Michael Bloomberg built a $12.2 billion annual revenue business by using one technological innovation, desktop computers, to supply professional investors with information through Bloomberg terminals.
Now, an Internet-based company, Investing.com, wants to do the same, but for retail investors. By bringing the cost of producing the information down, artificial intelligence may help put professional-quality research in reach of retail investors around the world.
“We will be the retail version of Bloomberg – we’ll give them technical tools, help them get ideas on picking stocks. Users will pay for that,” said Ding’An Fei, executive chairman of the company and a founding partner of Joffre Capital, which has a majority stake in Investing.com. “Even if just a fraction finds this useful and pay a fee, that’s enough.”
Investing.com has 80 million monthly active users, who speak 30 languages, in 200 countries, he said. Advertising is the primary revenue driver. Founded by an Israeli entrepreneur in 2007, the company, which has more than 200 employees around the world, continues to operate normally despite the violence in nearby Gaza, according to a spokesman.
Joffre, with more than $200M of assets under management, has offices in Los Angeles, Beijing, Singapore, London and Dubai. Fei is also chairman of Coins.ph, which Joffre’s web site describes as Southeast Asia’s first blockchain native regulated fintech company. He was on the board of Grindr.
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“On Investing.com, we’ll do anything that empowers the user to make sense of the decision to buy or sell,” he said. “AI will be able to draw charts, and for users who prefer natural language experience, AI can be your financial translator, offering comps of a specific company or ideas of which stocks to pick in a market.”
Good for Investors?
Whether investment information produced at volume and in real time will help retail investors is a separate question from whether they will pay for it. Stock trading is akin to gambling for some investors.
Fei said that in his view, there are two ways Investing.com works: Some investors aim to beat the market by stock picking, and some investors enjoy investing. Most experts advise index investing for retail investors based on decades of research, but the introduction of free trading and low-cost tools like Investing.com makes stock picking more competitive as a strategy based on after-fee returns.
Investing.com is unusual in having a very broad perspective on the investment landscape in different countries. “There are some markets, like Korea and China, where 80% of the entire market is individuals,” Fei said. “There are a lot of things to learn that we can leverage with Investing.com.”
Dangers of an AI-Reliant Business Model
However, there are a couple of dangers to a business model based on AI-generated information. One of them is whether artificial intelligence trained on big data can be sustained if AI itself is producing the big data. An Axios headline recently referred to the phenomenon as “choking on its own exhaust.” Another issue that ethical concerns and regulation are having a growing impact on business operations, as in the case of OpenAI, where the board of directors forced founder Sam Altman out.
Investing.com is a multi-national company, which means it needs to steer clear of providing transactional services, such as actually placing trades. In markets such as the United States that would put its services under the purview of regulators such as the Securities & Exchange Commission or FINRA. Fei said the company does not collect personal information about its users.
Can AI Beat the Market?
As to the 800-lb gorilla in the room: Whether an AI strategy can beat the market consistently over time? Fei said this by email: “AI will play an increasingly important role in devising investment strategies. AI-assisted strategies will likely compete with each other.”
In other words, AI will repeat the pattern created by professional investors. Because information is so widely and readily available about public companies’ prospects, it’s almost impossible for a professional investor to consistently beat other professional investors with access to the same information. They cancel each other out; but the value of the overall market continues to grow as the world economy does. That’s why investing in funds designed to mirror broad swaths of the market work to drive returns.
Might one AI be better than the others at investing? Or might a group of AI’s collaborate to corner the market and earn profits that way for particular groups of investors? You can imagine all kinds of scenarios, which have played out in human-driven markets before. And you can imagine there are black swans in AI-generated markets that haven’t been conceived of.
For now, Fei is focused on two ways AI can “supercharge” Investing.com: timing and volume. It can help the company push out information faster. “Most of the content is publicly available, so it’s about timing,” he said.
And, it can offer many takes on a single question. “There are different languages, formats and perspectives. In these things, AI will transform the way this content is generated.”