I asked ChatGPT investors' burning questions – and a CIO told me why the bot won't be challenging Wall Street's top stock-pickers anytime soon

• I asked ChatGPT questions about markets and showed the answers to Morningstar Investment Management CIO Dan Kemp.
• He called some of its knowledge "remarkable" – but isn't worried it'll put top strategists out of their jobs anytime soon.

Intelligent language tool ChatGPT can write cover letters, generate dating app messages – and provide investing advice.

Inspired by my esteemed colleagues Bea Nolan and Phil Rosen, I decided to find out whether the bot's insight on markets is up to scratch.

I fed the OpenAI program four questions that are top-of-mind for investors right now, and then shared its responses with Morningstar Investment Management's global CIO Dan Kemp.

Kemp, whose firm manages around $250 billion worth of assets, was impressed with the quality of ChatGPT's knowledge and prose but said it lacked the depth of analysis you'd find speaking to a top stock picker or financial advisor.

"The quality of its responses is remarkable," he told me. "That said, I don't think it's helpful as an investment decision-making tool, either for professionals or laypeople."

"It provides factual answers that are descriptive and are generalized," Kemp added. "But it doesn't ask questions like a good investment manager does."

Here are the four questions I asked ChatGPT:

• How should I invest during a recession?
• What impact will the Federal Reserve's interest-rate increases have on a portfolio?
• What investments are a good hedge against high inflation?
• Should I invest in cryptocurrencies?

The questions reflect some of the biggest ongoing concerns of retail investors – after the threat of a recession, Fed rate hikes and high inflation rattled stocks and caused the the 'crypto winter' of the past year.

ChatGPT quickly churned out a set of answers you'd find in a good markets textbook – recommending "invest[ing] in companies that have a strong track record of performance" during a recession and saying that "higher interest rates can make stocks less attractive to investors, which can lead to a decline in stock prices".

Kemp told me he was impressed with the breadth of the bot's knowledge – especially its ability to avoid unnecessary jargon when producing stock market content.

"It's quite amazing how ChatGPT can gather what is known about a particular subject by the investment community and then convey it in a very understandable format," he said. "If you haven't used ChatGPT before, it's genuinely surprising that an engine can do that with subjects as diverse as recessions and cryptocurrencies."

But the bot can only generate what Kemp called "first-level responses" – meaning that while its knowledge of the stock market is impressive, it can't apply that knowledge to specific situations in the manner a top Wall Street analyst or old-fashioned financial advisor would.

"It can tell you the things that everybody knows," he said. "When you asked it about inflation hedges, it mentions inflation-linked assets – clearly, that's correct, but that's a very limited help when making an investment decision."

"When making investments, you not only have to consider the fair return of investment, but also the price at which it's trading," Kemp added. "So you have to understand not only the basic features of an investment, but also how that investment is perceived by other investors."

"That's what people call second-level thinking – and it's something that ChatGPT doesn't appear able to do."

Kemp was also concerned with ChatGPT's response to my question on cryptocurrencies. The bot told me that "investing in cryptocurrencies is a high-risk, high-reward endeavor" – but rising interest rates meant most digital assets offered no returns at all in 2022, with the largest token bitcoin's price plummeting over 60% to under $17,000.

"I found this troubling because ChatGPT has clearly learned that to gain a high return, you typically have to take a high risk," he told me. "It's an interesting mistake and it's one that lots of investors made last year – not every high risk comes with a high reward."

Kemp's feedback chimes with what people tend to love – and dislike – about ChatGPT.

The language tool can churn out high-quality content alarmingly quickly – but its words tend to lack personality and depth.

So don't expect it to become a go-to engine for investing advice anytime soon.