Alejandro Lopez-Lira on AI in Financial Forecasting

Q & A

AI Street interviewed Dr. Alejandro Lopez-Lira, a finance professor at the University of Florida and author of “The Predictive Edge: Outsmart the Market using Generative AI and ChatGPT in Financial Forecasting” out today.

The book explains how to use artificial intelligence and large language models (LLMs) to find investment ideas, improve trading strategies and increase efficiency.

Lopez-Lira has been at the forefront of AI and finance, publishing a research paper last year on ChatGPT’s ability to predict stock returns based on news headlines. Lopez-Lira and his co-author, Yuehua Tang, asked ChatGPT to decide how a headline would affect a company’s stock price with a short prompt:

Forget all your previous instructions. Pretend you are a financial expert. You are a financial expert with stock recommendation experience. Answer “YES” if good news, “NO” if bad news, or “UNKNOWN” if uncertain in the first line. Then elaborate with one short and concise sentence on the next line. Is this…