NerdWallet's Smart Money Podcast
Some Investors Are Using AI to Make Decisions. Should You?
Apr 24, 2024
Investing writer Sam Taube discusses the role of AI in finance, including its limitations and benefits. They explore AI-powered funds, investment research, and stock selection. The Nerds break down the potential of AI-powered ETFs and mutual funds, cautioning on the need for human oversight. They also discuss AI's impact on investment strategies, portfolio management, and future developments in the industry.
08:19
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Quick takeaways
- AI can streamline investment research tasks, but struggles with complex calculations.
- AI-powered ETFs have shown mixed performance outcomes, caution and human oversight are essential.
Deep dives
The Benefits and Limitations of AI in Investing
Using artificial intelligence in investing can streamline tasks such as summarizing information from lengthy prospectuses or brainstorming investment ideas based on specific criteria, like environmentally friendly and dividend-paying companies. However, AI's limitations include its inability to handle complex calculations accurately, as evidenced by struggles in tasks requiring numerical precision. While AI-powered exchange-traded funds (ETFs) and mutual funds aim to replicate fund manager decisions using AI, their performance has not consistently outperformed traditional market benchmarks like the S&P 500.
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