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Weird Money

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 2:57PM

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.

Max Knoblauch4h

Nike’s China business declines for seventh straight quarter

Sportswear kingpin Nike reported results for its third quarter, which ended in February, after the bell Tuesday. The stock fell about 3% in after-hours trading.

For fiscal Q3, Nike reported:

Earnings of $0.35 per share, comfortably above the Wall Street consensus of $0.29 per share compiled by FactSet.
$11.28 billion in total revenue, roughly in line with the $11.26 billion estimate.

Nike’s sales in China — where the company earns about 15% of its revenue — fell 7% to $1.62 billion. That’s its seventh straight quarter of sales declines in the market, though this quarter’s was less than feared. The company had issued weak guidance for this quarter considering continued softness in the region.

“This quarter we took meaningful actions to improve the health and quality of our business,” said Nike CEO Elliott Hill. “The pace of progress is different across the portfolio and the areas we prioritized first continue to drive momentum.”

Nike shares are trading near decade lows this month, as tariffs continue to weigh on profits and shipping costs rise amid the war with Iran. As of Tuesday’s close, the stock was down 17% year to date.

Luke Kawa, Tasha Matsumoto

Stocks end worst quarter since 2022 with best day since May

Optimism that the end of the war may be near sent stocks surging.

Max Knoblauch6h

Oil-sensitive travel stocks pop following Iran state media reporting on potential war resolution

Travel stocks are surging on Tuesday as oil prices fall following reports from Iranian state media that President Masoud Pezeshkian said the country has “the necessary will to end this war,” but would only do so with guarantees that “prevent the recurrence of aggression.”

The war has sent oil prices and refining margins surging this month, causing airlines and cruise lines to cut profit forecasts despite reported high demand.

Following Tuesday’s update, shares of the big four US airlines (Delta Air Lines, United Airlines, American Airlines, and Southwest Airlines) all climbed, along with smaller rivals including JetBlue. US airlines have stopped fuel hedging in recent years, increasing their exposure to upward swings in oil prices.

Cruise stocks also rallied, with Carnival and Norwegian up more than 6% and Royal Caribbean up about 5%.

J. Edward Moreno9h

The FDA is expected to lift restrictions on certain peptides, the NYT reports

The Food and Drug Administration is expected to lift restrictions on certain peptides, allowing the experimental, often injectable substances to be sold by compounding pharmacies, The New York Times reported Tuesday.

The potential move was previously reported by The Wall Street Journal, and teased by Health Secretary Robert F. Kennedy Jr. on the “Joe Rogan Experience” podcast in late February.

Peptides have boomed in popularity recently, with search interest for “peptides” surpassing “ozempic” this month. Many of them are currently understudied and not approved for human use, a rule consumers are able to bypass by purchasing them from suppliers that sell them for, ostensibly, research purposes only.

As reports of the FDA changing its stance of peptides mount, consumer health companies like Hims & Hers and Superpower have been getting ready to roll out their peptide offerings as soon as they get the FDA's blessing.

The peptide gold rush: How impending deregulation could supercharge a shadow industry

Matt Phillips9h

Memory stocks bounce as Bernstein analyst calls TurboQuant fears “overdone”

Memory stocks rose Tuesday, after Bernstein analysts called the recent panic over Google’s TurboQuant AI algorithm “overdone.”

Bernstein analyst Mark Newman wrote:

“[Hard disk drive] and Memory stocks have sold off significantly due in part to fears from Google’s TurboQuant report. This however, should have zero impact on HDD demand and negligible impact on NAND demand. Given the stock sell-off we see this as an attractive entry point for Seagate Technology Holdings, Western Digital and Sandisk’s and upgrade WDC to Outperform.”

All three stocks were up early Tuesday, as was memory chip maker Micron.

Today’s rally stands in stark contrast to the pummeling these shares have endured over the last week, after Google Research published a technical paper on March 24 detailing its TurboQuant AI algorithm, which compresses the amount of data associated with AI operations without affecting the accuracy of AI models.

That was seen as a threat to surging AI demand for memory storage, which has supercharged prices for memory chips and memory-related stocks over the last year.