2023 has seen the rise of AI, with programs such as Bard and ChatGPT offering answers to any and all queries, ranging from what the weather is to writing college essays. We all know AI is based on machine learning, but how much can we trust the advice it gives? We wanted to find out if we can trust these programs, so we gave ChatGPT a budget of $10k to invest in stocks and $10k to invest in cryptocurrencies, subsequently following the advice provided.
Before following this advice, it is worth noting ChatGPT states the information given is not financial advice, and consulting with a financial advisor is always recommended. ChatGPT also suggests doing your own research to make more informed decisions regarding which stocks are worth investing in.
The program provides further advice for cryptocurrencies, stressing the volatility of cryptocurrencies and the importance of considering your financial situation when making investment decisions. Regularly reviewing your portfolio based on market conditions and investment performance is also advised.
The Breakdown
It took a little bit of training, but we eventually got ChatGPT to suggest exactly how much of my budget to invest in each stock/ coin, the breakdown is as follows:
Stock
Percentage
Total Invested
Apple Inc
10%
$1000
Amazon.com Inc
10%
$1000
Microsoft Corporation
9%
$900
Alphabet Inc
9%
$900
NVIDIA Corporation
8%
$800
Tesla Inc
7%
$700
NextEra Energy, Inc
7%
$700
Amgen Inc
4%
$400
Johnson & Johnson
4%
$400
Moderna, Inc
4%
$400
Pfizer Inc
4%
$400
Gilead Sciences, Inc
3%
$300
PayPal Holdings Inc
3%
$300
General Motors Company
3%
$300
NIO Inc
3%
$300
First Solar, Inc
2%
$200
Enphase Energy, Inc
2%
$200
Shopify Inc
2%
$200
Vestas Wind Systems A/S
2%
$200
MercadoLibre, Inc
1%
$100
Johnson Controls International plc
1%
$100
Square, Inc
1%
$100
Rivian
1%
$100
Coin
Percentage
Total Invested
Bitcoin
20%
$2000
Ethereum
20%
$2000
Binance Coin
10%
$1000
Litecoin
10%
$1000
Solana
10%
$1000
Polkadot
10%
$1000
Ripple
10%
$1000
Cardano
10%
$1000
The suggested stocks are rather expected; higher investments in stable stocks and a lower investment into stocks with more fluctuations. The cryptocurrency investments are slightly more interesting, however, as, of the 1000+ coins currently on the market, it’s given me a short list of eight to invest in.
The Experiment
The first week
The experiment started off on unsteady legs with stocks ending with a profit of $159 and cryptocurrencies making a loss of $64 after the first day. Five of the eight cryptocurrencies invested in made a loss, with Binance Coin performing the worst, with our $956 investment suffering a $44 decrease.
Stocks increased throughout the week but decreased right at the end ($25 lower compared to the previous day), making the final weekly total $10,220. This is a $220 increase from the initial investment, a solid start for our experiment.
Our crypto investment did not perform nearly as well in the first week, with only threedays ending in a profit from the initial $10k investment. The fourth day was the worst of our whole experiment, with an ending total of $9,741. Only two of the coins invested turned a profit on that day, with Ethereum making a loss of $114 from the initial investment. Our week ended on a slightly more positive note with a final total of $10,021, a $21 increase from the initial investment.
The second week
During the second week,the total reached $10,643 by the end of the second day. This is $423 more than the total at the end of week one. However, this high was short-lived as the final value decreased for the remainder of the week, ending on $10,492. Whilst $272 more than the final value of the first week, it’s $151 less than the second day’s total.
After a shaky beginning, our cryptocurrency investment far outperformed our stocks investment in the second week, peaking at $11,118 on the fourth day. This then decreased on the fifth and final day, making the final value of the week $10,987, a $967 increase from the first week.
The third week
The start of the third week saw more decreases for our stocks investments. Nine of our 23 investments decreased on the second and third day. The latter half of the week performed better, increasing to $10,559 in total by the final day.
Our cryptocurrency investment performed similarly, with a decrease at the start of the week and an increase towards the end. The final value dropped to $10,609 on the fourth day, then increased dramatically to $10,974 by the end of the fifth. The final value of the week was $11,402, a $415 increase from week two.
The final week
The final week of our stock investments was a disappointment with the overall value decreasing slightly for a final figure of $10,587. This is an overall increase of $587 from our initial investment, which is an overall ROI of 6%.
On the first day of the final week, our crypto investments increased by $314 to $11,719 in total, this is the highest end of day total we reached in our experiment. This was the high point, however, as we decreased throughout the rest of the week, ending with a final total of $11,359, a 14% ROI.
Overall Performance
Stocks
Whilst we ended up turning a profit from our stock investments, there were ten investments which made a loss from the initial investment, almost 45% of investments made. The worst-performing stock was Pfizer inc. which decreased from the third week and ended up with an ROI of -10%. This was after the company announced they were discontinuing the development of the type 2 diabetes and obesity candidate lotiglipron over safety concerns.
Rivian proved the best-performing stock, with an ROI of 88%, initially priced at $14.03 per stock it increased to $25.51 over the month. This is after the company announced that Q2 2023 was the best financial quarter in the company’s history.
Cryptocurrency
On the other hand, we had much more luck with our crypto investments, with only one of the investments returning a loss, making up 13% of the initial investment. This was Ripple (XRP), there are several reasons for this, one being that the transaction volume of XRP is down 90%.
The coin with the highest ROI is Solana (SOL) with an ROI of 39%, which is a $389 increase. SOL is considered a relatively stable coin with strong community backing, making it a good coin to invest in.
Hits or Misses?
Whilst it’s possible Bitcoin was suggested as one of the largest investments because it’s the biggest cryptocurrency. It was actually a great crypto to invest in as the price went from $26k to $30k, this was due to news that a new, safer, crypto exchange launched, receiving investments from Invesco and WisdomTree.
There is one stock we feel could have been missed from ChatGPT’s suggestions, this is Meta, the company who owns Facebook and Instagram. They’ve recently released a new app as part of Instagram called Threads, a Twitter competitor. It was released at the perfect time, after news that Twitter was limiting the number of Tweets its users could see.
This isn’t one of the stocks ChatGPT suggested investing in, so we wanted to see what could have happened had ChatGPT suggested investing in META stocks. Using historical data for the last month, we calculated that if we had invested $1,000, we would have $1,100 by the end of the experiment. This is more than we earned from the $1,000 we invested in Amazon and Apple stocks.
Methodology
We started by asking ChatGPT for stock market opportunities. Initially, it gave a generic answer of the types of industries which should be invested in and why. From these industries, we asked it to recommend specific companies from each. We then sent the list of all the suggested stocks back to it and asked for a weighting of a $10k investment.
We found that one of the stocks suggested, Waymo, is not a publicly traded business, we had to go back to ChatGPT and ask for it to remove this stock and add a new one. It was replaced by Johnson Controls International plc.
It was a much easier process to get answers about which cryptocurrencies to invest in. As ChatGPT gave us an initial list of coins, and when asked how much to invest in each it gave a general strategy for investing in cryptocurrency. 40-50% should come from Bitcoin and Ethereum combined and 10-20% for each of the remaining coins. We decided to put 20% into Bitcoin, 20% into Ethereum and 10% for the remaining coins.
TORONTO – Canada’s main stock index was higher in late-morning trading, helped by strength in energy stocks, while U.S. stock markets also moved up.
The S&P/TSX composite index was up 34.91 points at 23,736.98.
In New York, the Dow Jones industrial average was up 178.05 points at 41,800.13. The S&P 500 index was up 28.38 points at 5,661.47, while the Nasdaq composite was up 133.17 points at 17,725.30.
The Canadian dollar traded for 73.56 cents US compared with 73.57 cents US on Monday.
The November crude oil contract was up 68 cents at US$69.70 per barrel and the October natural gas contract was up three cents at US$2.40 per mmBTU.
The December gold contract was down US$7.80 at US$2,601.10 an ounce and the December copper contract was up a penny at US$4.28 a pound.
This report by The Canadian Press was first published Sept. 17, 2024.
TORONTO – Strength in the base metal and technology sectors helped Canada’s main stock index gain almost 100 points on Friday, while U.S. stock markets climbed to their best week of the year.
“It’s been almost a complete opposite or retracement of what we saw last week,” said Philip Petursson, chief investment strategist at IG Wealth Management.
In New York, the Dow Jones industrial average was up 297.01 points at 41,393.78. The S&P 500 index was up 30.26 points at 5,626.02, while the Nasdaq composite was up 114.30 points at 17,683.98.
The S&P/TSX composite index closed up 93.51 points at 23,568.65.
While last week saw a “healthy” pullback on weaker economic data, this week investors appeared to be buying the dip and hoping the central bank “comes to the rescue,” said Petursson.
Next week, the U.S. Federal Reserve is widely expected to cut its key interest rate for the first time in several years after it significantly hiked it to fight inflation.
But the magnitude of that first cut has been the subject of debate, and the market appears split on whether the cut will be a quarter of a percentage point or a larger half-point reduction.
Petursson thinks it’s clear the smaller cut is coming. Economic data recently hasn’t been great, but it hasn’t been that bad either, he said — and inflation may have come down significantly, but it’s not defeated just yet.
“I think they’re going to be very steady,” he said, with one small cut at each of their three decisions scheduled for the rest of 2024, and more into 2025.
“I don’t think there’s a sense of urgency on the part of the Fed that they have to do something immediately.
A larger cut could also send the wrong message to the markets, added Petursson: that the Fed made a mistake in waiting this long to cut, or that it’s seeing concerning signs in the economy.
It would also be “counter to what they’ve signaled,” he said.
More important than the cut — other than the new tone it sets — will be what Fed chair Jerome Powell has to say, according to Petursson.
“That’s going to be more important than the size of the cut itself,” he said.
In Canada, where the central bank has already cut three times, Petursson expects two more before the year is through.
“Here, the labour situation is worse than what we see in the United States,” he said.
The Canadian dollar traded for 73.61 cents US compared with 73.58 cents US on Thursday.
The October crude oil contract was down 32 cents at US$68.65 per barrel and the October natural gas contract was down five cents at US$2.31 per mmBTU.
The December gold contract was up US$30.10 at US$2,610.70 an ounce and the December copper contract was up four cents US$4.24 a pound.
— With files from The Associated Press
This report by The Canadian Press was first published Sept. 13, 2024.
TORONTO – Canada’s main stock index was down more than 200 points in late-morning trading, weighed down by losses in the technology, base metal and energy sectors, while U.S. stock markets also fell.
The S&P/TSX composite index was down 239.24 points at 22,749.04.
In New York, the Dow Jones industrial average was down 312.36 points at 40,443.39. The S&P 500 index was down 80.94 points at 5,422.47, while the Nasdaq composite was down 380.17 points at 16,747.49.
The Canadian dollar traded for 73.80 cents US compared with 74.00 cents US on Thursday.
The October crude oil contract was down US$1.07 at US$68.08 per barrel and the October natural gas contract was up less than a penny at US$2.26 per mmBTU.
The December gold contract was down US$2.10 at US$2,541.00 an ounce and the December copper contract was down four cents at US$4.10 a pound.
This report by The Canadian Press was first published Sept. 6, 2024.
