Mum and dad investors are increasingly using artificial intelligence to inform their stock market decisions in a fast-moving investment environment.
Just under half, or 48.6 per cent, now use AI tools when planning where to place their hard-earned money, according to a survey by stockbroking platform CMC.
Of those, 33.1 per cent use it occasionally, and 15.6 per cent regularly, the firm discovered after canvassing 8500 of its clients.
“I’ve definitely found it a lot more accurate and reliable if you learn how to prompt it properly and how to get the systems using the best sources only,” client premium manager Fraser Allan told AAP.
“However, a trust gap remains.”
Most of the survey respondents were using AI to research companies, analyse the market and generate trade ideas but a level of scepticism remained, with less than a third saying they trusted AI-generated market insights.
Overall, CMC found investors remained confident despite market headwinds caused by geopolitical tensions like the Middle East conflict and the Russia-Ukraine war.
A large majority want to invest as usual – or in greater amounts – in the next six months, despite cost of living issues limiting access to spare cash.
More than half of those surveyed pointed to their bank balance as their biggest barrier to investing.
“They’re not stepping away from markets just yet, but there’s a lot more caution,” Mr Allan said.
“Uncertainty has in the past led some retail investors and traders to flee to cash. This time, some investors and traders are staying in the market and adjusting how they participate.”
The study came after the US Federal Reserve raised interest rates and flagged further increases in borrowing costs in coming months, and ahead of a Reserve Bank of Australia monetary policy meeting next week which could result in a rate increase.
Many of the investors and traders surveyed also viewed exchange-traded funds, or ETFs, as the better investment in volatile times, and cryptocurrency as the riskiest.
ETFs are financial instruments that trade like shares on stock exchanges like the ASX, offering exposure to a basket of underlying assets such as stock market indexes, commodities, cryptocurrencies or investment themes.
“This is a market waiting for a catalyst rather than one positioning for a direction,” Mr Allan added.
“When that catalyst comes, whether it’s rates, earnings, or geopolitics, there’s a very large group of investors ready to move quickly.”
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