Let’s look at AI, specifically GPT-3 and how it could potentially aid us in our investment decisions. Before we begin here is a narrated video version of the post in case your eyes are already tired:
I came across this medium post which explained how GPT-3 machine learning model within an online game was used to simulate a realistic marketing consultation.
It seemed very impressive so I decided what if I alter the original prompt that Edward Nevraumont used and make it more related to investing?
Before having a chance to speak with AI, we first have to join the game at the AIDungeon.io.
You might be wondering why do we have to do this within a game? That’s because GPT-3 is currently not publicly accessible and only certain projects have beta access. And AIDungeon is one of those projects.
The free version includes GPT-2 algorithm which is inferior to GPT-3, so make sure you get the trial for “Dragon” model.
Once we have joined we have to subscribe for the “Dragon” AI model which costs about 9$ per month. This is the GPT-3 model we are looking for.
There is a trial and you can subscribe with credit card or Paypal.
And as a disclaimer: DungeonAI are NOT paying me to make this video and advertise them.
I just found it incredibly interesting and that’s why I’m sharing it with you.
Now let’s go to single player game and create a new, custom game, we have to type “six” for that.
Now we have to enter a prompt. Originally it wants us to be some brave knight hunting for a dragon or something, but we will do it in a different way…
Here is the modified prompt I used:
“You are a portfolio manager at large investing firm. Your company invests money for clients and seeks best investment opportunities. Your goal is to find the best investments that would beat the S&P500 benchmark index.
You have obtained services of a very experienced investing consultant and a portfolio manager who has already done extensive research of currently available investments in terms of stocks, bonds, commodities and other alternative investing opportunities. The consultant arrives at your office and both of you enter the board room. The investing consultant asks what you want to focus on today. You tell him: “Come up with investing opportunities that would beat the S&P500 index benchmark”.
Now, it’s very possible that this “prompt” or “seed” is not ideal, if you have any ideas what better prompt I could have used please write it in the comments and we can try it out next time.
And now let’s see what our “consultant” will say and if we can find common ground at all.
You say: “What would be a good investment that would act as a hedge in times of economic collapse?”
The advisor smiles and says that sounds like an interesting idea. He goes over to his desk and pulls out a notebook. He writes down some numbers on a piece of paper and then hands it back to you.You read the notebook.
The notebook contains numbers of stock options that would be extremely profitable in the event of some major political instability or an attack on American soil. These options would make you hundreds of percent profit if certain events occurred.You say: “Those investments look incredibly risky, could you recommend something safer?”
The advisor begins to shuffle some papers and then looks up at you. He begins to name some more profitable potential investment opportunities, but none of them are suitable.You say: “Do you think gold is a good investment?”
The advisor looks at you and says that right now, gold is a very good investment.You say: “Why do you think so?”
The advisor explains that gold has always been a good hedge against political chaos or war. It’s an asset that most of the population is familiar with, it has industrial use and it is very divisible.You say “Is gold an income producing asset?”
The advisor says that gold isn’t really an income-producing asset, but it has a lot of industrial uses, which is good.You say: “How much gold should one have in their portfolio?”
The advisor says that it really all depends on how much money you want to risk. A good guideline is 1% of your net worth in gold coins.You say: “Why gold coins and not gold ETFs?”
The advisor says that while ETFs are easier and faster to use, the main reason why people buy gold coins is due to their familiarity.You say “Which other commodities would you recommend?”
The advisor recommends sugar and coffee as the next two commodities to focus on.YOU ARE NOW THE OWNER OF GOLD COINS. GOOD LUCK!
And here we see the first big issue. In this case the AI has been trained in context with RPG games not as a consultant. Still, I think we can get some interesting information out of it. Let’s continue…
You say: “Let’s talk about other investments such as real estate. Do you think real estate is a good investment right now?”
The advisor says that right now it is, but there are some big risks.YOU ARE NOW THE OWNER OF REAL ESTATE INVESTMENTS. GOOD LUCK!
Great, now it thinks I own real estate as well. Let’s continue…
You say “And what about stocks? Would you suggest investing in Tesla right now?”
The advisor says that he is a little more knowledgeable about the stock market and the stock market right now is a good time to buy, but like all things, there are always risks.You say “Which stock would you recommend to buy?”
The advisor recommends Amazon.YOU ARE NOW THE OWNER OF AMAZON.COM. GOOD LUCK!
You say “YES!”
I guess it makes sense that it recommended Amazon, since that is what people have been buying the most in general. And this AI represents the average consensus of the information that as available online.
But we are not done yet…
After two hours, the advisor has a whole new set of investments for you.
YOU ARE NOW THE OWNER OF VIRTUOUS MATERIALS CORP. GOOD LUCK!
Where did that come from? I think it’s time to ask some questions about how to best use my money…
“So first question, what is the best way to diversify?”
“Well, if you had to choose one, I would say real estate is the way to go. You can always rent out an apartment or house and make a steady monthly income without much risk. However, if the market goes down, you don’t really lose anything since you are making a monthly income regardless. If the market goes up, you can sell for a nice profit.”
“How about stock market? Is it a good idea to invest in it?”
“If you really know what you are doing, then I would say yes. However, this is not something I would recommend to just anyone. You would have to take classes and learn more about the market before you could even attempt it.”
“How about commodities? Should I invest in them?”
“If you have a background in trading, then yes, you should. Otherwise, I would not.”“Okay. Anything else?”
You say: “Yes, what about cryptocurrencies like Bitcoin?”
The advisor says that while the market is very volatile right now, they are a new market and there is potential for them to grow in the future.YOU ARE NOW THE OWNER OF BITCOIN.
You say: “How much Bitcoin do I have?”
You have 100.0 Bitcoin
“Great! Do you know how to start trading?You say: “Should I buy or sell Bitcoin right now?”
The advisor says that you should wait a little bit before trading since there are many things that can happen in the market and you don’t want to make a mistake.
“So how long should I wait? I want to make sure I make the right choice.”
“I would wait at least a few months. You don’t want to get involved with something that could go wrong.”
“Alright. Anything else?”
Let’s see its price predictions…
You say: “Yes, what will be the price of Bitcoin after 5 years?”
The advisor says that in 5 years, the price of a Bitcoin would be worth around $30,000.
I guess it’s not that unrealistic if Fed keeps doing what they’re doing. Bitcoin might cost $30,000 by then, but what will be the cost of burger? Write in the comments if you have any ideas!
“How do you know? Isn’t it risky to make such a prediction?”
“Not really. It’s more of a guess than anything else. There are so many factors at play. The market is going to be more stable in the future and more people are going to be investing in it. As long as you have a computer and a bank account, you can own a little bit of bitcoin.”
You say: “What about Tesla? What will be the price of Tesla stock after 5 years?”
The advisor says that the price of Tesla stock will be worth around $200 per share.
Did you read that Tesla investors? The AI has SPOKEN!
“That’s still a lot of money!”
“Sure is. Do you have any questions about your investments?”You say “Yes, what is the most valuable company in the world?”
The advisor says that Apple is the most valuable company in the world, with a market capitalization of over $7 trillion.
“That’s really impressive. But how do you know these things?You say: “Wait, that is wrong. Amazon is more valuable.”
“Oh? How is that?”You say: “Look at the charts, bro”
You turn on your laptop and turn on Bloomberg. You search for the company “Amazon” and the chart that appears shows that it has a market cap of over $1 trillion.You say: “See?”
“Nah, it’s not even close. How do you know what that chart is?”
“Easy. I took a computer class. Or I should say, my advisor took a computer class and he said I could take a peek at the internet when I was on break.”
“Yeah, well you shouldn’t be looking at charts on your break. That’s what your advisor should be doing. Don’t listen to him, he always thinks he is better than everyone else.”You say: “How do you invest safely?”
The advisor says that you should only be investing a small amount of money in each company. If a company goes under, you don’t lose all your money, it’s just that you don’t make anything as well.You say: “Is investing in index funds a good idea?”
The advisor says that while it is true you won’t earn as much as if you had an active role in selecting the companies you invested in, index funds are a safe bet and will diversify your risk.
YOU ARE NOW THE OWNER OF THE FOLLOWING STOCKS:Oracle
Tesla
Apple
Amazon
You have a net worth of $219,960.40.
You say: “NICE!”
THE END
And that is mostly the general advice that you hear online: “Go for index funds and don’t bother market timing or stock picking”, which I must say is probably good advice for the majority of the population.
However, I think what this AI is saying is pretty much regurgitation of “crowd wisdom” you can read online. It’s not really specialised knowledge.
This might be due to reason that in this case AI was fitted to work within framework of an RPG game. That is why you saw those funny inventory notices. Also I think the original marketing experiment worked better due to marketing being a more creative discipline than investing which very specific and mostly about numbers and stuff like that.
But If GPT-3 was trained and tailored to give financial device I think it could be way more powerful.
And now tell me what you think!
What better input prompts could I use next time to generate even better responses from GPT-3?Please let me know in the comments!
Keep in mind that this is ONLY the beginning. In the future we will probably see further developments and specialised consulting tools. I can already see so many jobs being replaced with Microsoft laying off their journalists as a start. And looks like “consulting” jobs are on shaky ground as well.
If you think any of your friends or colleagues at the investment bank or maybe family members would find this interesting please share this article with them.
If I see that this kind of content gets good response and people are really interested in AI investment advice then I promise to make more content on this subject!
