AI stock portfolios pick popular companies, but don't make more money
What happened
Researchers asked several AI models to pick stocks for household portfolios. It turns out the AI models picked popular, large companies but did not earn statistically significant abnormal returns.
Why it matters
Everyone assumed that AI could find hidden patterns in the market and make better investment decisions than humans. This paper shows that, at least for household stock portfolios, AI just picks what's already popular. This means that the promise of AI-driven alpha for individual investors is not yet here.
The signal
Watch for new research that uses different AI models or more complex investment strategies to see if they can generate abnormal returns.