Retail investors will still lose.
ChatGPT can help yield more accurate stock trading predictions – study
11–20 of 58 posts
Re: ChatGPT can help yield more accurate stock trading predictions – study
#12We have very sophisticated technical forecasting algorithms. I doubt ChatGPT could improve there. Where it may be excellent though is in “sentiment analysis” which plays a role in forecasting.
I wonder why despite all of this, nearly all active money management funds perform below S&P.
because the average investor isn't aware of that simple fact, or they think they really can keep consistently breaking the market
Re: ChatGPT can help yield more accurate stock trading predictions – study
#13So what happens when we can predict stock market with much more confidence? What kind of effects would this have on the market. Corporations having much better predictions but also the average person.
Re: ChatGPT can help yield more accurate stock trading predictions – study
#14It's almost certainly expected.
These models are argued to contain hidden models of the data they represent, and can pick up on patterns with one-shot or few-shot samples
Let's recall that Bob Mercer, Jim Simons made their billions off of trading options with NLP based hidden markov models, beating everyone on Wall St for the last two decades.
ChatGPT is an easy entry to this
Re: ChatGPT can help yield more accurate stock trading predictions – study
#15ChatGPT, as for now, cannot infer anything. It will repeat most likely words and that's it.
It is like going to an advanced astrological consultant
Re: ChatGPT can help yield more accurate stock trading predictions – study
#16So what happens when we can predict stock market with much more confidence? What kind of effects would this have on the market. Corporations having much better predictions but also the average person.
Maybe the efficient market hypothesis?
Re: ChatGPT can help yield more accurate stock trading predictions – study
#17So what happens when we can predict stock market with much more confidence? What kind of effects would this have on the market. Corporations having much better predictions but also the average person.
Plenty of quant funds are already predicting the market with a fair degree of success -- RenTech has averaged something like a 35% return rate after fees on their Medallion Fund since its inception in the 1980s.
So I think the actual question here is: What happens when you can make these predictions without hiring dozens of Ph.Ds and paying them oodles of money?
Re: ChatGPT can help yield more accurate stock trading predictions – study
#18I've found it useful using LLMs to help understand company 10-K reports like these:
https://docalysis.com/library/10-k-reports
For example, I used it to understand how much Meta is investing in its Reality Labs initiatives ($13.7 billion last year) as well as how much revenue Reality Labs brought in ($2.15 billion).
I'm certain financial professionals are using it to better understand the world. The paper says it uses ChatGPT for sentiment analysis, but I think an even bigger leap is going to be getting actual meaning out of news and financial reports more efficiently.
Re: ChatGPT can help yield more accurate stock trading predictions – study
#19I feel compelled to write this though it's only tangentially relevant to the article and is an adaptation of Taleb's story of stock-picking monkeys[1] from either Fooled by Randomness or The Black Swan:
Say you have an email list of 100000 investors, you ask ChatGPT to produce 100000 predictions and send these out to each investor.
Assuming ChatGPT is as good as a coin flip, 50000 investors receive good predictions. The next week you have ChatGPT produce 50000 predictions and send them out to those winners, you now have 25000 who have gotten two good predictions.
Rinse and repeat four more times and congratulations, you now have a client list of over 1500 people who have received six weeks of good predictions and are ready for you to manage all of their wealth using these insanely accurate AI predictions.
[1] https://www.washingtonpost.com/archive/business/2004/06/20/a...
Re: ChatGPT can help yield more accurate stock trading predictions – study
#20An interesting benchmark would be if it can outperform index funds over a given time period.