AI-Powered Investing: How Entrepreneurs Are Beating Top Funds & Market Returns With AI Investment Advisors

In today’s Deep Dive…

• How Startups & Enterprise Companies are integrating AI and building scalable products with THIS amazing studio 

• AI-powered stock picking: can ChatGPT pick stocks better than your fund manager?

• The Active Fund Dilemma: Unpacking the challenges that have tripped up 95% of large-cap actively managed funds over two decades.

• AI's Investment Toolkit:

  • Short-Term Strategies: Tools that are reshaping quick-turnaround investments.

  • Long-Term Game Changers: Delve into portfolio optimization, risk management, and AI's role in crafting a long-term vision.

• Caveminds Podcast #3 - AI and Mind Indexing Will Transform Businesses Forever with Dmitry Shapiro

Hi there. This is Aditya, and I've been diving deep into the intersection of AI and investing which I find something we as founders could pay more attention to, as AI is providing us with tools that not so long ago only hedge funds had access to. Let’s jump to it.

Read Online and listen to the audio version.

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DEEP DIVE OF THE WEEK

AI can pick stocks better than your fund manager

Did you know that AI is now enabling entrepreneurs to invest more profitably?

First, we are going to show you how that’s happening and then below we’ll cover the top AI investment platforms and tools you should be considering for you investment strategy.

Researchers at the University of Florida have found that AI could predict the stock price movements of specific companies more accurately than some more basic analysis models.

Here’s how it does that…

1. ChatGPT to assess whether each headline is good, bad, or neutral for firms' stock prices

2. We document a significantly positive correlation between ChatGPT scores and subsequent daily stock returns

3. We find predictability in both small and large stocks, suggesting market underreaction to company news

4. Predictability is stronger among smaller stocks and stocks with bad news, consistent with limits-to-arbitrage also playing an important role

5. Finally, we incorporate advanced language models into the investment decision-making process can yield more accurate predictions and enhance the performance of quantitative trading strategies

Don’t worry I know it sounds complicated but there are platforms we’ll cover below that will do this all for you or at least advise you in the right direction.

In an experiment by Finder.com a mock portfolio comprising 38 stocks selected by ChatGPT experienced a 4.9% gain, surpassing the average loss of 0.8% recorded by 10 leading investment funds.

The analysts asked ChatGPT to choose stocks based on some common criteria, such as companies with low debt and a history of growth.

And ChatGPT selected companies such as Microsoft, Netflix, and Walmart.

🏆️ Golden Nuggets

While large investment firms have been using artificial intelligence (AI) for years to help them make investment decisions, AI can now help retail investors make better investment decisions too.

ℹ️ Why This Matters Today

These experiments and studies demonstrate that AI can compete with and even outperform human experts in the stock market.

Even if a majority of investors don’t feel fully comfortable embracing AI for their investments yet, it’s clear that AI-driven systems can adapt to volatile markets, make data-driven decisions, and achieve consistent growth.

And later in today’s piece, we’re going to share some tools to achieve those exact results.

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