Why ChatGPT is Not the Best Investment Adviser

What if your next investment mistake isn’t because of greed or fear, but because of ChatGPT? Millions of people are already asking AI what to buy, what to sell, and when to retire. Some are even letting it run their portfolios. Yet here’s the truth few are talking about: ChatGPT isn’t predictive, it’s persuasive. It doesn’t forecast the future; it summarises the past, and that difference could cost you everything.

Even Sam Altman, the man who built it, says it himself: “It’s a mistake to be relying on it for anything important right now.”

Professionals and Consumers are Relying on AI Tools for Advice

Still, investment professionals and financial firms are quietly weaving generative AI into research, modelling, and even client reports. The CFA Institute’s 2024 employer survey found that most investment firms are either already using or planning to use AI tools, but nearly all of them admit to ethical and regulatory worries. In short, the professionals are using it but fear what it might do next.

Meanwhile, retail investors are flocking to it. A 2024 FINRA Foundation study found that around 5 per cent of consumers already use AI for financial decisions, and that number is doubling each year. In addition, usage of ChatGPT among U.S. adults has nearly doubled since 2023, according to Pew’s 2025 Research report. As such, the line between “assistant” and “adviser” is becoming extremely blurred.

The Hidden Risk: It Sounds Right, Even When It’s Wrong

ChatGPT doesn’t think, it predicts. Its confidence has nothing to do with correctness, and that’s dangerous in markets built on uncertainty. It will gladly generate a detailed forecast of the next rate cut or stock surge, even if the data ends in 2024. It doesn’t know what happened this morning, or that an earnings revision dropped five minutes ago. Yet people are making real-money decisions based on its tone and fluency, not its foundation.

That’s how you get the illusion of insight: financial hallucinations that sound smarter than they are, but that doesn’t mean AI doesn’t have a place in investing. Used correctly, it can be a potent tool for analysis and decision-making support. Here are some ways to use it safely and effectively in your investment process.

Two Ways ChatGPT Can Be Useful Without Risking Your Portfolio

1. Use it for speed, not signals to buy or sell

Let ChatGPT help you summarise announcements, reports, or transcripts. You can paste an earnings call and ask it to list “key margin drivers” or “CEO forward statements.” This way, it will cut your prep time, not your capital.

2. Use it to challenge yourself

Instead of asking what to buy, you can ask it to “List five reasons this trade could fail or what assumptions would break my investment strategy?” This way, it becomes a second opinion generator, a digital devil’s advocate that keeps your reasoning honest.

The Key Takeaway

ChatGPT can make you a faster analyst, not a better prophet. If an AI’s answer lacks a source you can measure and verify, it’s not advice. So, before you hand over your financial future to a machine, remember that it’s not predicting the next market move, it’s predicting what you want to hear.

What are the best and worst-performing sectors this week?

The best-performing sectors include Consumer Staples, up over 1.5 per cent, followed by Energy, up over 0.5 per cent and Utilities, up just under 0.5 per cent. The worst performing sectors include Healthcare, down over 8 per cent, followed by Information Technology, down over 4 per cent and Real Estate, down over 3 per cent.

The best performing stocks in the ASX top 100 include Mineral Resources, up over 7 per cent, followed by Woolworths Group and Ansell Limited, both up over 6 per cent. The worst-performing stocks include Lynas Rare Earths, down over 21 per cent, followed by Wisetech Global Limited, down over 17 per cent and CSL Limited, down over 15 per cent.

What's next for the Australian stock market?

This week, sellers took control of the All-Ordinaries Index, driving it down more than 1 per cent on Thursday. The decline wasn’t entirely unexpected as the index has now failed for four consecutive weeks to close above its previous all-time high of 9,322 points, set in late August. As we’ve highlighted before, until the market can achieve a decisive close above that level, it remains uncertain whether the bulls have enough strength to push prices higher.

With the pullback underway, the 9,000-point level now becomes a key area to watch for renewed buyer interest. However, there’s a twist: the U.S. Federal Reserve’s rate cut overnight could shift the tone sooner than expected. Rate cuts typically weaken the U.S. dollar, and because commodities tend to move inversely to the dollar, a softer greenback often drives commodity prices higher.

That’s particularly good news for Australia’s largest sector, Materials. A falling dollar could give this sector exactly the catalyst it needs to kick off its next rise. Investors should keep a close eye on opportunities here, as the combination of supportive macro trends and strong fundamentals could set the stage for significant growth.

Don’t overlook gold either. It’s been under pressure lately, but the same rate cut that weakens the dollar could breathe new life into the precious metal. With several quality gold producers listed on the ASX, this may be the moment where the tide turns in their favour.

For now, good luck and good trading.

Dale Gillham is the Chief Analyst at Wealth Within and the international bestselling author of How to Beat the Managed Funds by 20%. He is also the author of the award-winning book Accelerate Your Wealth—It’s Your Money, Your Choice, which is available in all good bookstores and online.

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