Harpaul Sambhi’s Experiment
Last year, startup founder Harpaul Sambhi made a unique request to his wealth manager: he wanted 10% of his portfolio back.
This wasn’t for extravagant purchases like a sports car or a house; instead, Sambhi aimed to conduct a contest. He wanted to compare the investment outcomes of his human wealth manager against ChatGPT.
“It was purely out of curiosity,” explained Sambhi, who leads the AI platform Magical and resides in Marin.
Investment Strategies
Sambhi utilized Deep Research, an AI feature in ChatGPT that generates detailed reports with references, to find companies contributing to the AI boom. The chatbot suggested firms like Nvidia and Taiwan Semiconductor Manufacturing, including lesser-known mining companies. He invested his funds in these companies.
Although he was ready to incur losses in this experiment, Sambhi experienced a 35% return with his ChatGPT portfolio, while his wealth manager achieved approximately 40%. The S&P 500 index rose around 15% during the same timeframe.
AI in Financial Advice
A recent survey indicated that about two-thirds of adults using generative AI have sought financial advice from it, with about 80% of those who acted upon it reporting improved financial situations. Among younger users, around 82% of Gen Z and millennial respondents relied on AI for guidance.
However, over half of those who followed AI’s financial recommendations admitted to making poor decisions, highlighting the inherent risks of utilizing chatbots for investment strategies.
Daniel Padilla’s AI Portfolio
Daniel Padilla, a finance graduate in San Francisco, adjusted his conservative investment approach amid worries about AI’s impact on employment. He speculated that companies adept at using AI would profit the most.
Padilla challenged four chatbots to create a stock portfolio capable of outperforming the market. After some persuasion, Perplexity and ChatGPT provided him with specific investment recommendations.
Portfolio Performance
Following chatbot advice, Padilla opened two accounts with $500 each and began weekly contributions. His portfolios—one from Perplexity and another from ChatGPT—are now up 49% and 52%, respectively, outpacing the S&P 500 index’s 22% increase during the same period.
Despite this success, experts caution that AI chatbots may lack the unique insight required for consistent high returns, as they often rehash existing information rather than provide an advantage.
Concerns About AI-Generated Advice
Economists also voice concerns regarding bias in AI advice. A study from UC Berkeley suggested that chatbots tend to favor stock investments over cash unless demographic information is provided. Sharing such details can lead to more tailored advice.
Professors advise caution when acting on chatbot recommendations, noting that professional traders may have superior AI resources.
Conclusion
For both Sambhi and Padilla, leveraging chatbots for investing remains a casual activity. Sambhi prefers having a human wealth manager for comprehensive financial services, while Padilla doesn’t consider ChatGPT a substitute for his primary retirement savings strategy, which still relies heavily on index funds.
