AI (Artificial Intelligence) is the talk of the town right now. From generating art to even writing a complex codebase, AI is pretty much doing a good job. We can safely say that AI has the potential to make a decision that can revolutionize the way we think. So, it is a no-brainer to implement AI in investing where it can shine the most.
Investing is all about numbers and finding the right pattern to get better ROI (Return on Investment) and cash flow. And take a good guess about who or (what) is better at finding patterns? Yes, it is Artificial Intelligence. Thanks to the advanced machine learning algorithms that are tailored to finding complex patterns really help in investing and driving long-term growth. So, yeah AI is good when it comes to investing. But how? How AI actually helps investors in terms of growth? To answer that question, let’s take a look at the aspects of the intersection of AI and investing, especially short-term rental investment to get a better idea about the role of AI.
How AI Re-Shaping Investment World
Before we directly dive into the intersection of AI and investing, it is better to briefly know the relationship between AI and investors. Firstly, an investor who uses technology, especially AI and machine learning algorithms is known as a “techiest.” As said, investing is all about finding the pattern within the dataset. Datasets are “archives” that have multiple “data points” which indicate the stock rates, dates, stock volatility, and other factors that help you to determine the final predictions of your investment.
Usually, a while back, the database was created and maintained manually with the help of Microsoft Excel. If you don’t know, there is a caveat with this process, which is time-consuming. When it comes to investment, money is money and time is also money. So, as an investor, how will you juggle both time and money which in turn creates this dilemma? AI is the best possible solution to your dilemma.
AI helps you to automate your whole process which considerably reduces your manual work and enables you to focus on other important tasks such as finding which are some best short-term rental investments to get better annual returns.
The Intersection of AI and Investing
The AI is truly an engineering marvel. Old-school investors use Microsoft Excel as their database and manually enter data points and find a pattern that ultimately helps to get them better ROI and cash flow. There is nothing wrong with the process, but if you are a single investor who is handling all the critical processes by yourself, there is a good chance for human error which can be fatal for your result. But when it comes to AI, it does most of the heavy work which simply allows you to focus on iron-clad your investing strategies and focus more on forecasting your ROI.
As said, AI does most of the heavy tasks and the first and probably one of the most crucial tasks is the “data analysis.”
Deep Data Analysis Using AI
Investing, especially short-term rental investments are data-driven. Investment success ultimately depends on how much data you have. But how can you gather that vast amount of data manually? AI plays a major role in gathering data. The process, known as “web scraping” really helps you out in data analysis. There are a set of computer programming codes (usually Python) that help you to gather data from various sources online at a pretty fast pace. The most exciting part of web scraping is it is fully customizable and automated. Meaning you can go for particular data at a particular location online and save it automatically to your local file.
Now you are getting vast amounts of data from various sources such as, publicly available company reports on profits, social media reports, news blogs, and articles, market and research reports, and building a good database.
The next part is simple. To forecast your investment. This is where machine learning algorithms and neural networks (AI) come into the spotlight. By feeding the gathered data to your algorithm, you will be able to train the machine learning algorithms (known as machine learning models) to find a pattern. More data means more accurate results. This highly quantitative-driven approach can help you to make a decision about your financial investment.
AI’s Role In Trading
Nobody has time for trading, right? If you are thinking about reducing the time spent on trading or even want to be more efficient in your trading business, AI is your best companion. AI and machine learning algorithms help you to carry out automated trading. All you have to do is give a set of predetermined rules. Based on that, machine-learning models can be created. Once the machine learning model is created, you can automate the model for buying and selling stocks or orders (if you are an eCommerce seller). These machine-learning models are adaptive in nature. Meaning they can analyze tremendous amounts of market data, trends, and conditions and adapt to its volatility which really helps you to find a great profitable strategy for your trading business.
Mitigate Potential Risks in Investment Using AI
When it comes to investment, risks are inevitable. Sometimes, you can be pushed for “desperate time, desperate measures”. And there is nothing wrong with that, but the risk can be too high. What if you have a way to identify potential risks that can either help you to make a break or make you broke? AI is that way.
If you keenly look at your database, potential risks are hidden there. These risks are known as “outliers” in the AI sector. Think of outliers as “odd ones out”. AI and machine learning models are designed for finding the “odd ones out.” Once you get the information about the outliers, it helps you to gain good insights on risk exposure and hedging opportunities. Sometimes, these outliers are indications of anomalies in the investment and even fraudulent activities.
Knowing beforehand the potential risk involved in the investment is more of a necessity rather than considered as one of the factors in investment decisions for profitable annual ROI.
Yes, AI is a great companion which really helps you out in your investment journey. But one thing remains which is the actual investment. Some people may not know clearly how to invest or better what is the good practice for a good investment. The answer is our next aspect of the intersection of AI and investment.
Sentimental Analysis for Better Investment Practice
What better way to know about a particular investment or company than by asking people? But you cannot go and talk to each person to get information. That is not a good idea. AI has a solution and the name of that solution is sentimental analysis. Sentiment analysis is about getting people’s opinions and comments about a specific product or market. By coupling web scraping (to get people’s opinions online) and pattern recognition (machine learning models), you can differentiate between positive and negative emotions. This sentiment analysis helps you to devise a good plan for your overall investment strategy.
Passive income is more of a requirement than a hobby in today’s world. Truth be told, not everyone at first can have a good break on the investment. But you can really up your investment game with the use of AI. Also, there are robo-investors that can actually help to provide you with quantitative data leveraged with the help of AI. One of the best ways to start your investment journey is to find short-term rental investment advisors and get a good start on your ROI.
All things considered, AI is still not omnipotent. The current market is still volatile, meaning you need to constantly validate and update your database and your algorithm which requires human oversight. But, who knows down the line, deep neural networks pave the way for strong AI that can predict your investment with 100% accuracy. Until then, it is better to understand that AI and humans are a Yin and Yang for a good investment.