How to use ChatGPT for Investment Research
The complete guide for using generative AI as a tool for investment research
Table of Contents:
What is ChatGPT?
Use cases for ChatGPT
Limitations of ChatGPT
What is FinChat.io?
Use cases for FinChat.io
Features of FinChat.io
Conclusions
What is ChatGPT
Chances are, if you've kept up with recent tech trends, you've heard of ChatGPT. Chat Generative Pre-trained Transformer, more commonly known as ChatGPT, is a highly advanced large language model (LLM) fine-tuned specifically for conversational interactions. Released by OpenAI in November of 2022, ChatGPT is trained on vast tracts of text and can predict the next word in a sequence, making it sound almost human in its responses.
What makes ChatGPT unique amongst other chatbots, is its ability to answer follow-up questions, admit mistakes, and challenge incorrect premises. The platform quickly skyrocketed in popularity, and for good reason; ChatGPT can be used for various purposes, including answering questions, generating creative content, assisting in research, tutoring in various subjects, and even casual conversation.
Uses for ChatGPT in Investment Research
ChatGPT can be a great tool for investors to use to support their research process:
Information Synthesis
ChatGPT can quickly parse and summarize lengthy reports, like earnings call transcripts or annual publications. By uploading the report, analysts can get a concise overview of key information rather than wading through pages of data.
Trend Identification
Ask ChatGPT about patterns in specific industries or macroeconomic indicators, and it can provide insights, saving valuable research time.
Training and Conceptual Understanding
New to the investment arena? ChatGPT can explain complex topics, including interping financial metrics, learning the principles of asset allocation, or how global economic indicators can influence the market.
Scenario Analysis
By providing perspectives on potential outcomes, ChatGPT helps in understanding the diverse scenarios in which investments might play out.
Qualitative Analysis
From company culture insights to management evaluations, ChatGPT can offer qualitative assessments based on available information.
Limitations of Using ChatGPT for Investment Research
ChatGPT can be a great resource for investors, particularly retail investors early in their investment journey that may benefit from ChatGPT’s ability to educate on various topics and concepts.
However, ChatGPT’s greatest constraint is that it only has access to the data available at its most recent update, which was September of 2021. This means that it does not have access to real time data and cannot provide a response to queries about any recent events or new information.
This implies that in order for ChatGPT to summarize a quarterly report or transcript, the user must provide the chatbot with the specific documentation. It also means that company profiling, industry patterns, and historical financials, are only relevant up until the latest update in 2021. The implications of this constraint are vast for investors looking for current market trends or a company’s recent performance
Google has also released a conversational, generative AI platform, called Bard. Similar to ChatGPT, Bard may not be a reliable source when it comes to investment research. While Bard does have access to more recent information, it does not always provide the most recent information and often provides the wrong number or data. This is a critical flaw in the platform as the quality of the data becomes uncertain.ﾠ
The Better Way - What is FinChat?
FinChat.io is a generative AI tool trained to answer questions and carry conversations about public companies and investors. FinChat.io takes the technology of ChatGPT and applies it specifically to the finance industry to provide users with the real time data that ChatGPT cannot.
With FinChat's conversational interface, it’s like having your own personal investment research assistant saving you hours of work.
How FinChat is a Better Tool for Investment Research
FinChat has integrated data from Stratosphere.io - an investment research terminal specializing in fundamental data and company-specific key performance indicators (KPIs). This allows FinChat to bring real time data on 60,000+ public stocks globally to its users.
FinChat.io is trained to answer a variety of queries and prompts; Unlike ChatGPT, FinChat can summarize quarterly reports and earnings call transcripts from a single query, without having to provide the documentation. FinChat also provides company insights, macroeconomic and ETF activities, and even stock prices, all in real time so you know you are getting the most accurate information.
Additional Features of FinChat
FinChat.io does much more than summarizing reports and providing industry trends. Let’s use Apple Inc. as an example and run through some sample prompts to see what the platform is capable of.
Provide a summary of Microsoft Corporation's business model.
Provide EV/EBITDA for Microsoft Corporation.
Provide the historical net debt / EBITDA ratio for Microsoft Corporation.
How has Microsoft Corporation's stock performed?
What are the revenue estimates next year for Microsoft Corporation?
Who are Microsoft Corporation's industry peers?
Provide historical free cash flow per share growth figures for Microsoft Corporation.
Provide Microsoft Corporation's KPIs and revenue segments.
Not only does FinChat provide in-depth summaries for all queries, but also provides, where relevant, supporting graphs, charts, transcripts, and reports, in addition to providing data sources. As a bonus, FinChat also lists related questions for each prompt.
Conclusions
Both tools use generative AI to deliver information in a conversational manner. ChatGPT can be a great resource for novice investors looking to educate themselves on investing related topics. But, FinChat takes the capabilities of ChatGPT and steps it up a few notches - bringing in real time data, supporting visualizations, financial modelling and in-depth analysis. When it comes to accessing the needle moving data and and key insights required to make educated investment decisions, retail and professional investors alike should look to FinChat.io as their tool of choice for investment research.