How Not to Invest With AI
Editor's note: Ignoring the negative signs is an easy way to get burned...
With the development of tools like ChatGPT quickly growing popular, many people are bullish around artificial intelligence ("AI") right now. But according to Marc Chaikin – founder of our corporate affiliate Chaikin Analytics – this excitement is masking a dark spot in the AI trend...
That's why Marc believes it's critical for folks to prevent themselves from rushing into AI investments in order to avoid huge losses as this trend unfolds.
In today's Masters Series, adapted from the July 17 issue of the Chaikin PowerFeed daily e-letter, Marc explains why AI has exploded in popularity... highlights an important factor in AI investing... and details how you can uncover viable investment opportunities amid today's AI craze...
How Not to Invest With AI
I'm guessing many of you are still excited about the AI craze... I am, too.
I can't help it. I've spent decades in finance, specifically focused on using computers to generate the highest returns possible.
So, when a new computer tool promises to revolutionize the way we work... I take it seriously. And I'm having fun with it, too.
Many of my colleagues have received an e-mail from me that included some content written with artificial intelligence ("AI"). I just love how incredibly natural AI writing sounds these days.
It's truly an incredible leap. But that doesn't mean everything AI-related is golden.
Today, we're going to explore a dark spot in AI. And we'll use the Power Gauge to help us with it.
You see, the Power Gauge has identified a way not to invest with AI. And I think you should hear about what it has uncovered. After all, the fund literally has "AI" in its name.
Now, astute readers will have noticed... today, we're talking about investing with AI rather than in AI. That's an important distinction.
Sure, there are lots of great, and not-so-great, ways to play the AI trend. But some investment tools available to investors also claim to use AI in their processes.
The one we're looking at today is the AI Powered Equity Fund (AIEQ).
At first glance, that name looks great. Bigwigs on Wall Street put together an exchange-traded fund that's specifically powered by AI.
But looking at the performance... we can quickly see something is wrong.
Over the past year, the S&P 500 Index has made an incredible turnaround. And so has the Nasdaq Composite Index. They're up more than 17% and 23%, respectively.
But AIEQ is struggling. It's simply not participating in the rally.
It's not just a bad year for the fund either. Zooming out even more, we find that over the past five years, the fund has barely returned 12%. The S&P 500 clobbered it over that time frame with nearly 60% returns.
The Power Gauge sees this, too. And today, the fund earns a "neutral" rating...
Looking at the upper right-hand corner of the graphic, you'll see the Power Bar for the fund. That represents the Power Gauge rating for each of the individually rated stocks that the fund holds.
Today, the majority of the stocks in the fund earn a neutral or worse rating from the Power Gauge. And I'm able to see that the fund ranks No. 129 of 166 funds in the "All Cap Blend" fund category.
Put simply, this fund may have AI in its name, but the Power Gauge and fund's performance make it clear...
This is not how you want to invest with AI.
Now, that doesn't mean I'm not excited about AI. I'm particularly bullish about how investors can leverage these new tools in their own portfolios.
And to give you a clue about where this is going, just remember...
The AI craze is real. But that doesn't mean every part of it is perfect.
Good investing,
Marc Chaikin
Editor's note: AI has the potential to shape the investment landscape for years to come. And it just shattered one of the most important barriers in technological history. That's why Marc recently joined Retirement Millionaire editor Dr. David Eifrig to release a special presentation on the topic...
They delved into whether AI is just another stock market bubble – or something that will really change the world and economy for good. Plus, they discussed how you can use AI to transform your wealth. Click here to watch the full replay...