In a recent episode of Bloomberg’s Odd Lots podcast, Bob Jensen, Co-Chief Investment Officer (CIO) at Bridgewater Associates, the world’s biggest hedge fund, warned against using large language models (LLMs) like ChatGPT to trade stocks. Although Jensen is a fan of artificial intelligence (A.I.) technology, he believes that relying solely on LLMs for stock-picking is a hopeless path that will yield awful results.
Bridgewater, founded by billionaire investor Ray Dalio in the 1970s, has been utilizing machine learning for a long time. However, the firm takes a more complex approach and combines multiple forms of A.I., leveraging the strengths of different models. Jensen explained that they use large language models to create theories and then utilize other techniques, such as statistical models, to evaluate and iterate on those theories. This approach allows Bridgewater to develop an artificial reasoner that combines the imprecision of LLMs with the precision of statistical models.
Jensen emphasized the importance of building an ecosystem that can achieve the tasks performed by Bridgewater analysts and its stress-testing process but on a much larger scale. By harnessing the power of A.I., Bridgewater aims to scale up its capabilities and have millions of associates at once to analyze and make investment decisions.
While there has been a surge of interest and investment in A.I. technology, Jensen cautioned against the hype and urged market participants to approach it with caution. He highlighted that rather than displacing human investors, A.I. will change the roles of investment associates. Jensen encouraged curiosity and utilization of new technologies in the future of work, as he believes it would be challenging for knowledge-based industries to ignore these advancements.
As A.I. continues to evolve, there are concerns about its impact on job markets and the need for governance. However, Jensen’s perspective suggests that embracing technological advancements and utilizing them alongside human expertise could lead to more efficient wealth management processes.
With billions of dollars being invested in cutting-edge A.I., conversations around its potential to disrupt various industries are becoming more prevalent. The future of work will likely require individuals to adapt to new roles and technologies. Jensen’s view aligns with the idea that incorporating A.I. into the knowledge industry is essential for future success.
In conclusion, while cautioning against relying solely on large language models like ChatGPT for stock picking, Bob Jensen of Bridgewater Associates believes in harnessing the power of A.I. to create an ecosystem that combines the strengths of various models. He sees A.I. as a tool to augment human expertise and achieve more efficient wealth management. With the future of work rapidly changing, Jensen encourages curiosity and utilization of new technologies to stay ahead in the evolving landscape.
