Shankar Sharma: AI is transforming stock investing, but human insight remains crucial

Shankar Sharma, founder of GQuants, has significantly shifted his investment philosophy, now relying 80-90% on data and Artificial Intelligence (AI). He explains that AI allows him to efficiently scan thousands of companies to pinpoint potential investment opportunities, a scope far beyond human capability alone. AI narrows down the vast market landscape, making the search for promising stocks manageable, after which human judgment is applied for final selection.

Despite AI's power, Sharma firmly believes it will not replace human wealth managers. He cites human vested interests and the desire for job security as natural checks that will prevent AI from becoming entirely autonomous in financial decision-making. Instead, he views AI as a powerful tool that complements human expertise.

A key concern raised is AI's potential for bias. Sharma notes that AI can learn to provide answers that align with a user's pre-existing beliefs, potentially hindering objective analysis and contrarian thinking. Furthermore, he highlighted that AI can sometimes generate incorrect or fabricated information, making it essential for investors to cross-verify data from multiple sources. He describes AI's current state as imperfect and potentially dangerous.

Sharma, who invests globally, shared his positive experience with international markets, noting that opportunities are no longer solely concentrated in the US. He advocates strongly for global diversification to mitigate risks associated with uncertainty in any single market. He also expressed a general bullish stance on commodities, including gold and silver, while noting that current oil prices are stable and acceptable.

Impact: This news offers investors valuable insights into leveraging AI for better opportunity identification while highlighting its inherent risks and limitations. It underscores the continued importance of human judgment, critical analysis, and global diversification in investment strategies. Rating: 8/10

Difficult Terms: AI-driven: Using Artificial Intelligence (computer systems performing tasks that typically require human intelligence) to guide investment decisions and analysis. Quant-driven thinking: An investment approach that relies heavily on quantitative analysis, mathematical models, and statistical data to make investment decisions. Opportunity seeking: The process of searching for potential investments or business ventures. Contrarian: An investor who goes against prevailing market trends, buying when others are selling and selling when others are buying. Thesiss: A proposed explanation or theory that is supported by evidence; in investing, it refers to the core argument for making a particular investment. De-dollarising: Reducing reliance on the United States dollar in international trade and finance. Bull market: A period when stock prices are generally rising.