Experts Warn: Relying on ChatGPT for Stock Picks Can Be Hazardous to Your Portfolio

Experts Urge Caution on Using ChatGPT to Pick Stocks A growing number of retail investors are turning to AI chatbots like ChatGPT for stock-picking advice, but experts warn that relying solely on these tools can be a recipe for disaster. According to a recent survey by eToro, 13% of individual investors worldwide already use AI tools for stock selection, while half say they would consider using them in the future. This trend is not surprising, given the increasing popularity of AI chatbots and their potential to provide personalized investment advice. However, experts caution that relying on ChatGPT or similar tools can lead to poor investment decisions, as they are only as good as the data they were trained on. Jeremy Leung, a former analyst at UBS who now relies on ChatGPT for his multi-asset portfolio, is an example of this trend. "I no longer rely solely on human analysis," he said in an interview with Reuters. However, experts warn that relying too heavily on AI chatbots can lead to over-reliance on flawed data and algorithms. The use of AI chatbots in stock picking has significant market implications. As more investors turn to these tools, the demand for traditional investment advice is likely to decline, potentially disrupting the business models of financial institutions. Additionally, the increasing reliance on AI chatbots raises concerns about market manipulation and the potential for algorithmic trading to become even more prevalent. Stakeholders are also sounding the alarm. "While AI chatbots can be a useful tool in investment decision-making, they should not replace human expertise," said Marko Kolanovic, chief global markets strategist at J.P. Morgan. "Investors need to be aware of the limitations and potential biases of these tools." The future outlook for AI chatbots in stock picking is uncertain. While some experts predict that these tools will become increasingly popular, others warn that their limitations and potential flaws will eventually lead to a backlash. As the use of AI chatbots continues to grow, investors would do well to remember that no tool can replace human judgment and expertise. "AI chatbots are not a substitute for sound investment strategy," said Leung. "Investors need to be aware of the risks and limitations of these tools and use them in conjunction with traditional investment advice." Key Statistics: 13% of individual investors worldwide already use AI tools for stock selection Half of retail investors say they would consider using AI chatbots for portfolio decisions $1.3 trillion in assets under management are expected to be affected by the rise of AI chatbots Market Context: The increasing popularity of AI chatbots is part of a broader trend towards digital transformation in the financial industry. As more investors turn to these tools, traditional investment advice and human expertise may become less relevant. Implications for Society: The growing reliance on AI chatbots raises concerns about market manipulation and algorithmic trading. Additionally, the increasing demand for personalized investment advice could lead to a decline in traditional investment advice and human expertise. Next Steps: Investors would do well to approach AI chatbots with caution and use them in conjunction with traditional investment advice. Financial institutions should also be aware of the potential risks and limitations of these tools and develop strategies to mitigate their impact on business models. *Financial data compiled from Arstechnica reporting.*