AI can help investors harness and better understand data about the markets, said Toggle AI CEO Jan Szilagyi on Yahoo Finance Live (video above).
"We've taken this really incredible technology that allows us to communicate with computers, train it in a lot of the analytical methods that allow you to then understand better what's going on in the markets," he said. "Just like this morning, when you were really trying to get a narrative of a range of assets, and I think this has become substantially easier with all the progress we've seen in generative AI."
The AI hype cycle is in full swing, and it was kicked off at the end of last year by the release of OpenAI-built ChatGPT. Toggle AI, an analytics firm, is looking to use the power of generative AI to track what's happening in the markets on a sector-by-sector and company-by-company basis. However, Toggle AI is very careful not to make recommendations; the company's priority is to provide information.
"So, very importantly, it doesn't issue Buy or Sell recommendations," said Szilagyi. "We have a lot of advisers who are actually using our platform. It allows them to very quickly do a data check. For example, you're trying to understand what's currently going on with banks. Why are banks, for example, up today versus technology, which might be down? Is it more earnings-driven? Is it positioning-driven, and so on?," he said.
"It provides context by harnessing this large amount of data and distilling it down to the key things that really matter, but it it definitely works in tandem with us as opposed to replacing advisers, as opposed to replacing what all of us do," he added.
It's also important to note that the platform Toggle AI is working with, while it might have some things in common with ChatGPT, has been built to specifically provide accurate financial information.
"ChatGPT, of course, is in the limelight because everybody is now learning to use this technology," said Szilagyi. "What we've taken is foundationally the same model, but we've trained it specifically and much more narrowly on financial analytics, because the concern you might have when you're using this technology in finance is, 'What if I get a wrong answer?' There could be hallucinations. How can I be sure that what you're telling me is factually correct? So, what you see with Toggle is that each time analysis is done and summarized for you, you have complete traceability."
Ultimately, AI is unlikely to replace human financial advisers, but what it can do is be that proverbial tide that raises all boats, helping create a financial system that everyone understands better across the board.
"To an extent, [AI] does elevate everybody's level of understanding of the market, but I don't think it necessarily changes dramatically the relative hierarchy," he said. "There will be people who will be spending more time with it to continue to understand the markets better, and will use it differently than others. I do think that just in the sense of financial literacy and a better understanding of how to avoid some really bad mistakes and outcomes – that's where the technology can be very helpful."