GPT-3 For Finance [Friends, Foes Or Something In-between]

OpenAI has created one of the most impactful artificial intelligence systems that has ever existed.

Not only is it powerful, but it has revolutionized nearly every industry that it’s touched.

GPT-3 can be been used for various applications within these industries – and finance is no different.

Before we get into how GPT-3 can benefit finance and what it can do, it’s important to note that GPT-3 should not be used as a source of financial advice.

This is something that we will further discuss later on in this post.

Even though GPT-3 cannot pick stocks or provide individualized investment advice, there are still plenty of ways that it can be applied to finance and help with tasks such as portfolio analysis, forecasting markets, and more.

We’ll go over all of these topics in detail below so you can better understand the potential of GPT-3 for the finance sector.

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The Intersection of AI and Finance, The Then and Now

With how impactful both Artificial Intelligence and Finance are in our society, the intersection of Artificial Intelligence (AI) and Finance was always destined to be.

Artificial intelligence is revolutionizing our world, and with how integrated technology and finance have become, it just made sense to bring artificial intelligence along for the ride.

While it may seem like GPT-3 has created this intersection – it’s existed for a long time.

In 1968, a man named “Jim Simons” left his cushy role as a professor at MIT and Harvard to apply pattern recognition to the market. Simons had realized that the market could somewhat be solved and exploited, but to do this, you’d need advanced systems that can learn these trends. Simons hired mathematicians, software engineers, physicists, and other STEM-focused disciplines while creating the first quantitative-based firm.

Simon’s integration of artificial intelligence into these systems has been a home run. Renaissance Technologies (the firm he founded) handles more than $60 billion in assets.

What’s even cooler is the Medallion Fund – a black box trading algorithm that is only open to current employees has routinely beaten the market at a rate unseen before.

So, while Simons made a name for himself up until 2010 (his retirement), other firms were learning and advancing.

Quants are still dominating the market today.

In fact, Citadel, one of the most well-known hedge funds in the world, made an incredible 16.3 billion dollars last year – more than any other hedge fund – largely due to their use of quants and models that trade systematically.

AI is truly transforming the way we think about Finance, from trading strategies to increasingly personalized investment advice – a trend that will only continue as technology continues to advance

References:

Quantitative Research

Can GPT-3 be used for investing and financial advice?

GPT-3 should not be used as investing and financial advice due to its nature as an AI system.

It is not infallible, and its responses are often incorrect or made-up information that has little basis in reality.

For example, GPT-3 may suggest a certain stock to invest in based on incomplete data or a misread of the current market conditions.

Not only that, but GPT-3 is not consistently being trained.**

GPT-3 models stopped being retrained around 2019, with the DaVinci model continuing on to 2021.

Would you take investment advice from someone that hasn’t had any new information in 2 years?

I know I wouldn’t.

Instead, when it comes to investing and financial decisions, it’s better to consult with an expert in the field who has a more comprehensive understanding of your specific situation.

Outside expertise allows for personalized advice tailored to your needs rather than relying on the possible inaccuracy of AI algorithms.

Remember, GPT-3 was trained on the entire internet, so the recommendations you’re getting will come from forums that may not accurately represent your investment philosophy.

(I’m looking at you r/wallstreetbets)

Ultimately, when it comes to important investment and financial advice, you would have a better time consulting with an expert than trusting AI with your decision-making process.

** I think GPT-3 is still being trained, even though they say they aren’t training it anymore. Though I doubt they’re training all sectors (probably improving grammar, sentence semantics, etc.)

Since GPT-3 Shouldn’t Be Used For Investing or Financial Advice, where can we use it in finance?

There are a ton of places to use GPT-3 in finance.

General Information

I know it may sound off from what I said before, but using GPT-3 for general surface-level financial information can be incredibly convenient, even if it completely goes against everything I previously said.

For example, if you need a quick answer to a question such as “what is a 401k?” GPT-3 can be a great tool to get the information you need quickly.

With its ability to generate meaningful and accurate information, GPT-3 can provide invaluable insight into surface-level finance topics, from taxes and investments to budgeting and insurance.

Remember, as soon as you branch past the surface level, you will encounter many problems.

Infrastrucutre (Code)

Now, I know I told you not to use GPT-3 for financial advice.

But what if you used it to build out a quantitative platform?

Now, instead of depending on GPT-3 for the answers, you’re just using it for the infrastructure while leveraging your knowledge and finance research to create a profitable system.

And from what we know above about quantitative research and algorithms, they dominate finance.

Luckily for us, Python, a language commonly used for coding, machine learning, and data science projects, is a particularly suitable choice for those looking at taking the plunge into quantitative finance since it’s 1 of 13 coding languages that GPT-3 can handle.

Excel Formulas

While coding is an important element of finance, it’s no secret that Excel remains the heart and soul of day-to-day operations in any financial institution.

Rather than struggling to write these intense formulas all day, why not use GPT-3 to become an Excel master?

Just provide GPT-3 with your desired outcome, and watch as it produces the formula you need.

It’s like having an excel expert standing beside you, ready to provide advice; only this one can do it without ever taking a break (but it will cost you a little $$)

This means more time to focus on strategic planning and analysis instead of spending most of your hours poring over youtube videos teaching you how to write the formulas you need.

Put simply, tapping into the powerful analytics capabilities of GPT-3 will make managing finances in Excel much easier and more efficient.

GPT-3 For Finance [Friends, Foes or Something In-between]