Beware of investing in stocks through AI

Many investors are turning to new artificial intelligence (AI) tools for stock picking and investment advice. However, slow and insufficient data can lead to... heavy losses.

AI relies on data to advise on investments, so if the input data is inaccurate or incomplete, it can easily lead to wrong decisions - Graphics: TAN DAT

Many experts believe that AI predicting the future (if it exists) can be just as "wrong" as humans. Therefore, it is advisable to combine it with many other factors before investing...

AI benefits

Seven years ago, when Techcombank Securities (TCBS) implemented a technology brokerage model without brokers, many people considered this a bold move. In the past two years, the application of AI in investment consulting has been tested and developed quite a lot in securities companies. Many financial technology (fintech) companies are also racing in this field.

Currently, some applications are known to many investors such as DATX Vietnam, DNSE's virtual stock assistant Ensa, VNSC by Finhay of Vina Securities, Simplize...

For application providers, the obvious effect is that while traditional brokers can only serve a few dozen investors at a time, virtual stock assistants can serve thousands of customers at the same time.

Most of the apps advertise AI-based stock analysis and valuation in just minutes, early identification of strong stocks, and early capture of market cash flow. Even personalized investment ideas are provided according to each customer's interests...

Mr. Nguyen Mui (Hanoi) - a stock investor - said that he has been using AI in transactions for nearly a year now. "I have additional tools to help me determine buying and selling points based on analysis results. Information and price history are updated promptly. After just a few minutes with a report of hundreds of pages, AI can extract the important information I am interested in," Mr. Mui shared.

According to this investor's experience, AI seems to be useful for those who follow the technical investment school, that is, monitor the price and volume fluctuations of stocks in the past to calculate and analyze indexes, models, indicators...

"But after trying a few times to buy and sell purely based on AI recommendations, I haven't seen many advantages in investment performance compared to normal," said Mr. Mui.

Sharing with Tuoi Tre, the director of a securities company headquartered in Hanoi said that currently, AI applications in Vietnam mainly stop at being an information synthesis tool with technology similar to ChatGPT.

For example, an investor asks a virtual assistant whether to buy stock A, the answer is a ready-made template such as what are the business results, how many sessions the stock is trading higher or lower than the average, updates on the latest information about that business...

According to this person, securities companies themselves will be careful when recommending buying or selling stocks, especially through AI. Because it is easy to encounter trouble if the price does not meet investors' expectations. But on the contrary, in some applications of fintech companies, "buy - sell" recommendations are somewhat more comfortable.

Many stockbrokers are worried about losing their jobs due to the trend of investing in stocks using AI - Photo: Q. DINH

Don't "deify" AI

There are also many potential risks of loss, especially for investors who rely too much on AI. Even the chairman of a securities company that is deploying a famous AI virtual assistant in the market has to admit: AI cannot replace humans.

Mr. Vu Duy Khanh - Director of Smart Invest Securities Analysis - believes that risks will arise when we train AI incorrectly. Good input is needed for good output. Not to mention that the quality of input data in Vietnam is generally not perfect and transparent enough like in developed countries.

Meanwhile, AI relies on data to make decisions, it can completely make wrong predictions, leading to losses if the input is incorrect.

Ms. Tran Thi Khanh Hien - Director of Research at MB Securities (MBS) - also found that the data provided by AI is mainly based on past events. The fluctuations and prospects of businesses depend on many variables that AI cannot synthesize or does not have data to synthesize. Investors need to rely more on their judgment and understanding of the business.

"AI is a tool, each person should accumulate knowledge on their own, should not rely on AI or any stock "teacher" or brokerage consultant," said Ms. Hien.

The data "pump" determines AI

Mr. Phan Hoang Quan - a personal financial planning expert at FIDT Investment Consulting & Asset Management Company - also noted that investors, even when choosing AI as a companion, still need the skill of cross-checking information.

Because the accuracy of information from AI still depends on the people who "pump" it with sources. Always ask yourself whether the information source is reliable or not.

Mr. Quan also noted the need to be alert and avoid being "crazy" before the overwhelming buy-sell recommendations from AI assistants. "Buying and selling continuously can easily lead to losses," Mr. Quan said, adding that he himself has used AI tools but has not found them to be really effective.

In addition, according to this person, AI cannot predict unexpected situations, "black swan" events such as the Covid-19 pandemic, war...

No robot trading yet

According to Mr. Phan Hoang Quan, currently AI in Vietnam is mainly applied to collecting information and answering questions from investors about the potential and value of stocks. Some applications have recommendations for buying and selling points.

"No unit has officially deployed automatic transactions at high speed, also known as robot trading," said Mr. Quan.

Many experts reiterated that last September, the State Securities Commission issued a document requesting securities companies to review and immediately stop using automatic order placement (robot trading), take technical measures to prevent automatic order placement, and request investors to stop using this form without permission from the management agency.

However, there are still many advertising units about automatic trading with indicators on when to buy at the bottom or sell...

WHO threatens "rice-running" brokers?

The rise of AI investment has made many brokers worry about losing their jobs. However, Ms. Tran Thi Khanh Hien said that the development of technology with AI applications in stock investment requires brokers to upgrade themselves and become more progressive.

"The role of brokers is different in each era. In the past, brokers only needed to place orders, but later they had to advise. Now, the higher requirement is to identify risks faster. In the future, brokers who want to survive in this profession will have to develop even more professionally," said Ms. Hien.

Mr. Phan Hoang Quan believes that whether brokers are unemployed or not still depends on their qualifications, expertise and ability to meet service quality requirements. "Even without AI, they will still be unemployed if their expertise and ethics are poor," Mr. Quan said. In general, at present, AI has not reached the level of bringing too much confidence to investors, they are also concerned about other risks when depending on machines or AI such as viruses, incidents, etc.

Source: https://tuoitre.vn/coi-chung-dau-tu-chung-khoan-qua-ai-20241216091059848.htm