AI Portfolio Competition: ChatGPT vs Google Bard
Can AI can outperform the S&P500 & which model will perform better?
Dear Sunday Investors:
Happy Sunday & welcome back to the 31st edition of The Sunday Investor! Over the last few months, I am sure everyone has heard the same words over and over again in the investing/business world, artificial intelligence. Recently, Nvidia stole business headlines by reaching the super-exclusive $1 trillion club for the first time as it rocketed over 30% on quarterly earnings. With AI being showcased across the world these last few months, it got me thinking into writing this article to see whether or not AI can invest better than a conventional investor. Or even if AI outperform the S&P500? If you wondering the replies to these questions, keep reading below:
Top News Articles
Just 5 stocks including Nvidia account for 96% of the S&P 500’s gains this year - Yahoo Finance
The inflation rate barely budged last month, dropping to 4.9% year-over-year from 5% in March, according to Labor Bureau data. - CNBC
Mortgage rates are climbing again to almost 7%, raising the cost of a home loan to its highest level in 2023 - CBS News
The SEC unveiled a barrage of charges against two of the world's largest crypto exchanges — Coinbase and Binance — kicking off a legal battle that will help define the future of cryptocurrencies. - CNBC
Saudi Arabia decides to cut oil output, but worldwide demand concerns continue to steal the spotlight and keep prices fairly stagnant - Reuters
Recent Markets TLDR
AI takes center-stage carrying the S&P500 on it’s back rising the last few months
Inflation is slightly dropping, but not over yet
SEC targets top crypto exchanges with no clear crypto legislation in sight
Oil prices stagnate even with Saudi Arabia’s decision to cut output
It is currently the most unaffordable housing market of our lifetime
ChatGPT and Bard continue improving at a scary-fast rate
The AI Investing Experiment
Let’s get to it! I have seen multiple different variations of investors utilizing AI to help research and even create different portfolios for them. Each experiment is dependent on what exactly you ask the AI to do for you, while being as specific as possible. For the purposes of this experiment, below is the prompt I used which asks both ChatGPT and Google Bard to create a portfolio of 25 stocks (5+ sectors and 5+ small cap stocks) with the goal of having the highest returns by 12/31/2023. ChatGPT was asked using a plug-in called BoolioInvest on the latest GPT-4 model, while Google Bard was directly asked on its latest model with no plug-ins (as no similar plug-ins exist on Bard).
ChatGPT Prompt:
Google Bard Prompt:
And drumroll…
ChatGPT Portfolio Reply:
ChatGPT Reply: Here's a proposed portfolio, with 25 stocks spread across various sectors, each representing 5% of the total portfolio. I've also included 5 small-cap stocks as per your request.
Please note that this is a hypothetical portfolio and it's always important to do your own research and consider your own risk tolerance when investing.
Technology:
Microsoft Corporation (MSFT, US)
NVIDIA Corporation (NVDA, US)
Taiwan Semiconductor Manufacturing Company (TSM, TW)
ASML Holding (ASML, NL)
StoneCo Ltd. (STNE, BR) - Small Cap
Healthcare:
Johnson & Johnson (JNJ, US)
Novartis AG (NOVN, CH)
Moderna, Inc. (MRNA, US)
CSL Limited (CSL, AU)
Inari Medical, Inc. (NARI, US) - Small Cap
Consumer Discretionary:
Amazon.com, Inc. (AMZN, US)
LVMH Moët Hennessy Louis Vuitton SE (MC, FR)
Tesla, Inc. (TSLA, US)
Sony Group Corporation (6758, JP)
Purple Innovation, Inc. (PRPL, US) - Small Cap
Financials:
JPMorgan Chase & Co. (JPM, US)
Berkshire Hathaway Inc. (BRK.B, US)
Banco Santander, S.A. (SAN, ES)
HDFC Bank Limited (HDB, IN)
Lemonade, Inc. (LMND, US) - Small Cap
Industrials:
The Boeing Company (BA, US)
General Electric (GE, US)
Honeywell International Inc. (HON, US)
3M Company (MMM, US)
Plug Power Inc. (PLUG, US) - Small Cap
The selection of these stocks is based on a variety of factors:
Historical Performance: These stocks have shown strong historical performance, with consistent growth over the years.
Market Leadership: Many of these companies are leaders in their respective sectors, which often translates to more stable returns.
Innovation and Future Potential: Companies like NVIDIA, Moderna, and Tesla are at the forefront of technological innovation, which could lead to significant growth in the future.
Diversification: This portfolio is diversified across several sectors and geographical regions, which can help mitigate risk.
Small Cap Potential: The small-cap stocks included have shown promising growth and could provide higher returns, albeit with higher risk.
Please note that while this portfolio is designed with a balance of growth and stability in mind, all investments carry risk and past performance is not indicative of future results. It's also important to regularly review and adjust your portfolio based on changes in the market and your personal financial situation.
Google Bard Portfolio Reply:
Google Bard Reply: Sure, here is a diversified portfolio of 25 stocks that I would recommend for the competition:
Sector | Stock | Weight
Technology | Apple | 4%
Technology | Microsoft | 4%
Technology | Amazon | 4%
Technology | Alphabet | 4%
Technology | Tesla | 4%
Financials | Bank of America | 4%
Financials | Wells Fargo | 4%
Financials | JPMorgan Chase | 4%
Healthcare | Johnson & Johnson | 4%
Healthcare | Pfizer | 4%
Healthcare | Merck | 4%
Healthcare | Abbott Labs | 4%
Consumer Discretionary | Nike | 4%
Consumer Discretionary | Walmart | 4%
Consumer Discretionary | McDonald's | 4%
Consumer Discretionary | Coca-Cola | 4%
Industrials | Boeing | 4%
Industrials | Caterpillar | 4%
Industrials | UnitedHealth Group | 4%
Utilities | Dominion Energy | 4%
Small Cap | Roku | 4%
Small Cap | Square | 4%
Small Cap | Shopify | 4%
Small Cap | Zillow | 4%
Small Cap | Pinterest | 4%
I chose these stocks because they are all well-established companies with strong track records of profitability and growth. They also represent a diverse range of industries, which will help to reduce risk.
I included 5 small cap stocks in the portfolio because they have the potential for higher growth than large cap stocks.
I believe that this portfolio has the potential to outperform ChatGPT's portfolio over the next year. However, it is important to remember that there is no guarantee of success in the stock market. The best way to protect your investment is to diversify your portfolio and invest for the long term.
How Can You Follow This Competition?
To follow this experiment, I have created two portfolios on the platform M1 Finance, where you can follow or create your own portfolio of stocks/funds using fractionalized shares as well as track overall portfolio performance until the end of this year.
ChatGPT Portfolio Tracker: https://m1.finance/Cq1lTMzxfOY5
Google Bard Portfolio Tracker: https://m1.finance/7fRSw2U3rc93
It will be very interesting to see who wins this competition between ChatGPT or Google Bard the end of 2023. Keep in mind that both Google Bard and ChatGPT are not financial advisors and this is an experiment, so both portfolios could easily over or underperform the S&P500, which I will use as our comparative index for performance at the end the year! For this experiment, I will be placing an equal investment in both portfolios and will keep you all posted with the results.
Next Article
Thanks again for taking the time out of your day to read the Sunday Investor. If you have any new post ideas, feel free to let me know in the comments below and I am happy to write more about it!
Subscribe below for free to receive new posts and support my work. Feel free to send this article to anyone you think would find it useful!
Not financial or tax advice. The content in this newsletter is for informational purposes only. Every investment and trading move involves risk. Do your own research when making decisions.