I’m not sure if you’ve heard about all the unidentified balloons floating over the U.S. listening to everything we say, but it really has Alexa and Siri upset – they think that’s their job!
On a more serious note, AI is more than those devices that listen to us in our homes. AI is making inroads into the investment management world. AI-powered portfolio management tools use machine learning algorithms to analyze historical data, identify patterns, and predict future trends. They can also consider a wide range of data sources, such as market news, social media sentiment, and economic indicators, which are difficult to analyze manually. Based on those insights, AI systems can make recommendations about which assets to invest in, how much to invest, and when to buy and sell. This can help investment managers to make more informed decisions and to optimize their portfolios for maximum returns while minimizing risks. Overall, AI is transforming the investment landscape, enabling investment managers to make more accurate and profitable decisions for their clients.
However, it is important to note that while AI can assist with decision-making, it is not a replacement for human expertise. Investment managers still need to understand the fundamentals of financial markets and the behavior of individual assets, and to be able to interpret and act on the insights provided by AI systems. They must also be able to manage the risks associated with investments and make sound decisions in the face of uncertainty. As such, the use of AI in investment portfolio management is most effective when combined with human expertise, allowing investment managers to make the best decisions for their clients.
Full disclosure – other than the joke at the beginning of the first paragraph, everything above was written by an artificial intelligence engine called ChatGPT. I just typed in a description of what I wanted to write about and in about five seconds it wrote two paragraphs. This probably elicits a “Yikes!” or “Hooray!” depending on your point of view.
In our investment world, AI has been helping us for years, from using trading algorithms to improve executions to more recently developed software that analyzes a portfolio for tax harvesting strategies that take into account the intended exposures. The companies we invest in will also be using AI to improve their manufacturing, distribution, and financial processes to become more efficient. So, whether we like it or not, AI is going impact our companies and our portfolios for decades to come.
Every year we host an event where we look back at the markets and look forward to the new year. We call it Perspectives. This year we are changing it up and bringing in a panel of business leaders for a discussion on Artificial Intelligence. We have Eric Sprunk, the former COO of Nike, Rachel Foltz, Managing Director of Endeavour Capital, and Kellan Carter, Founder of Fuse Ventures. The event will begin at 5:00 PM on March 23rd at the Portland Art Museum. Please join us. To RSVP, please email Nick Herrick at nherrick@beckercap.com.