This is the story of Alex Kim. A man whose research cracked the stock market.
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Like me, Alex is passionate about artificial intelligence. Alex, a PhD student from the University of Chicago, wanted to see whether large language models (like ChatGPT) can be used to perform financial analysis. His results were shocking.
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To study whether LLMs were effective at performing financial analysis, Alex compared it to 2 alternative approaches.
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The naive approach took the change in EPS on one year, and predicted the change in EPS the following year be the exact same.
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The analysts approach took the consensus rating of financial analysts on one year, and measured how accurate their predictions were the following year.
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The LLM-approach took financial statements on a stock on one year, and asked the LLM to perform Chain of Thought prompting to predict the change in earnings the next year.
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- Naive Approach: He found that the naive approach was 49% accurate in predicting the change in a stock's EPS.
- The Analyst Approach: He found that professional analysts were 53% accurate in predicting the change in a stock's EPS
- The LLM Approach: The LLM-approach was by far the most accurate, at over 60% accuracy using solely financial statement data.
Just imagine what’s possible with more data – industry averages, backtesting, and more. AI is fundamentally transforming how we approach the markets, and you have the chance to be at the forefront of this revolution.
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AI will change how people approach financial markets. Are you going to standby as this opportunity passes you by? Or are you going to take action?
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Ready to take your trading game to the next level? With NexusTrade Premium, you’ll have access to cutting-edge AI tools like the ones used in Alex’s research. Refine your strategies, explore new opportunities, and gain an edge in today’s fast-moving markets.
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Happy trading!
Austin Starks
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