The author also suggests that in the age of AI, creativity will be a uniquely human trait that will produce above-average results. While AI can use historical data to predict future results, it cannot predict long-term economic themes or societal trends. Therefore, the ability to foresee these trends will be a valuable source of alpha. Despite the advances in technology, the author emphasizes that the fundamentals of good investing remain the same: knowing your investment objectives, having a clear investment time horizon, and understanding the worst-case scenario.
Key takeaways:
- The article discusses the potential of AI in leveling the playing field between institutional and retail investors. AI's ability to process and analyze large amounts of data quickly and execute programmed strategies could reduce the edge for institutional investors.
- Despite the democratization of information, retail investors still underperform. However, with the emergence of AI, startups may now have the ability to deploy the equivalent of a large team of analysts to help make investments decisions for their users, with minimal actual analyst headcount.
- AI investment apps and platforms could provide retail investors with capabilities they didn’t have before, potentially encouraging them to re-engage with the markets. Over 80% of investors opt for AI managed portfolios, rather than DIY options.
- Despite the potential of AI, the article suggests that creativity, a uniquely human trait, will still be a valuable source of alpha in the age of AI. The ability to predict long-term economic themes and societal trends will remain crucial.