How can you use ChatGPT in investing? And should you even consider it?

How can you use ChatGPT in investing? And should you use ChatGPT at all? It is an interesting question. ChatGPT will give you anything you ask without a whiff of judgement on who you are, where you are or what you are asking.

So why not use it to give you stock picks? Well, we think it does not give you enough information to invest – you need to do your own due diligence. What’s more is that many algorithms can take a while to update, so new information or news that has come out of companies may not be reflected in them.

Nonetheless, there are some ways in which ChatGPT could be useful as a kind of first step in terms of due diligence.

How can you use ChatGPT in investing

Compile lists of stocks to look at further

If you are looking for stocks with a certain criteria, you might be able to ask ChatGPT for a list of those companies. The algorithm will often give you a paragraph or two on the company with a general overview including its industry, where its headquarters are and what it does. Ask for an elaboration on any of these points and the bot will be happy to oblige.

SWOT analysis

In our view, this is the best way to use ChatGPT in your investing journey.

A SWOT analysis is a strategic planning tool that helps a business identify its Strengths, Weaknesses, Opportunities, and Threats. It’s often used to evaluate both internal and external factors that can affect a company’s success.

Strengths are the internal attributes or resources that give the business an advantage over competitors. Examples include a strong brand reputation, a loyal customer base, specialised expertise, or efficient operations. Weaknesses are the internal factors that may hinder the business’s performance or limit its ability to compete effectively. Weaknesses could be things like poor customer service, outdated technology, lack of funding, or inefficient processes.

Opportunities are external factors or trends that the business could capitalise on to grow and improve. Opportunities could include emerging markets, changes in consumer behaviour, technological advancements, or industry growth. Threats are external factors that could pose risks to the business or harm its performance. Threats could include things like economic downturns, increased competition, changing regulations, or shifts in consumer preferences.

We experimented with asking ChatGPT to come up with a SWOT analysis for CBA.

Strengths: Market Leadership, Brand Recognition, Technological Innovation, Strong Financial Performance and Wide Service Range

Weaknesses: Regulatory Scruitany, High Operating Costs, Public Trust Issues and Dependency on the Australian Market

Opportunities: Expansion of Digital Services, Global Expansion, Sustainable Banking, Partnerships & Acquisitions.

Threats: Intense Competition, Economic Slowdown, Cybersecurity Risks, Regulatory and Compliance Changes.

We hope you can see that this is just a starting point – it is up to you to do further research on these points.

Identify risk

Similar to what we identified above, you could ask ChatGPT to come up with the risks facing the company. Of course, the risks the bot comes up with could be limited – we recommend reading a company’s annual report because there’ll always be a section of it where all the risks will be outlined.

Ask what something means

Google a word or a phase, and you’ll get a definition. But if you see a longer statement, you may only get news that tells you nothing about what it may mean for the company. ChatGPT may be AI-generated, but it is not trained by the company’s PR department so will likely come up with a neutral view.

ChatGPT can’t be the be all and end all

We know we’ve already said this, but we cannot stress it enough. Similar to Wikipedia, ChatGPT can only be a starting point to your investment analysis. It is no substitute for your own due diligence, let alone professional investment advice.

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