Artificial intelligence is coming for finance. Researchers are using ChatGPT to decipher Federal Reserve statements and to mine headlines for clues about where stocks are headed. JPMorgan Chase just launched an AI bot that generates trade signals from Fed statements.
While AI may soon do the work of Wall Street, it's unlikely to do any better for investors than the industry it seeks to replace. Most financial professionals who try to outsmart the market by parsing Fed statements or financial news - and who knows what else - have little to show for it. The vast majority of actively managed mutual funds consistently underperform their broad market benchmarks, and most hedge funds are no better. Investors are more likely to be better off with low-cost index funds that track broad markets.