In the ever-evolving landscape of the financial industry, one technological marvel has taken centre stage: Artificial Intelligence (AI).
According to Mordor Intelligence, AI in fintech had a market value of $7.91 billion in 2020 and is expected to reach $26.67 billion by 2026.
AI has lately been a hit in practically every industry. Each day, we come across new AI that goes beyond our human imagination. Machine Learning (ML) is now making things possible that we previously thought only humans could do. It is no surprise that the financial industry has embraced AI due to the massive potential it holds that can revolutionize the industry for good.
With its ability to process vast amounts of data and uncover hidden patterns, AI has transformed the way we navigate the world of finance. From AI-powered stock recommendations to personalized investment strategies, the impact of AI in the financial sector cannot be overstated.
Problems in Traditional Investing World
The investment industry has traditionally been characterized by a slow pace of adopting new technologies. Yet there are some prominent Hedge Funds that have embraced sophisticated technologies to generate consistent returns. Such money management is accessible primarily to institutional investors and high-net-worth individuals, leaving out a large portion of the population. Retail investors often face barriers such as high minimum investment requirements, complex processes, and limited access to certain investment opportunities.
In today’s digital economy, the stock market generates tons of data every second, making it challenging for investors to always keep a close eye on all the available information. While the market is open, investors are bound to be on their toes, scanning it continuously. Failure to do so potentially causes them to miss opportunities or increased risk exposure.
Traditional investment models present more obstacles than just the ones mentioned above. For instance, the process of investing can evoke strong emotions, often causing investors to react impulsively when the market experiences a downturn. It is common for individuals to panic, hastily sell their investments, and later regret their decisions. Human emotions frequently hinder the investment process, leading to poor decision-making.
The Precision of AI-Powered Stock Recommendations
When we talk more specifically about AI investing, one of the first things that come to mind is using AI to evaluate which stocks to purchase, sell, or hold in the stock market. AI has revolutionized the investment management process, leaving a profound impact on the industry. The implementation of AI technologies in hedge funds has demonstrated remarkable results. According to the Eureka database, hedge funds that utilized AI over the past decade have outperformed their non-AI counterparts by 140%. Despite these compelling statistics, it is surprising to note that less than 30% of investment managers currently integrate AI into their investment strategies, as reported by the CFA.
The performance advantage enjoyed by AI-powered hedge funds speaks volumes about the potential of these technologies. By leveraging AI, fund managers can enhance their ability to identify market trends, optimize asset allocation, and effectively manage portfolios.
The power of AI lies in its ability to process vast amounts of financial data and extract meaningful insights. AI algorithms can swiftly analyze historical price data, company fundamentals, market trends, news articles, and even social media sentiments. By considering this wide range of information, AI systems can identify patterns, correlations, and anomalies that might go unnoticed by human analysts. This comprehensive analysis enables AI-powered systems to generate accurate and timely stock recommendations.
AI investing reduces the possibility of manual errors. AI algorithms can automate repetitive tasks such as portfolio rebalancing, trade execution, and performance monitoring, reducing the chances of manual errors.
The best part about AI? Well, machines don’t need a break! Once your workday comes to a close, AI investment apps remain active on your behalf, ensuring you don’t miss out on any opportunities while you relax and recharge. Additionally, machines don’t have feelings (yet!). AI, in the realm of investing, operates solely on market conditions, predictive analyses, and predefined criteria that align with your goals.
Furthermore, AI algorithms continuously learn and adapt to new data, enabling them to improve their performance over time. As they process more information and gain insights from real-time market conditions, AI systems can refine their recommendations and adapt to changing market dynamics. This adaptive nature of AI allows investors to stay ahead of the curve and make informed decisions based on the latest information available.
A Crucial Question that Comes to Mind…
AI-Powered Stock Recommendations can increase your financial gains.
But is it really accessible to everyone yet?
Worldwide, many of the big investment firms have dedicated teams focusing on AI and ML technology, with a significant number having already incorporated these tools into their investment strategies. However, the accessibility of these technologies remains skewed towards wealthier individuals, leaving retail investors with limited options such as incomplete or generic tools, or the arduous task of managing their investments entirely on their own, which can be akin to a full-time job.
As a consequence, unsatisfactory returns have become a prevalent outcome, as demonstrated by the alarming statistic that retail portfolios experienced a decline of over 44% in 2022 according to JP Morgan.
So is it all gloom and doom? No!
AI is moving in a similar direction to how computers were formerly only available to the affluent in the 1990s. If the folks of history could see how accessible computers have become due to their enormous rise in popularity, they’d be in awe. AI holds just as similar potential, maybe even more as even suggested by Bill Gates.
Paving the Way for the Democratization of AI
This is where platforms such as Alphanso come into play. We believe that democratizing AI in the investment landscape is essential for creating a level playing field. By providing retail investors with access to AI-powered tools, algorithms, and data-driven insights, we aim to bridge the gap between the wealthy and the average investor.
Evidently, Alphanso’s top-rated stocks have generated 58% in the last six months outperforming S&P 500 by 42%.
This democratization can empower individuals to make more informed investment choices, enhance their financial literacy, and potentially achieve greater financial success. Just as computers revolutionized the way households operate, democratizing AI in investments has the potential to revolutionize how people manage and grow their wealth, fostering a more inclusive and equitable financial landscape.
Start your free trial with the Alphanso platform today to boost your financial returns with AI-powered stock recommendations designed just for you.
