Myth v/s Reality? Debunking The 5 Most Assumptions About AI In Investing

You may have read articles about Artificial Intelligence (AI) & investing over the past few years. The things they mention AI can do for investors may not always look possible. However, you should not deny it because you do not understand it.

On the other hand, there are a lot of things related to AI that are pure myths. You need to draw a line between myth and reality before using AI for investing. 

Today, we will discuss some myths related to AI and investing. Before that, let us get the basics cleared. We are sure some of you are new to the technology.

What is Artificial Intelligence?

Artificial Intelligence or AI is any system that leverages human capacities for learning, perception, and interaction. It works at a complexity level that supersedes human abilities. In the investment world, AI is about using past data to learn and create a system that can help you make the right investment decisions.

Why do we need to even discuss AI in investing?

Artificial Intelligence was introduced to the investment world because of human weakness. No matter how hard we try, ‘personal feeling’ is tough to suppress over logical thinking. 

Also, most of us are not from a finance background. Hence, most cannot do all the stock analysis and pick the different investment options. Choosing investment options is comparatively easier than stock selection as it requires a higher level of knowledge and understanding. If you cannot do it, technology can help you.

Top 5 AI and investment myths

Myth 1 – AI will displace humans in investing

It is not going to happen, at least in the near future. AI in investing is about human empowerment and not displacement. AI does not plan to replace humans, and no organization is working to replace humans in investing. 

Humans have certain limitations when it comes to investment. AI tries to help humans overcome those limitations and make the investment. In some scenarios, an investor may not be interested in spending time in the market analyses and tracking but still want to invest in the equity market. AI is advanced enough to help investors in such cases. However, it is not replacing them. When it comes to investment, the trade execution always has to be done by humans. 

Myth 2 – AI is not advanced enough to be used in money matter

Many people believe that AI has not advanced enough, and investors must not take a risk by using it for their investment decisions. The reason for such thinking comes from the below fear:

  • AI systems can behave in inadequate and unexpected ways in the real-time against the original intent
  • AI systems may amplify or reproduce biases contained in data

Yes, it can happen, but companies ensure that such scenarios do not occur with real money. Like any other software, the AI system is rigorously tested in the test environment before it is introduced to investors to make investment decisions.

Myth 3 – AI will take all investment-related jobs

It is only a fear which is far away from reality. AI is no different than other technological advances that enable us to become more effective, teams to automate, and processes to become more efficient. 

AI is a tool used to augment the human workforce and help advisors and analysts work smarter and in newer ways. Yes, technological advancement has taken away some jobs in every area, but it has introduced many more. Looking at history, we can see that more jobs were ultimately created that looked different and required different skill sets. The same is happening with AI and investment. AI in investing does not plan to replace human advisors, analysts, etc.

Myth 4 – AI systems cannot give good returns to investors

Since people believe that AI is not advanced enough, there is a myth that AI systems cannot give good returns to investors. We are not sure about all the AI-driven systems, but Jarvis Invest can deliver good returns to investors for months. Even in this bear market, we were able to beat the market. It is essential to mention that beating the market does not mean that Jarvis has given positive returns to investors. It means that compared to the benchmark, Jarvis’ investments have fallen less. Jarvis can achieve it through its well-advanced Risk Management System. If you want to check out our performance, read this article for details.

Myth 5 – AI-driven investment systems can be only created by tech-giants

AI is unlike space projects (or other similar) where you need to spend billions to start a business. Any organization can start creating an AI system. You may ask then why don’t see many AI platforms for investment. It requires some level of expertise. A company requires technical infrastructure that can support the necessary quantity of data processing. More importantly, the leaders need to have the belief and willingness to create a system that can change investors’ life. 

We only have a handful of AI-driven platforms in the world presently. However, we believe more companies will come into this space.

Let us know anything else you have read or listened related to AI-driven investment platforms and are confused about whether it is a reality or a myth. We will get it sorted for you.