June 13, 2023
The CEO of RavenPack shares his thoughts on the potential of using AI and alternative data to enhance financial decision-making on the Compound Insights podcast, by CFA Society New York.
Compound Insights, by CFA Society New York , is a finance podcast that delivers in-depth conversations with the foremost experts and influential authorities of the global financial investment world.
Armando Gonzalez, the CEO and co-founder of RavenPack, sat down with host Rob Rowan to unpack the case of leveraging ChatGPT in finance, discuss the power of alternative data in sector selection and multi-asset class investing, as well as share his views on the emerging skills for finance professionals.
Here are some tidbits from their discussion:
Diligence, transparency, and accurate sourcing are essential in the financial world.
While ChatGPT is an impressive product with vast applications, we need to be careful when assessing its effectiveness in financial analysis.
CEO & Co-Founder
RavenPack
There is no guarantee that the analysis itself will be based purely on factual information. There is also ambiguity, perhaps just lack of transparency around the sources that were used to train ChatGPT as well as the availability, timeliness and veracity of the information.
By leveraging language AI and sentiment analysis, professionals can gain insights into prevailing sentiments on companies and sectors.
This approach enables a more effective way of rebalancing portfolios, overweighting sectors with positive sentiment and underweighting those with negative sentiment.
The success of this strategy is exemplified by an index product created with a partner bank, which has consistently outperformed the S&P 500 by over 50% for more than a decade.
Traditionally, alternative data has been extensively used in equities. However, recent market conditions have led to significant traction in credit markets, fixed income, commodities, and currencies.
Investors are becoming more data-driven and applying quantitative techniques across multiple asset classes. This expansion opens up new opportunities for professionals with expertise in alternative data and artificial intelligence.
By using our Language AI technology, businesses can assess company sentiment accurately. They gather valuable insights by aggregating sector sentiments, favouring positive sectors and avoiding negative ones.
As the financial industry embraces fintech and alternative data, professionals need to adapt and acquire relevant skills. the ability to explain and advocate for new tools and techniques becomes crucial.
Professionals who can dissect and demystify these concepts for clients, while providing transparency about techniques, service providers, and data sources, will have a competitive advantage.
Having someone who can simplify complex concepts and embrace transparency is a significant opportunity in this industry. Traditional approaches based on simplistic financial perspectives will be overtaken by emerging technologies, advanced techniques, data-driven modelling, and systematic processing in the next 5 to 10 years.
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