Can ChatGPT assist in picking stocks?

18 Pages Posted: 10 Nov 2023 Last revised: 29 Nov 2023

See all articles by Matthias Pelster

Matthias Pelster

University of Duisburg-Essen - Mercator School of Management; european center for financial services (ecfs)

Joel Val

University of Duisburg-Essen - Mercator School of Management

Date Written: October 13, 2023

Abstract

This paper studies whether ChatGPT-4 with access to the internet is able to provide valuable investment advice and evaluate financial information in a timely manner. Using a live experiment, we find a positive correlation between ChatGPT-4 ratings and future earnings announcements and stock returns. We find evidence that ChatGPT-4 adjusts ratings in response to earnings surprises and news events information in a timely manner. An investment strategy based on "attractiveness ratings" by ChatGPT-4 yields positive returns.

Keywords: information processing, artificial intelligence (AI), ChatGPT

JEL Classification: G12, G14, G17

Suggested Citation

Pelster, Matthias and Val, Joel, Can ChatGPT assist in picking stocks? (October 13, 2023). Finance Research Letters, 104786, Available at SSRN: https://ssrn.com/abstract=4602452 or http://dx.doi.org/10.2139/ssrn.4602452

Matthias Pelster (Contact Author)

University of Duisburg-Essen - Mercator School of Management ( email )

Lotharstraße 65
Duisburg, Nordrhein-Westfalen 47057
Germany

european center for financial services (ecfs) ( email )

Lotharstraße 65
Duisburg, 47057
Germany

Joel Val

University of Duisburg-Essen - Mercator School of Management ( email )

Lotharstraße 65
Duisburg, Nordrhein-Westfalen 47057
Germany

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