(News Bulletin 247) – On January 24, 2023, we asked the conversational robot to give us ten stocks to invest in, which it ended up reluctantly accepting, while warning that it was not advice. Has this list of stocks beaten the market over a year?
Important disclaimer: we have engaged in a pure theoretical exercise with ChatGPT. In no way do we recommend investing on the basis of advice given by artificial intelligence, nor choosing such a short horizon of one year. The usual advice (become well informed about the securities in question, diversify your portfolio, focus on the long term) prevails. Our News Bulletin 247 rankings, published on Monday, show that an individual investor is most often a winner in the long term.
Can ChatGPT have a hollow nose on the stock market? We asked ourselves, out of simple curiosity, the question a year ago, on January 24, 2023, asking him to give us ten stocks (five on Wall Street, five in Paris) in which to invest over three months. The conversational robot was reluctant and ended up, by insisting and reformulating the request, by responding to us, delivering five values to Wall Street, and five to Paris.
Let us point out that we tried the experiment again this week and received a categorical refusal from ChatGPT. This refusal was accompanied by general advice in investing in the stock market, such as being well informed about a stock, its financial health, its competitive position, diversifying your portfolio, considering a long-term investment horizon or even not hesitating to consult a financial advisor. In short, common sense. By modifying the question a little, the conversational robot cited not stocks in which to invest, but “well-known companies that operate in Paris and on Wall Street” (the list appears at the bottom of this article).
To return to the 10 stocks cited by ChatGPT a year ago, we wondered what performance these stocks would have had if an investor had held them for a year.
>> Access our exclusive graphic analyses, and gain insight into the Trading Portfolio
A performance largely driven by Nvidia
Remember that ChatGPT had not demonstrated great originality in the companies mentioned. For American stocks, he talked about Apple, Microsoft (the two largest listed groups in the world in terms of capitalization), Amazon, Nvidia and Bank of America. Or almost only “big techs”, with relatively little diversification. For the Paris Stock Exchange, ChatGPT had suggested quite diverse sectors, with Totalenergies, Airbus, Sanofi, Orange and BNP Paribas.
How would this portfolio have performed? It would have turned out to be quite thunderous, thanks to Wall Street. We took the variations by comparing the closing prices of January 24, 2023, the date of our request, and those of January 24, 2024.
Over this period the S&P 500 gained around 21%, the American index having also reached a historic high this week. But ChatGPT’s five American values do even better. Their average performance amounts to +76%, thanks to Nvidia’s jump of 218%, but also the good behavior of Amazon and Microsoft (more than 60% each). Apple, which is currently running out of steam on the stock market, still posted an increase of 36.5%, while Bank of America is the only stock to show a negative performance (-4.6%).
This result is not really surprising. Tech was the big winning sector on the stock market last year, with the “magnificent seven” (Apple, Amazon, Alphabet, Microsoft, Meta, Nvidia, Tesla) alone carrying or almost the entire S&P 500. These companies had been driven by the end of key rate increases by the American Federal Reserve, the emergence of generative artificial intelligence (AI), the resilience of their results which have transformed them into a safe haven, as well as job cuts appreciated by the walk.
Nvidia is almost a special case with a jump in its stock of around 240% last year, its financial results and its activity (quarterly revenues jumped by more than 206% in the third quarter) having been boosted by the demand for its graphics processors, essential for developing conversational robots like ChatGPT. Its rally also continued at the start of 2023.
Airbus brings performance to Paris
In Paris the results are less spectacular. Nevertheless, ChatGPT outperforms the CAC 40, the Parisian index gaining 5.7% over the period, compared to an average gain of 8.9% on the five stocks cited by the conversational robot. Airbus, which is near historic highs with the setbacks of Boeing’s 737 Max and its delivery target largely exceeded, gained 21.5% over the period. The aircraft manufacturer is ahead of Orange (+16.9%) which is off to a good start to 2024 (+8%), with UBS which recently confirmed its purchase advice, given its solid growth prospects. and cash generation. The performances of Sanofi (+3.6%), BNP Paribas (+2%) remain more ordinary while with the fall in oil and gas prices, Totalenergies is almost stable (+0.3%).
Ultimately, the 10 stocks cited by ChatGPT recorded an average performance of 42.4% over one year. Assuming that an investor had devoted 1,000 euros to each security, his portfolio would have increased from 10,000 euros to 14,227 euros, the difference with the gross stock market performance being explained by slight negative exchange rate impacts on the euro-dollar. Obviously this does not include brokerage fees or taxes.
Do these results mean that ChatGPT is good advice? Not necessarily or not at all. The conversational robot was certainly lucky, with large American capitalizations (and therefore those that it cites most spontaneously) which posted enormous performances last year.
ChatGPT does not consider itself a good stock market tool
In a post published on LinkedIn in February, Stephane Renevier, analyst for the financial portal Finimize, explained that ChatGPT could potentially help dissect the strengths and weaknesses of a stock, but always by verifying and deepening its analysis.
“ChatGPT is far from perfect: it was trained on a pre-2022 dataset. Its content is often misleading or just plain wrong. And it doesn’t understand the content it produces at all,” he wrote .
“ChatGPT will not allow you to discover hidden gems. It will not allow you to directly generate alpha [pour faire simple de la surperformance sur un portefeuille, NDLR]. You won’t become a superstar analyst by using it,” he insisted.
Markets.com’s Zachariah Walker pointed out in May that ChatGPT cannot analyze new data or information as soon as it appears, meaning “ChatGPT has the potential to produce unreliable results.” “Which may be fine for a little fun, but becomes a serious risk when asked to deal with important financial matters that have serious implications for the user who is relying on the algorithm to function productively,” he warned.
Moreover, ChatGPT has the honesty to admit its own limitations. We simply asked him if he considered himself a good investment tool in the stock market.
“No, I do not consider myself a reliable tool for making investment decisions on the stock market or any other financial market,” he admitted. “While I can provide information, answer questions, and offer general knowledge on various topics, including finance and investing, I cannot offer personalized financial advice, predict market movements, or recommend stocks specific”, adds the robot.
“Investing involves a complex set of factors, and decisions should be based on thorough research, consideration of your financial goals and risk tolerance, and, ideally, consultation with a financial professional qualified. Market conditions can change quickly and the information I have is only current at the time of the completion of my last training, in January 2022,” he continued.
The 10 “well-known” stocks on Wall Street and Paris cited by ChatGPT on January 24, 2024
On Wall Street:
In Paris:
I have over 8 years of experience working in the news industry. I have worked as a reporter, editor, and now managing editor at 247 News Agency. I am responsible for the day-to-day operations of the news website and overseeing all of the content that is published. I also write a column for the website, covering mostly market news.
