No Replacement – The Performance of AI Funds 🤖

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No Replacement – The Performance of AI Funds

Artificial intelligence is set to replace many jobs moving into the future, with Goldman Sachs estimating 300 million full-time jobs to be taken by this new technology. However, AI is far from being capable of doing that, and we’ve seen some interesting stories come out recently. Scientists at Stanford discovered that ChatGPT 3.5 and 4.0 have been getting worse at basic mathematics compared to previous versions because of a phenomenon called “drift,” which is something that is being investigated further.

AI has also been rumored to start replacing the big jobs on Wall Street, but that’s not happening anytime soon either. Artificial intelligence has started to be introduced to Wall Street with 13 ETFs currently being managed by the technology, which has been tinkered with to fit the fund’s strategy. So far, most of these funds have underperformed the S&P 500 on the year, and they have ironically missed out on the major tech rally despite being managed by the most hyped tech in the market right now. One of the major problems with AI managing portfolios is that all it can do is analyze the past and make decisions based on all that data. In the stock market, a new day brings forth lots of different news that could influence share prices, along with major news such as the war in Ukraine. This leaves AI vulnerable to those rapid changes as it can’t predict them, and if you pair that with the technology’s errors it leaves them on the same playing field as humans. It is well known that monkeys who randomly chose stocks by throwing darts beat stock pickers in performance, showing that for now, AI isn’t going to tip the odds in your favor with the randomness of the markets.

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I am not a financial advisor and my comments should never be taken as financial advice. Investments come with risk, so always do your research and analysis beforehand.

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