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Comment by crazygringo | Hacker News Reader

Applying something like ChatGPT to stock prices together with quarterly reports, industry research, and daily (minutely) news articles seems like a no-brainer -- I'm surprised this is the first time I've seen something like this mentioned.

And so I can't help but wonder if this would outperform the market significantly due to seeing more patterns and holding more information than any individual trader or even whole desk ever could... OR if its total lack of any actual reasoning/deductive capabilities makes this just a total non-starter here. Or maybe it might be useful for day trading but not any kind of longer-term investment?

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> Applying something like ChatGPT to stock prices together with quarterly reports, industry research, and daily (minutely) news articles seems like a no-brainer – I’m surprised this is the first time I’ve seen something like this mentioned.

Customized neural networks for stock prediction have been around for decades, and for obvious reasons its been a domain that’s attracted a lot of attention and energy. LLMs obviously have utility in automatically processing news and the narrative portion of reports, but I don’t know that they are particularly likely to be useful as the main prediction engine rather than a tool to process text into inputs for specialized trading models (I’d be surprised if there hasn’t already been AI news sentiment analysis, etc., being used to supply input for these models, even before ChatGPT was available.)

Any edges, though, in that field get eaten up quickly in the arms race.

> Applying something like ChatGPT (...) seems like a no-brainer

Why? It's famously bad at math after all. It can spit out quarterly reports and industry research back (so if analyst says "buy", ChagGPT will parrot that), but other than that it would - I think - work as a glorified sentiment analyser. Of course I may be wrong.

And we also need to remember that AI is used heavily in finances (and the best cutting edge methods are probably not published by the companies using them, since this is a zero sum game).

> Applying something like ChatGPT to stock prices together with quarterly reports, industry research, and daily (minutely) news articles seems like a no-brainer

It has been done many times. It turns you predicting the flip of a coin can be done with extremely high levels of accuracy using traditional methods.

Lol. It’s gonna confidently pick stocks that are just as likely to be good as bad. Same as a hedge fund manager.

You seem to assume that one can do better than random in that field... That's already debatable (or maybe not: wasn't it proven that hedge funds don't do better than rolling dice?)

Well, there's Warren Buffett's famous bet that the S&P 500 (or an index fund tracking it) would outperform hedge funds after all their fees over the course of a decade, which he won in a landslide: https://www.cnbc.com/2022/10/03/billionaire-warren-buffett-s... . There's also something in there about almost all active funds underperforming (84% after 5 years, 90% after 10 years) and being worse than luck.

Oh, that's interesting. So the best is just to diversify and hope for economical growth, I guess?

Basically. Because if you think you can figure out a better investment strategy than Warren Buffett, well, good luck, you're gonna need it. Monkeys, cats, and small children often pick stocks better than the pros: https://prosperitythinkers.com/personal-finance/three-monkey... . In fact, here's the Guinness World Record for a chimpanzee who was the 22nd most successful money manager in America by throwing darts at a list of companies: https://www.guinnessworldrecords.com/world-records/most-succ... .

I believe there's a lot of machine learning already done in finance. not sure how a llm would help?

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