We have talked so much about diversifying investment portfolios and their importance. We are sure you have diversified your investment portfolio by now. But have you considered diversifying the tools and technology you use for investing? A small percentage of investors are doing it and making
the most of it. Industry-wise changes are happening in the financial space, and AI investment is leading the changes. Today, we look at AI as a tool for investing.
Artificial Intelligence – The Rise
Codes and algorithms are not new for investors. Computers have been used to help investors and traders with investment strategies for years. However, with the introduction of AI, things have advanced at a faster pace. But what does AI do differently for trade?
It is AI’s adaptability when exposed to new data. AI is not a new technology, it has been around for a while, but conditions for its use are optimal now – at least more than they were in the past. We have computers today with super high processing abilities. The cost of processing data has decreased
considerably. There has also been an increase in accessible data availability. On top of all this, the cost associated with storing data has fallen sharply. Hence, even smaller companies can create software using AI that brings investment wisdom even to investors who are new to investing.
What does AI bring to the table for investors?
There is a lot that companies looking to create smart investing platforms can do using artificial intelligence. Investors should look for highly advanced platforms as it makes their investing journey super simple.
One of the used cases of AI in investment is data monitoring – they are an ideal tool for data monitoring. It can monitor all types of data – structured and unstructured. There is data that you may not have time to monitor, data that is too complicated for monitoring, or that has to be monitored 24*7 as it is highly impactful – AI can do all that for you.
This feature of AI alone can help you make a more informed decision. It can provide up-to-date information on product movement, analysis of weather forecasts, and outline search engine topics, then use this information to determine a profitable investing strategy for every investor.
AI-based investing is also capable of analyzing a company’s reports and press releases for words that point to a stock moving south or making new heights. AI is being used with machine learning to predict the overall market sentiments.
AI in Hedge Fund
Till now, we have talked about AI from an individual investor perspective. But to give you an idea of its power, it is essential to talk AI and investment from a broader perspective. Let us look at how AI has shaped hedge funds.
For those who don’t know about it, let us understand hedge funds. It is a private investment partnership and fund pool that uses many complex strategies and invests (or trades) in different investment products – listed and unlisted derivatives.
A recent study conducted between 2006 and 2021 concluded that AI-based hedge funds have generated an average return of about 0.75% per month v/s 0.25% per month for human-guided hedge funds.
Do you know the most interesting part of the study? The combined funds with a medium level of human involvement and automation performed the worst among the different hedge fund strategies.
Will AI replace humans?
Whatever we discussed so far, it seems that AI is superior to humans. However, that is not the case. As Mike Chen rightly put it, “It is not a machine versus man, it’s man plus machine.”
AI is good. However, it is not better than humans in many areas. There are areas where we humans excel and will continue to do so. AI can multitask at levels the human brain doesn’t have the ability to. Also, it can gather data immeasurably faster.
This is how you need to look at the picture – who is giving power to machines? Engineers and data scientists are building this AI infrastructure. They set the parameters for the AI system, and the machine can change them through deep learning. Deep learning is the reason AI stands out to
A machine can learn – an intelligent AI-based machine can manage your risks as an investor by surveying the path ahead for looming threats and burgeoning opportunities, allowing
investors to respond quickly.
Working with AI
For investors, artificial intelligence can save time and also money. The fee will be high if you decide to invest in direct equity and hire financial advisors. For most investors, the return on investment (ROI) is low. Hence, financial advisors are not a viable option for them.
Jarvis Invest gives you the freedom to use your time as you want to – you don’t have to invest hours on analysis and worry about monitoring your portfolio. AI-based Jarvis does it all for you and more efficiently. It also comes with a risk management system that notifies you if any of your stocks have a red alert.
Do check out the app if you have not used the app so far.