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ChatGPT-4o: can it be useful for an investor? [Guide]

ChatGPT-4o: can it be useful for an investor? [Guide]

created Forex Club21 May 2024

Changes in the world have been rapidly accelerating for several quarters. Importantly, development artificial intelligence has accelerated over the last two decades. However, most of the time, the algorithmic revolution was hidden in better performing applications, recommendations, etc.

Thanks to the development of programs such as Chat GPT people could see in a tangible way how advanced algorithms work. The first versions of the solutions were already a shock for many. However, shortly after the debut, skeptics appeared who highlighted errors (especially in mathematics) or inaccuracies in the information provided by this type of devices. However, with each subsequent quarter, solutions began to appear that proved that progress was very fast. She recently made her debut ChatGPT-4o version, whose presentation went viral on social media. The possibilities presented by this chat model can be appreciated. But is it really better than previous versions? Is it an effective tool in the hands of an investor? Let's check!

ChatGPT-4o: AI and investor needs

First of all, the information that ChatGPT-4o has is newer than the usual 4. Secondly, it is easier for him to insert links to the sources from which he obtained the information. If you need a link to the company's latest quarterly report, you can feel free to ask ChatGPT for it, without having to search for the necessary information on your own. Sometimes it is worth asking for sources of interesting reports. Thanks to ChatGPT, we can learn, for example, about an interesting report about a company Allegro, which the chat found on a German website.

However, when it comes to drawing conclusions from financial reports, still the current model has problems with data analysis. For example, we have added a link to the company's report for Q2024 XNUMX Amazon. Then there was a request to provide the operating margin of the AWS segment in Q2023 2024 and XNUMX. ChatGPT quickly calculated:

00 inquiry chatgpt-4o

Source: OpenAI

This seems like a brilliant solution. Just paste the link and the analysis of financial results will be instantaneous. The problem, however, is that the data is false. Chat GPT took incorrect numbers, which meant that despite using the appropriate formula, the result was incorrect. Only after guidance did Chat calculate the correct data.

01 chatgpt 4

Source: OpenAI

The creators of the new chat model boast about the multimodality of ChatGPT-4o. It has the ability to generate not only text, but also images. The model has the ability to interpret visual data and provide answers.

We asked the chat to create a column chart describing the achieved operating margin in addition to the previously calculated indicator (already correct).

02 chat gpt 4o

Source: OpenAI

It is also possible to download the Python code that creates the mentioned chart. As you can see, nowadays if you use basic coding, you no longer need to write lines of code yourself.

We tried asking the chat to find companies with a specific business profile. Importantly, you can see what sources ChatGPT used to obtain the relevant information.

03 ai investing chat gpt

Source: OpenAI

The links are certainly very interesting. Unfortunately, the operating results reported by the company differed from reality. We had a long conversation with ChatGPT about the Coca-Cola company. Unfortunately, the chat wasn't able to tell us exactly which site it got the incorrect information from. So it is not yet a tool you can trust when analyzing financial statements.

04 open ai chatgpt

Source: OpenAI

A few shortcomings are…

However, it works well as a way to educate a beginner investor. It is worth noting that the model still makes simple interpretation errors. As an example, we will give our conversation on the topic ROE.

At the beginning, we asked how to calculate ROE. The chat had no problem explaining what the above-mentioned measure is and how to calculate it.

05 query chatgpt

Source: OpenAI

However, we decided to ask a trick question about the return on equity capital. The next question was whether a company can have a negative ROE and be profitable (our opinion: maybe). Chat-GPT4o had a different opinion at first:

06 chatgpt 4o

Source: OpenAI

Worth watching for the last sentence of the chat:

“The only time ROE can be negative is when net income is negative, which means the company has made losses.”

In our opinion, this information is inaccurate. After all, a company may have positive net profit and negative ROE due to negative equity. This is not a hypothetical example. McDonald's is an example of a company that had a period in its history when, despite net profits, it had a negative ROE.

It is worth noting that in section “possible misunderstandings” there is information that ROE may be negative when equity is negative. However, the model is still a bit lost in interpretation. Negative equity alone does not necessarily mean too much debt. They may be intentional financial engineering in which the company buys back its own shares because the ROI of such an investment is greater than the cost of external capital (in a situation of negative interest rates). This action increases the level of net profit per share, which may help the share price. McDonald's used this strategy.

07 ai trading

Source: OpenAI

As you can see, the chat rather misinterprets the possibility of a negative ROE with company profits. Chat-GPT4o knows that there may be a situation where profit and negative ROE occur at the same time, but in the summary the chat clearly states "The company cannot have positive net profits and negative ROE at the same time."

We decided to torment the chat about negative ROE. Another request concerned negative ROE and the example of a company with S & P 500, in which such a situation occurred. Chat-GPT correctly identified the company: McDonald's. However, he indicated the wrong years. This did not happen between 2015 and 2017, but continued from 2016 to now.

08 ai chat requests

Source: OpenAI

Evaluation of the new Chat-GPT4o

For investors, the new chat is certainly better interaction, but there is still a lot to improve. This especially applies to searching for key information in financial reports. For now, the fundamental investor is "condemned" to his own strength. However, one can imagine that in a few years such tools will be able to thoroughly analyze a quarterly report and specify the fragments that should be of interest to an investor.

What the new chat can help with is translating reports of foreign companies that do not publish them in English. This will allow you to invest in small companies from various countries, from Europe, through Asia, to Latin America. For those who like geographical diversification and investing on their own, Chat-GPT4o will certainly be helpful.

The impact of AI on the future

Despite the shortcomings, the chats indicated that in many areas people will not be needed in a few years. They can be a great example language schools, which will lose some customers due to the development of education and translation tools. Another industry that may be affected by the development of new chats will be Private Lessons. In the coming years, it is conceivable that students will be able to purchase a paid subscription where a virtual teacher will be able to calmly explain all issues. They will have trouble finding employment beginner programmers, journalists, analysts i office's workers and cashiers. With the development of AI, it will most likely accelerate automation development. This, in turn, can contribute to the automation of production and storage. This will also result in employment reductions "blue collar" (production workers or warehousemen). Automation may lead to the "reindustrialization of the West", but this will require cheap energy. Europe, with its "expensive energy" policy, is unlikely to be in the vanguard of automation-driven reindustrialization.

On the other hand, AI presents not only threats, but also opportunities. New analytical solutions will result in better inventory management, which will reduce product prices. Moreover, improving vehicle autonomy will contribute to reducing transport costs (on the other hand, a decline in employment in the transport sector is expected). Optimizing routes using artificial intelligence or advanced algorithms will contribute to faster and cheaper transport of goods. The increase in productivity should result in many companies improving their margins, which will contribute to higher profits. Therefore, another “great, generational bull market” may appear. This, in turn, may lead to even greater disproportions in wealth between the richest and the poorest.

Which ETF for AI development?

Of course, exposure to Chat-GPT4o can be gained through investments in Microsoft shares. The problem, however, is that this is not a type of company “pure player”. For this reason, by investing in the shares of this company, we will also gain exposure to, for example, the software market (the famous MS Office) or the cloud market. If you prefer to invest your funds in companies operating in the robotics and artificial intelligence market, there are many available ETFs. These include:

  • Global X Robotics & Artificial Intelligence ETF (BOTZ),
  • ARK Autonomous Technology & Robotics ETF (ARKQ),
  • iShares Robotics and Artificial Intelligence Multisector ETF (IRBO),
  • First Trust Nasdaq Artificial Intelligence and Robotics ETF (ROBT),
  • WisdomTree Artificial Intelligence UCITS ETF (WTAI).

Global X Robotics & Artificial Intelligence ETF (BOTZ)

The mentioned ETF gives exposure to companies that may benefit from the increase in the use of robotics and artificial intelligence. The industries in which the companies operate include industrial robotics, non-industrial robots, automation machines and autonomous cars. The mentioned ETF has exposure mainly to American (44%) and Japanese (34%) companies. The largest components of the ETF include: NVIDIA (9,4%), ABB (9,1%), Intuitive Surgical (8,2%). The product is very popular among investors, no wonder that the fund's assets under management amount to $2,8 billion. It is not a cheap product as the annual management cost is 0,68%. The average annual rate of return since the ETF was established (2016) is approximately 10,1%.

ARK Autonomous Technology & Robotics ETF (ARKQ)

The mentioned ETF invests in companies that may benefit from the development of artificial intelligence and automation of human work. The mentioned ETF invests in a really wide range of companies. The sectors include: transport automation, robotics, automation, 3D printing, energy storage, space exploration. Sounds very technological. However, it is worth looking a little deeper and seeing the top 5 most important companies included in the ETF. These are:

  • Tesla - 10,6%
  • Teradyne – 9,6%
  • Kratos – 9,1%
  • UIPatch – 6,9%
  • Iridium – 6,7%

The ETF itself was founded in 2014 and has since achieved an average annual rate of return of approximately 12,0%. This is a lot when you consider that the annual management fee is approximately 0,75% per year. Currently, the ETF has approximately $880 million in assets under management.

iShares Robotics and Artificial Intelligence Multisector ETF (IRBO)

This is a solution from the company Blackrock. The ETF also gives exposure to companies operating and beneficiary of the dynamic development of robotics, automation and artificial intelligence. This can be seen in the structure of assets, where the 5 largest items include companies such as:

  • Microstrategy – 2,5%
  • NVIDIA – 1,8%
  • ARM Holdings – 1,6%
  • Spotify – 1,5%
  • Matterport – 1,5%

As you can see, the structure of the 5 largest items is quite interesting. Spotify (an application for listening to music and podcasts) may be particularly surprising. In turn, Matterport is certainly an interesting company that wants to automate real estate management. In addition, it operates as a supplier of high-quality cameras (4K). The benchmark for IRBO is the NYSE FactSet Global Robotics and Artificial Intelligence index.

Forex brokers offering ETFs and stocks

How to invest in ChatGPT or artificial intelligence? Of course, the simplest option is to buy only shares, but for people who want to well diversify and balance their portfolio, investing in entire ETFs (including those mentioned above) will be a better choice. An increasing number of forex brokers have quite a rich offer of stocks, ETFs and CFDs for these instruments. For example on XTB Today, we can find over 3500 companies and 400 ETFs, a Saxo Bank as many as 19 shares and approximately 000 ETFs.

Broker xtb 2 saxo bank logo small etoro
Country Poland Denmark Cyprus
Number of exchanges on offer 16 exchanges 37 exchanges 21 exchanges
Number of shares in the offer approx. 3500 - shares
approx. 2000 - CFDs on stocks
19 - shares
8 - CFDs on stocks
3 - shares
The amount of ETF on offer approx. 400 - ETF
approx. 170 - CFDs on ETFs
3000 - ETF
675 - ETF CFDs
323 - ETF
Commission 0% commission up to EUR 100 turnover / month according to the price list 0% commission*
Min. Deposit PLN 0
(recommended min. PLN 2000 or USD 500, EUR)
PLN 0 / EUR 0 / USD 0 100 USD
Tool xStation SaxoTrader Pro
Saxo Trader Go
EToro platform

*Zero commission means no brokerage/transaction fee was charged during the activity. However, they may still incur general fees, such as currency conversion fees for deposits and effects in non-USD currencies, fees for fees, and (if applicable) inactivity fees. Market spread also applies, although this is not a "fee" charged by eToro.

76% of retail investor accounts lose money when trading CFDs with this provider. Consider whether you can afford the high risk of losing your money.

This article is for information only. It is not a recommendation and is not intended to encourage anyone to undertake any investment activities. Remember that every investment is risky. Do not invest money you cannot afford to lose.
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Forex Club
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