New study by Chicago Booth School of Business shows LLMs able to produce a 60% rate of accuracy when predicting financial performance, vs human average between 53-57%. And these models are improving exponentially. This particular study used Chat GPT-4.
Article goes on to discuss how startups are already testing LLMs by feeding it financial data and allow it to pick stocks. A 2020 study by S&P Dow Jones found that 89% of fund managers fail to outperform their benchmark.
It seems to me like equity research associates will be the first role to be dropped. The models will update financial models (ironic), produce notes, and consolidate data better and more efficiently than people can. And I’m sure that banks are going to catch onto this. Also a bit ironic how the financial industry is pouring money into a technology that could help make their own jobs obsolete.
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