AI Pioneer Who Built First Hedge Fund Bot Warns on ChatGPT

Vasant Dhar was doing AI on Wall Street before most traders knew what a neural network was. Back in 1994, he helped build one of the earliest AI-driven hedge funds — the kind of work that now sounds like origin-story stuff for the entire quant industry. So when this guy talks about what AI can and can't do with your portfolio, you listen.

Here's the kicker: he doesn't trust ChatGPT with his own money. That's not a knock on the technology broadly — Dhar knows better than almost anyone what machine learning can do in financial markets. But the large language models powering today's consumer AI tools are a fundamentally different beast from the disciplined, data-trained systems quants have been running for decades.

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The distinction matters for retail investors right now. There's a wave of fintech apps and AI-powered "advisors" promising to revolutionize how everyday people invest. Dhar's skepticism is a useful gut-check. Hype cycles in finance are expensive. The investors who got burned chasing algorithmic crypto bots or robo-advisors that couldn't handle a volatile market already know this lesson.

What Dhar wants you to understand is that real AI in finance is narrow, tested, and brutally accountable to performance data. ChatGPT is a generalist tool optimized for language, not returns. Feeding it your brokerage account details and asking it to optimize your retirement isn't the same as what a quant fund does with proprietary models trained on decades of tick data. The underlying mechanics are completely different.

Bottom line: be skeptical of any platform slapping "AI-powered" on its homepage and promising alpha. The guy who literally built this stuff three decades ago isn't using the hot new chatbot to pick his stocks. That should tell you something. Continue reading at MarketWatch.com