen described relying on large language models for stock picking as a “hopeless path.” He expressed doubt about their efficacy in providing precise predictions about future market movements.

It will be challenging for knowledge-based industries to resist utilizing AI tools, he adds. But adapting to these advancements will be a key factor in navigating the changing landscape of work in finance, the report noted. 

Jensen’s cautionary words serve as a reminder that AI holds immense potential in the finance industry. However, it is crucial to recognize the limitations of specific AI applications. AI chatbots may not possess the precision required for accurate stock picking or predicting major market shifts. 

Why It's Important: As the financial industry explores the potential of advanced language models like ChatGPT for predicting stock market returns, concerns arise regarding the accuracy and potential risks involved. 

Despite these reservations, Bloomberg has recently introduced BloombergGPT, a GPT-based language model trained on financial data, aiming to enhance natural language processing tasks in the finance domain. 

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