A.I. bull at the world’s biggest hedge fund warns about using chatbots to make stock picks: ‘It’s a hopeless path’ – Fortune
Greg Jensen, co-chief information officer at Bridgewater Associates—the world’s largest hedge fund—is undeniably an A.I. bull, having been an early investor in ChatGPT creator OpenAI and poured funding into A.I. startup Anthropic.
He isn’t alone—plenty of investors have proven in recent months that they’re willing to throw money at artificial intelligence, prompting concerns about the hype as well as declarations that the “Gold Rush” is a huge opportunity for traders.
While Jensen is a fan of the tech, he warned market participants against using large language models (LLMs) like ChatGPT to trade equities.
“If somebody’s going to use large language models to pick stocks, that’s hopeless, that is a hopeless path,” he said in the latest episode of Bloomberg’s Odd Lots podcast, adding that the technology would be “awful” at pinpointing major turning points in the macroeconomic environment.
That doesn’t mean he believes there isn’t a place for A.I. in wealth management.
Bridgewater, the hedge fund founded by billionaire investor Ray Dalio in the 1970s, has long been utilizing machine learning. Jensen is one of the firm’s three co-CIOs, a role which Dalio himself stepped down from last year as he ceded control of the company.
Since ChatGPT became a public phenomenon at the end of 2022, some users have experimented with getting the technology to pick stocks—sometimes with promising results. However, Jensen said Bridgewater takes a more complex approach than this.
“If you use large language models to create theories, and you use other techniques to judge those theories and you iterate between them, [you can] create a sort of artificial reasoner,” he told the Odd Lots podcast, noting that Bridgewater was currently deploying several forms of A.I. to harness the strengths of various different models.
“That’s really what we’re focused on, combining large language models that are bad at precision with statistical models that are good at being precise about the past, but terrible about the future,” he said.
Ultimately, the company was starting to build an ecosystem that Jensen said would eventually be able to achieve “the types of things that Bridgewater analysts combined with our stress-testing process…can do”—but he said the firm would be able to complete these tasks at a much bigger scale because “all of a sudden you have…millions of [associates] at once.”
With billions being invested in the development of cutting-edge A.I. technology, many are speculating about how it will disrupt our day-to-day lives—leading to predictions of jobs being lost to machines, calls for greater A.I. governance, and forecasts that the world will soon see the dawn of a new A.I. era.
When it came to the future of work—and whether superintelligent computers would displace investors—Jensen acknowledged that “it’s definitely true that it’s going to change the roles that investment associates play.”
“People should expect, at Bridgewater and just generally, things are changing quickly and that really requires people to be capable of playing whatever role is necessary,” he said. “What I’ve found, and certainly the people in the lab, is you want people who are curious about these new technologies. You want to utilize them. And that’s going to be really part of the future of work. I think it’s going to be very hard in any knowledge industry to not utilize these [technologies].”
© 2023 Fortune Media IP Limited. All Rights Reserved. Use of this site constitutes acceptance of our Terms of Use and Privacy Policy | CA Notice at Collection and Privacy Notice | Do Not Sell/Share My Personal Information | Ad Choices
FORTUNE is a trademark of Fortune Media IP Limited, registered in the U.S. and other countries. FORTUNE may receive compensation for some links to products and services on this website. Offers may be subject to change without notice.
S&P Index data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Terms & Conditions. Powered and implemented by Interactive Data Managed Solutions.
