Folks, it’s time to say goodbye to endless hours of data crunching analysis paralysis and all sorts of tedious work you have to do in equity research. In this video, let me show you how ChatGPT can streamline your equity research process, so you can better focus on understanding the businesses and their stock movement.
Let’s dive right in. As a language model, ChatGPT can help us in the realm of writing. Since its release, ChatGPT has been my proofreader for my weekly blog articles. Simply instruct ChatGPT to proofread the following and then paste in your rough draft. It will produce a revised version. However, make sure to fine-tune the output to maintain your unique writing style, which is often part of your brand.
Even if you know your writing had poor grammar, feed it into ChatGPT and see what it comes up with. Review it, adding or removing as needed, and repeat the process until you arrive at the final form.
You can also ask ChatGPT to summarize anything, even specifying a word limit for the summary. For example, when compiling speaker bios for your annual client conference, manually pulling data from proxy statements or company websites and summarizing them to the same length can be very time-consuming. Now, you can just ask ChatGPT to summarize it for you. Feed in the blurb from the company’s proxy statement or website, ask for a summary with your desired word limit, and your job is done.
For Plus users, you can even feed a URL of a document as an input, unlocking the possibilities of summarizing 10Ks, earnings calls, or any industry-related text you want to generate an article quickly.
Say, write an article using the information below, and then paste in your gathered data points. ChatGPT will provide a draft of the article, and you can fill in the missing pieces.
Most YouTubers are likely experimenting with ChatGPT for video generation. Why not use it for research and idea generation? For example, if you cover semiconductors and you want 20 note ideas on how to generate deep dive content on AI that can engage clients, just ask ChatGPT.
Another handy feature is generating emails. You can ask ChatGPT to compose an engagement email tailored to your liking. Remember, though, for important communications and human touch might still be necessary, so use this feature with caution and with human intervention.
Even for a pretty individualistic profession, you have to work with people via verbal and written communication in equity research. ChatGPT can also help you soften your tone when delivering feedback to juniors or crafting diplomatic responses to supervisory analysts.
Moving on to the actual research and analysis, many of my Instagram followers praise ChatGPT’s ability to generate more suitable comparables or competitors for the stocks they analyze, often surpassing most of the real-time data vendors. Take advantage of that.
Next time when your analyst or portfolio manager asks you to put together a quick comp sheet, you can even feed an income statement or a KPI table from a 10K or another filing into ChatGPT to get a summary.
If you’re initiating coverage on a sector or conducting an industry deep dive for your portfolio manager, you can explicitly ask ChatGPT to map out the industry, providing you with a good starting point on understanding who gets to keep how much of the value of the entire value chain.
Additionally, ChatGPT can help identify the key risks of a company you’re interested in. So be sure to focus on the company’s specific risks rather than the generic ones.
The third bucket of use cases involves technical assistance. If you forgot how to calculate a less frequently used financial ratio, just ask the machine. Similarly, if you need help implementing a logic in Excel or even SQL, ChatGPT can assist you. You just have to ask the right questions.
Before I conclude, a few points to remember. Never fully rely on a machine. Always consider its limitations and potential errors. You need to ensure compliance with your firm’s policy on inputting material non-public information into an AI model.
Also, ChatGPT has a word limit of 3,000 words, so you need to break up larger inputs. But that means you could alter the takeaway in the summaries because it wasn’t analyzed holistically.
Keep in mind that AI-based summaries of certain events, like earnings calls, may not capture all the qualitative insights experienced investors are looking for.
How have you used ChatGPT to save time in your stock research analysis? Please comment in the video description below so we can all learn from each other.
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