Can AI Play a Role in Choosing Investments?
Artificial intelligence or AI is one of the hottest topics of the decade. Not a day goes by where you don’t see the effects of AI. This month, the researchers who developed “machine learning,” the basis for AI, were awarded the Nobel Prize. If AI can take vast amounts of information and distill it to answer questions about health care, enhance Web-based searches, and correct grammar, can it help better predict movements and trends in the financial markets? And can that help improve the performance of your portfolio?
In machine learning, a computer gains knowledge through observation and trial and error, much the way humans learn. However, AI allows the system to review a multitude of information, obtain insights, and summarize potential actions based on that knowledge in incredibly quick timeframes.
For example, AI is essential for “high-frequency trading,” used by large institutional investors to instantaneously analyze multiple markets and transaction orders, and actively make trades in a fraction of a second.
Some companies utilize “roboadvisors,” which are AI-powered programs to create investment recommendations based on algorithms created and constantly modified by the computer.
Investment Decisions Using AI or Investing in AI?
Technology has enabled not only AI, but the availability of real-time market data, analysis, and recommendations. Overall, it has made many types of investments quickly accessible to almost any investor. But slow down there! Fast is not always best. That often results in impulse investing or making emotionally based decisions.
We encourage an investment strategy that is based on longer-term needs and objectives. Don’t fund your retirement portfolio with impulse investments, based on what happened in the stock market on this day.
At Isakov Planning Group, we appreciate clients who are future-thinking and are asking questions about new technologies like AI. We can answer questions about AI-related companies and investments. We start by taking the opportunity to understand your short- and long-term financial goals and investment needs. We need to know what your dream retirement looks like, and what financial issues concern you today.
Our financial advisors will create a customized portfolio (maybe even including AI company investments) that aims to meet your specific financial goals. Contact us today for a free, no-obligation consultation.