Top 10 Posts from 2023: The 10 Greatest Investors, ChatGPT, and the Active Management Delusion

1. The 10 Greatest US Investors and the Virtues That Made Them

Who are the greatest investors of all time? Andrew Mitchell, founder of Ophir Asset Management, asked ChatGPT to name the top 10. The artificial intelligence (AI) responded with its list. Mark J. Higgins, CFA, CFP, was intrigued by both the question and ChatGPT’s response. He’d just completed writing Investing in U.S. Financial History, and had many legendary investors on his mind. While ChatGPT’s list was not terrible, it included four people who he believes were undeserving and excluded several more who were very much worthy. So where did ChatGPT go wrong?

2. ChatGPT and the Future of Investment Management

“So, do we human advisers and analysts stand any chance in the post-ChatGPT world?” Larry Cao, CFA, the editor of Handbook of Artificial Intelligence and Big Data Applications in Investments, asks. “Absolutely. But authenticity will be key. Originality has always come at a premium, and that premium will only increase in the ChatGPT era. In investment analysis or portfolio construction, if we’re offering little more than the conventional wisdom, then ChatGPT and similar applications could very well take our jobs.”

3. ChatGPT and Generative AI: What They Mean for Investment Professionals

“ChatGPT has launched a new era in artificial intelligence (AI),” Michinori Kanokogi, CFA, and Yoshimasa Satoh, CFA, write. So, what does this mean for investment management and how will all the ChatGPT- and large-language-model (LLM)-related developments affect how investment professionals work?

4. A Sea Change: Howard Marks, CFA, on the End of Easy Money

“I’m not saying that interest rates are going to go back up. I just think they’re done coming down,” Howard Marks, CFA, told Marg Franklin, CFA, as quoted by Mark Fortune. “One of the basic tenets of my thesis is that in the next five to 10 years, interest rates will not be constantly coming down or constantly ultra-low. And if that’s true, I think we’re in a different environment, and that’s a sea change.”

5. The Active Management Delusion: Respect the Wisdom of the Crowd

That few active managers add value is a conclusion supported by numerous studies going back decades, Mark J. Higgins, CFA, CFP, observes. Yet many investors still refuse to believe that very few can regularly outperform a cheap index fund. Outside a small and shrinking group of extraordinarily talented investors, active management is a waste of money and time. So, why is the active management delusion so persistent?

6. The Six Stages of Asset Bubbles: The Crypto Crash

Investors can protect themselves from the next bubble by recognizing the trajectory that most follow, Mark J. Higgins, CFA, CFP, contends. Using the cryptomania of the 2010s and 2020s as a guide, he lays out the path that most bubbles take.

7. ChatGPT: Copilot Today, Autopilot Tomorrow?

“Based on what we have learned about the new, dark art of prompt engineering, how can quant and fundamental analysts apply LLMs like ChatGPT? How effective a copilot can these technologies be?” Dan Philps, PhD, CFA, and Tillman Weyde, PhD, pose and answer these questions.

8. The Predictive Power of the Yield Curve

“The predictive power of the yield curve is a widely accepted causal narrative,” Joshua J. Myers, CFA, explains. “But the history shows that the causal correlation between long and short rates is actually quite weak.”

9. Redefining the Retirement Income Goal

David Blanchett, PhD, CFA, CFP, discusses his research on perceptions around retirement spending flexibility for the Financial Analysts Journal and provides evidence that households can adjust their spending and that these adjustments tend to be less disastrous than success rates and other common financial-planning-outcomes metrics suggest.

10. ChatGPT: The Origins, the Hype, the Opportunity

“What are the LLM opportunities and risks in investment management?” Dan Philps, PhD, CFA. and Tillman Weyde, PhD, writes. “To answer that question . . . we will introduce how to apply LLMs in investment management and explore the new dark art of ‘prompt engineering.’”

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All posts are the opinion of the author. As such, they should not be construed as investment advice, nor do the opinions expressed necessarily reflect the views of CFA Institute or the author’s employer.

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