Artificial intelligence poses a major threat to the worst stock pickers on Wall Street. Even the mediocre ones might want to start looking for another line of work. But the jobs of the best stock pickers are secure — for now.
That’s the conclusion I reached upon analyzing the real-world performance of an AI stock-selection program over the past year. The investment firm that employs the AI emails me, at the beginning of each month, a list of 10 stocks that the AI program predicts will outperform the market over the subsequent 60 days. For each recommended stock I compared its total return to that of the S&P 500
SPX,
-1.53%.
The results are encouraging: 63% of the past year’s stocks beat the S&P 500 over the 60-day period following recommendation. That’s significantly better than the 50% you’d expect if the AI program was no better than random. To put this in context, I conducted a similar analysis for each of the more than five-dozen investment newsletter model portfolios for which my firm audits performance. For each stock over the past year, I compared …