AI's Role in Investment Strategies and Decision-Making
Published: 2023-12-01 14:46:15

Investing in the stock market isn’t easy, especially considering the vast amount of data and information that you have to acclimate to. Even the very best stock brokers don’t have all the tools they need to formulate an efficient, well-balanced analysis of the market – thus helping them to make correct decisions for their clients.

Brokers, themselves, can also make the process difficult for first-time investors. Often, middlemen will only work with investors who have a lot of money to put into the market, while also attempting to maximize their own profit. This cuts off opportunities for those with lower sums, putting them at a disadvantage in navigating the market and making strong returns. 

This has been the case for years now, with no real solution to solve the problem.

##Enter AI

At least, there was no solution. Now, however, the difficulties of the stock market may have been eased with some new tech that you might have heard of.

Across multiple industries, AI has been making a substantial impact, and this includes the stock market, where investors are working with AI tech to both analyze and provide insights into the investment landscape.

A good example of this can be found in [FINQ’s portfolios](https://blog.finqai.com/articles/taking-a-closer-look-at-finq-portfolios-outperforming-market). Amidst the clutter of abundant, contradictory, and frequently disorganized financial data, FINQ distinguishes itself. Its STOCKS-AI system collates data from diverse origins such as company fundamentals, professional wisdom, and public sentiment. It then adeptly organizes these extensive data sets, converting them into actionable insights. This process equips investors with highly relevant, data-backed insights, enabling them to make decisions that are not only informed and timely but also exceptionally effective.

##AI’s Role In Investment Strategies

There are numerous investment strategies for investors to pick from, but it’s not always obvious which will be appropriate in the current market. This isn’t helped when they are given unreliable data and advice that might not be in their best interests.

AI can work from a vast amount of data that would be unattainable by a single individual, or even a single company. While collecting this data, it can deconstruct the information and evaluate the true [risk versus reward](https://www.investopedia.com/terms/r/riskrewardratio.asp#:~:text=The%20risk%2Dreward%20ratio%20is,investment%20without%20undue%20risk%2Dtaking.). It can then transfer this information to the investor in simple terms – clear and concise insights that can be chosen no matter the risk tolerance or experience of the investor in question.

##AI’s Role In Decision-Making

Because AI can offer investors a clear idea of where the stock market is, it can also aid in overall decision-making. Or, rather, it can help to treat the dreaded [analysis paralysis](https://www.healthline.com/health/mental-health/analysis-paralysis). This is the part of investing that can easily backfire, even for the most seasoned investors.

We mentioned it earlier, but a lot of investor strategies are dictated by their risk tolerance. If an investor is risk-averse, that means they are less likely to capitalize on key market movements – either because they do not want to take the risk, have a strategy that doesn’t involve constant market analysis, or spend too much time back-and-forthing with a middleman.

With AI, however, the technology keeps up with every second of the market, and it can respond in real-time to any changes. The risk, therefore, is greatly reduced, as AI has the best possible scope to analyze the market and make key decisions – whether that’s ascertaining the top stocks to buy, or movements that the investor should make for a current portfolio. This is a game-changer in the investment world, and it shows how far AI has come to not only simplify the process but also make it accessible for any investor.