Bridgewater Associates' use of AI?

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May 18, 2022
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ChatGPT Impresses the World's Largest Hedge Fund: Bridgewater Associates' Investment Associate Test Passed

Introduction

Imagine having millions of investment associates, all working simultaneously and continuously around the clock without rest. Sounds like a dream, doesn't it? Well, according to Greg Jensen, the co-CIO of the world's largest hedge fund, Bridgewater Associates, that's exactly what OpenAI's ChatGPT feels like.

Impressive Achievement of ChatGPT

OpenAI's artificially intelligent chatbot, ChatGPT, has successfully completed Bridgewater Associates' investment associate test. The co-CIO was impressed enough to compare the chatbot's performance to the 80th percentile of human test takers, on par with a first-year associate at the prestigious hedge fund. This implies that the AI performed better than the majority of humans taking the same test, a striking achievement for artificial intelligence.

According to Jensen, "Because all of a sudden, if you have an 80th percentile investment associate, technologically, you have millions of them at once."

The Potential and Limitations of ChatGPT

However, the chatbot's success does not come without its limitations. Despite ChatGPT's strong performance, the chatbot does have a tendency to provide inaccurate information. Jensen equates some of the AI's incorrect outputs to "hallucinations."

Despite these issues, the potential benefits of utilizing AI tools like ChatGPT are too significant to ignore. Bridgewater Associates has already started experimenting with AI in their trading strategies. They're even developing a fund that's primarily managed by machine learning techniques. Moreover, the firm is working on integrating ChatGPT with other statistical and AI models to enhance its predictive capabilities.

The Human Element in Investment

Despite the impressive strides made by AI tools like ChatGPT, the human element in investment decisions is not yet redundant. As Jensen emphasized, the need for "flexible generalists" who can use various tools to achieve their objectives remains critical.

"You're still going to want people around that, working on those things," Jensen highlighted, pointing to the enduring value of human intuition and creativity in navigating complex investment landscapes.

Conclusion

ChatGPT's success with Bridgewater's test is a significant milestone in the ongoing integration of AI into financial services. The capabilities of this AI tool signal the arrival of a future where investment advice may not solely rely on