Welcome to the era of stock-picking AI chatbots

An Israeli startup just received approval for a chatbot that will pick stocks. Would you take its advice?

9/26/24 1:57PM

If you ask ChatGPT, “Which stocks should I buy,” the chatbot will reply with something like “I'm unable to provide specific stock recommendations as I'm not a licensed financial advisor.” (This is a verbatim response from my ChatGPT, I’m guessing you’ll receive something similar).

However, a Tel-Aviv-based startup just received approval from the Israel Securities Authority to release a chatbot designed to answer this very question, and later this month, users will be able to solicit the hottest stock picks from their digital aid. From Bloomberg:

Tel Aviv-based Bridgewise has been given the green light by the Israel Securities Authority (ISA) to release a chatbot called Bridget later this month that can offer recommendations for which stocks to buy and sell in response to user queries. The startup is working with one of the country’s largest banks, Israel Discount Bank, to roll out the product…
A spokesperson for the Israeli regulator said the approval came with restrictions. The tool cannot include advice “that is specific to the user,” for example, or have a conversation that appears to be “personal advice.”
When testing the chatbot, its responses included a disclaimer about the service’s limitations. “The information is not tailored to you specifically and is not a substitute for personal investment advice,” the disclaimer said.

I love everything about this. First, the point that Bridget can provide stock picks, but it can’t include advice “that is specific to the user” is just great. If something is considered a good stock pick for one person, wouldn’t that make it a good stock pick for everyone? If Bridget tells me that Cloudflare is a good investment for XYZ reason, wouldn’t that same reason apply to any other investor? If it’s a good investment, it’s a good investment. Period.

This disclaimer reminds me of when I see folks promoting different stock picks on X or Substack, before including a parenthetical phrase that says, “Not financial advice!” Like, that’s great, but it’s not actually a legal defense. I imagine that we’re around two months away from a headline that says “Investor sues Bridgewise after stock pick recommendation drops 20% in one week.”

That being said, I do think a stock picking tool like this, if its recommendations aren’t taken at face value, will be a valuable tool for investors that expedites research. According to the Bloomberg report, Bridget provides reasons for its buy and sell recommendations, allowing investors to more quickly find relevant data on different companies from which they can draw their own conclusions.

I will be interested to check back in a couple of years and see how a fully Bridget-recommended portfolio performs compared to the S&P 500.

Matt Phillips

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