Dec 02, 2022

Using AI to generate stock pitches and other finance stuff

I have been playing with the chatGPT feature in open.ai, and It is somewhat cool to see an AI generate a stock pitch. Its very rudimentary but I could see this being useful especially if you want to get a brief overview of what a company does for your own reading.

https://chat.openai.com/chat

Some examples I generated:

Prompt: Give a stock pitch on Coca Cola

OpenAI Response:

Coca-Cola is a global beverage company that produces and sells a wide range of non-alcoholic beverages. The company is best known for its flagship product, Coca-Cola, a carbonated soft drink that is one of the world's most recognizable and valuable brands. Coca-Cola is the world's largest beverage company and is a member of the Dow Jones Industrial Average. The company operates in more than 200 countries and has a diverse product portfolio that includes more than 500 brands, including sparkling beverages, juice, water, sports drinks, and coffee.

One of the key strengths of Coca-Cola is its strong brand recognition and customer loyalty. The company has a long history of successful marketing campaigns that have helped to build its brand and create a loyal customer base. Coca-Cola has also made significant investments in its production and distribution network, which has helped it to maintain a strong presence in global markets.

Another strength of Coca-Cola is its diversified product portfolio. The company offers a wide range of non-alcoholic beverages, which allows it to appeal to a wide range of consumers and to respond to changing consumer preferences. This diversification also helps to reduce the company's dependence on any one product or market, which can be beneficial in times of economic uncertainty.

Despite these strengths, Coca-Cola does face some challenges. The global beverage industry is highly competitive, and the company faces strong competition from other beverage companies. In addition, health concerns about sugary drinks have led to increasing scrutiny of the industry, and some consumers are shifting to healthier beverage options.

Overall, Coca-Cola is a well-established and highly recognizable brand with a diversified product portfolio and a strong global presence. While the company does face some challenges, it is well-positioned to continue to grow and generate value for its shareholders.

Prompt: Write an equity research report on Apple

OpenAI Response:

Apple Inc. is a leading global technology company that designs, develops, and sells consumer electronics, computer software, and online services. The company's best-known products include the iPhone, iPad, Mac, and Apple Watch, as well as the iTunes, iCloud, and Apple Music services.

Apple has a strong financial track record, with a history of steady revenue and profit growth. In its most recent fiscal year, the company reported revenue of $274.5 billion, an increase of 21% compared to the previous year. Net income for the year came in at $57.4 billion, an increase of 31% compared to the previous year.

Apple's strong financial performance has been driven by the continued success of its flagship iPhone products, as well as the growing popularity of its services segment, which includes the App Store, iCloud, and Apple Music. The company has also been expanding into new markets, such as wearables and home automation, through products like the Apple Watch and HomePod.

Looking ahead, Apple is well-positioned to continue its strong performance. The company has a loyal customer base and a strong brand, and its diverse range of products and services provides a steady stream of revenue. Additionally, the growing demand for smartphones, tablets, and other connected devices is expected to continue to drive growth for the company.

Overall, Apple is a solid investment opportunity. The company has a strong financial track record and a diversified range of products and services, and is well-positioned to capitalize on the growth of the global technology market. A reasonable price target for Apple's stock could be around $150 per share

Prompt: Walk me through a DCF

OpenAI Response:

A discounted cash flow (DCF) analysis is a method used to estimate the intrinsic value of an investment by calculating its future cash flows and discounting them back to the present value. This method is based on the idea that the value of an investment is the sum of all of its future cash flows, discounted at a rate that reflects the time value of money and the level of risk associated with the investment.

To perform a DCF analysis, the first step is to forecast the investment's future cash flows. This typically involves making assumptions about the growth rate of the investment's revenues and expenses over time, as well as the timing of those cash flows. Once the future cash flows have been forecasted, the next step is to determine the appropriate discount rate to use in the analysis. This rate should reflect the time value of money and the level of risk associated with the investment.

Once the future cash flows and discount rate have been determined, the next step is to discount the future cash flows back to their present value. This can be done using a simple present value calculation, which takes the future cash flow and divides it by the discount rate plus one, raised to the power of the number of periods until the cash flow is received. For example, if a future cash flow of $100 is expected in three years and the discount rate is 10%, the present value of that cash flow would be $100 / (1 + 0.1)^3 = $75.36.

Once all of the future cash flows have been discounted to their present value, the final step is to sum all of the present values to arrive at the investment's intrinsic value. This value can then be compared to the investment's current market price to determine whether the investment is undervalued, overvalued, or fairly valued.

Overall, a DCF analysis is a useful tool for estimating the intrinsic value of an investment and determining whether it is a good value at its current market price. However, it is important to remember that the accuracy of the analysis depends heavily on the assumptions used in forecasting the investment's future cash flows and selecting the appropriate discount rate.

Prompt: Why and when should I invest in consumer cyclicals

Investing in consumer cyclical companies can be a good way to capitalize on the growth of the economy and consumer spending. These companies are sensitive to changes in the business cycle, and tend to perform well when the economy is strong and unemployment is low. This can lead to increased revenue and profit growth for these companies, which can translate into strong returns for investors.

However, it is important to keep in mind that consumer cyclical companies are also subject to the risks of an economic downturn. When the economy slows and unemployment rises, consumers tend to reduce their spending, which can hurt the performance of these companies. Therefore, it is important for investors to carefully consider the state of the economy and the potential risks before deciding to invest in consumer cyclicals.

Overall, investing in consumer cyclicals can be a good way to capitalize on the growth of the economy and consumer spending. However, it is important to carefully consider the risks and be prepared for the potential impact of an economic downturn.

This stuff is pretty nifty, but I am wondering how many people in the future are just gonna give a stock pitch generated from an AI during an interview. I have heard accounts on Twitter of people in school submitting papers generated with AI and they pass with A's, undetected by plagiarism scanners.

I wonder what this could mean for investing/research roles in the future when this tech is more mature.