Here are some fantastic tips from Finimize analyst Reda Farran, CFA. TLDR on the 6 ways to use ChatGPT to analyze a stock:
1) Ask ChatGPT to explain the business model of a company and ask follow-up questions.
Ask not just "what" but also "how".
2) Ask ChatGPT to perform a SWOT analysis.
Use that as a starting point and don't hesitate to drill down into the details.
3) Ask ChatGPT to summarize a company's earnings report calls.
Add the link in the prompt and ask for the top 10 key takeaways.
4) Ask ChatGPT to evaluate a company's ESG credentials.
But don't forget to double check the information.
5) Ask ChatGPT to generate code to backtest buy and sell signals.
From testing the performance of different technical indicators to analyzing past patters, ChatGPT can allow you to quickly test your hypothesis.
6) Ask ChatGPT to identify key risks to your investment.
Again, you might want to ask "how" and dig deeper into the details.
Now, here are some important caveats:
- ChatGPT won't allow you to uncover hidden gems.
- It won't allow you to generate alpha directly.
- You WON’T become a superstar analyst just by using it.
- BUT it does allow you to aggregate information extremely quickly.
- Which will not only allow you to explore more ideas (you'll get a first, big-picture idea more quickly, which will allow you to then decide whether it's worth pursuing or not).
- But also to spend less time on google, and more time thinking about the implications of what you read.
So use ChatGPT as a starting point, but don't expect it to write your investment thesis.
A well-informed and critical mindset is still required for that.
In fact, it is just becoming more valuable than ever.