Digital Event Horizon
As the popularity of AI-driven stock market strategies grows, so do concerns about the risks associated with relying on generic models like ChatGPT or Gemini for investment advice. Experts warn that individual investors must be cautious when using these tools, understanding both their benefits and limitations.
At least 1 in 10 retail investors now use AI chatbots like ChatGPT or Google's Gemini for stock-picking advice. 13% of individual investors already use AI tools to select stocks, and about half say they would consider using these tools for portfolio decisions. Retail investors from around the world are turning to AI-driven strategies to inform their investment choices globally. Individuals should approach AI chatbots in finance with a critical eye, understanding their limitations and using them judiciously to minimize risks.
The world of finance has undergone a significant transformation in recent years, as technology continues to play an increasingly important role in the way individuals invest their money. One of the most notable developments is the growing trend of using Artificial Intelligence (AI) chatbots and other digital tools to inform investment decisions. According to a Reuters report, at least 1 in 10 retail investors now consult AI chatbots like ChatGPT or Google's Gemini for stock-picking advice, marking a significant shift in the way people approach investing.
A survey conducted by trading platform eToro found that 13% of individual investors already use AI tools to select stocks, while about half say they would consider using these tools for portfolio decisions. This trend is not limited to the United States; it has gained popularity globally, with retail investors from around the world turning to AI-driven strategies to inform their investment choices.
One notable example is Jeremy Leung, a former analyst at UBS who now relies on ChatGPT for his multi-asset portfolio. Leung acknowledged that while AI models can be brilliant, they also come with risks. "The risk comes when people treat generic models like ChatGPT or Gemini as crystal balls," he warned Reuters. "General AI models can misquote figures and dates, lean too hard on a pre-established narrative, and overly rely on past price action to attempt to predict the future."
This concern is not limited to individual investors; experts also warn about the potential risks of relying on AI-driven strategies in general. "If people get comfortable investing using AI and they're making money, they may not be able to manage in a crisis or downturn," Leung noted. The concern extends beyond individual losses to whether retail investors using AI tools understand risk management or have strategies for when markets turn bearish.
To mitigate these risks, some experts recommend creating specific prompts tailored to the investor's needs and goals. Leung himself uses custom prompts like "assume you're a short analyst, what is the short thesis for this stock?" or "use only credible sources, such as SEC filings." By doing so, investors can harness the potential of AI while avoiding its pitfalls.
The rise of ChatGPT and other AI chatbots has also sparked debate about the future of financial analysis. While some see these tools as democratizing investment opportunities, others caution that they may lead to a lack of understanding among retail investors about risk management and market dynamics.
According to Dan Moczulski, UK managing director at eToro, "AI models can be brilliant." However, he also emphasized the importance of treating these tools with caution. "The hazards of AI stock picking are very real," Moczulski warned. "We need to make sure people understand that generic models like ChatGPT or Gemini are not foolproof and should be used responsibly."
As the use of AI chatbots in finance continues to grow, it is essential for retail investors to approach these tools with a critical eye. By understanding their limitations and using them judiciously, individuals can minimize their risks and maximize their potential returns.
Related Information:
https://www.digitaleventhorizon.com/articles/The-Rise-of-AI-Driven-Stock-Market-Strategies-A-Growing-Concern-for-Retail-Investors-deh.shtml
https://arstechnica.com/information-technology/2025/09/experts-urge-caution-about-using-chatgpt-to-pick-stocks/
Published: Thu Sep 25 14:49:43 2025 by llama3.2 3B Q4_K_M
