There is a lot of talk surrounding “the next industrial revolution”, and what it will be, and how our world will change because of it. I believe Artificial Intelligence may be one of the key determinants of our future. As an investor, I believe the future is in AI Investing.
Artificial Intelligence (AI) has the potential to completely change the world of Investment Management. We have seen a decrease in actively managed portfolios in recent years in favor of investment into passive index fund options. However, if utilized correctly, AI could bring the power back into Investment Managers’ hands.
Over time, the improvement in technology in the investment world has allowed investors to have a far greater access to information and analysis of the stock market. Enabling investors to make more informed decisions far quicker than they ever have before. However, in the next 5 years, I theorize that the way we analyse investment information is going to completely change again, with the implementation of Artificial Intelligence.
The way this will impact Investment Managers will depend on how they adapt to this change. I think the traditional Manager may end up seeing a significant reduction in their client portfolio. However, if Investment Managers utilize AI to be able to improve the interaction and information with investors, they will be able to separate themselves from the competition.
How Artificial Intelligence Will Impact Investing
Artificial Intelligence will have a great impact upon the decision making process of investing. AI will have the ability to read through the lines of complicated data which has been obtained from the marketplace.
AI will become a huge time and cost saving measure for Investment companies, and cut through the mess of complex information for Investors who may not possess a wide breadth of Investment knowledge.
By utilizing AI Investing, an investor will be able to do the following:
- Possess in-depth monitoring of the marketplace by tracking signals and alerting the investor of potential changes in the marketplace before they even occur in real time. This may allow Investors to recognize good entry or exit points from the market for their investments. This may also help Investor emotional bias to be removed from their investment portfolio. Investors may put all of their trust into AI, which means they won’t allow their emotions to take control of their buying and selling on the marketplace.
- In-depth analysis of portfolio risks. Investors may not require portfolio managers to help with their complex portfolios anymore. The AI system will be able to calculate and re-calculate risk exposures in real time and deliver it to the Investor live on a dashboard overview of their stock portfolio. Investors will be able to monitor specific areas of risk or opportunity within their portfolio and the marketplace, without the need for a CFA qualification. The worry here is whether or not this will impact the Investment Management profession to a large degree.
AI Helps Private Investors
Let’s flip this article on its head for a second. What if you wanted, as an investor, to invest in AI? Well, you can! It will be something I’m investing is as an investor, and business owner in the next few years. Here’s 6 ways anyone can invest in AI.
Adaptations to technology has allowed investors to go straight to the source. It is no longer the case that you need to give a stock broker a call and book in your buys or sells. These days, everything can be done from your mobile.
AI has the ability to give more power to private investors. Allowing them to cut out all the middle men, including the providers of information and advice on investments.
Overall, Investing in the Stock Market has become more accessible to every day people in recent years. However, the requirement for knowledge has been a barrier people wanting to take the plunge into the world of investments. Artificial Intelligence should remove this barrier. Allowing for Investors without years of knowledge about market risk and value to put their money into the marketplace.
Artificial Intelligence has the potential to open up the world of Investing to a whole new audience. It has the opportunity to introduce direct individual investments, and stop the reliance upon Index Fund Investments.
I expect that in the next five years we will see a revolution in how we analyse investment information. However, we will also see a significant change in the inclusiveness of private investors. Especially those with lacking investment knowledge and experience. This will allow more people to make confidence investment decisions without the need for an expensive portfolio manager.
Important Factors of AI Investing
There is the potential for a financial downturn to occur soon. Many experts expect it to happen in the next 12 to 24 months. Nobody is entirely sure how it will happen, or how severe it will be. However, it will no doubt have an impact upon the investment world.
However, you can view this as an opportunity to become a part of AI Investing, and utilize it to get AI Investing at a huge discount!
Keep an eye on the markets and any news coming out on this in the next 12 months. Artificial Intelligence could potential be a key-winner in the world of investing in years to come. I have written an article on when the next financial crisis may happen.