Understanding the Key Concepts of Generative AI and LLMs

What is an LLM? (Large Language Model)

An LLM (Large Language Model) is an artificial intelligence algorithm designed to understand and generate natural language. These models are trained on vast amounts of text data, enabling them to detect patterns, answer complex questions, and even provide recommendations.

In finance, LLMs like ChatGPT are particularly useful for:

• Quickly synthesizing complex information.

• Identifying trends from textual data, such as economic reports or stock market news.

• Creating personalized scenarios for investors.

ChatGPT and Perplexity AI: Allies for Investors

ChatGPT is an application based on an LLM, capable of handling complex questions in finance and helping investors better understand their options. Thanks to its "Search" function, ChatGPT can access updated data from the web, which is essential for tracking constantly evolving markets.

Perplexity AI, another generative AI solution, stands out for its ability to provide quick and contextualized answers, ideal for precise research on financial assets or specific trends.

Applications of Generative AI in Investment

Market Analysis and Trend Tracking

LLMs like ChatGPT allow for real-time monitoring of economic and geopolitical trends. For example:

• Analyzing financial news to spot opportunities in growing sectors.

• Identifying macroeconomic factors influencing the markets, such as interest rates or geopolitical tensions.

Customization with Custom GPTs

Custom GPTs are specialized versions of ChatGPT, tailored to specific needs.

Why use a Custom GPT for investing?

• Automating repetitive tasks, such as portfolio analysis or sector report generation.

• Creating custom models to track the performance of specific assets, such as ETFs, real estate investment trusts (REITs), or cryptocurrencies.

Example: A financial advisor might use a Custom GPT to provide automated recommendations to clients based on their financial goals and risk tolerance.

Automation and Time Savings

ChatGPT can simplify many tasks related to investing, including:

• Searching for information on specific stocks, funds, or bonds.

• Generating asset allocation scenarios based on your investor profile.

• Creating customized dashboards to track your portfolio performance.

Case Studies: Real Use of ChatGPT and AI

Portfolio Analysis

ChatGPT can be used to evaluate the performance of your current investments. For example, by providing it with data about your assets, it can:

• Identify underperforming sectors that need rebalancing.

• Analyze the correlation between different assets to optimize diversification.

• Suggest adjustments based on current economic trends.

Example: By asking a question like "How to diversify a portfolio consisting of 60% technology stocks?", ChatGPT can generate reallocation scenarios by including less correlated sectors, such as energy or healthcare.

Market Forecasting

With the "Search" function, ChatGPT can combine real-time data with historical information to provide insights on future trends.

Example: "What factors could influence the price of gold over the next 6 months?". ChatGPT can analyze data on inflation, monetary policies, and geopolitical tensions to provide a concise answer.

Optimization of REIT and Real Estate Investments

Real estate investors can use ChatGPT to analyze geographic or sectoral opportunities within REITs or direct real estate.

Application example:

• "What types of REITs offer the best returns in a rising interest rate environment?".

• ChatGPT can assess criteria such as asset diversification, past performances, and the stability of management companies.

These examples show that ChatGPT is not just a support tool but a true lever for improving decision-making in your investment strategies.

Advantages and Limitations of Generative AI for Investment

Advantages

1. Time Savings: ChatGPT can analyze in seconds what would take hours with traditional methods.

2. Accessibility: These tools do not require advanced technical skills, making them usable by all investors.

3. Accuracy and Customization: Custom GPTs allow for tailored solutions to meet specific needs, such as sector analysis or portfolio management.

Limitations

1. Data Reliability: The information generated by ChatGPT depends on the quality of the input data.

   • The "Search" function is essential to ensure that responses are based on up-to-date data.

2. Human Judgment: AI does not replace the experience or intuition of an investor but acts as a complement.

3. Precautions to Take: Never base an investment decision solely on forecasts generated by AI.

By understanding these limitations, investors can better utilize these tools as a support to their traditional analyses.

Conclusion

Large language models (LLMs) are transforming not only the way we invest but also the way we learn and understand finance. By integrating these tools, you gain access to precise analyses and clear explanations, even for the most complex financial concepts. They offer a unique opportunity to enhance your financial education while refining your investment strategies.

With their ability to synthesize massive data, analyze trends, and generate tailored scenarios, LLMs are a powerful complement to traditional analytical methods. They not only help optimize your decisions but also enhance your understanding of market dynamics and deepen your knowledge.

However, AI remains a tool. An informed use, combined with human reflection and a good understanding of the fundamentals of investing, is essential. These technologies do not replace financial education but make it more accessible and interactive.

Investing in your knowledge and adopting a balanced approach between advanced technologies and personal analysis will enable you to build a solid and sustainable financial future.