Game On! JP Morgan files trademark for 'IndexGPT'
The internet is on fire today with the recent revelation that JP Morgan filed for trademark protections for 'IndexGPT' with the United States Patent Office (USPO). The claim largely alludes to 'Index GPT' will use the same technology that powers its popular cousin - ChatGPT. Now, it is not clear if JP Morgan plans to couple their investment know how with Chat-GPT to create IndexGPT or if it plans to create its own large language model (LLMs) for IndexGPT. Whatever path they choose really doesn't matter (but my money will be on partnering with OpenAI to couple ChatGPT to their services). What matters is the investment game is about to change and this is why.
Lower Investment Costs
If JP Morgan (or any other investment bank that joins the foray) successfully deploys IndexGPT, this will mean giving similar or superior investment advice compared with human advisors. You guessed it - a lot of low - mid level advisors will loose their jobs thereby allowing the investment banks to reduce their costs. Lower investment costs will also mean a lower barrier to entry for most investors will mean many more investors will come into the markets. Having many new investors enter the markets with superior knowledge that IndexGPT will support has unclear implications for the markets because this has never happened before - many have entered markets before after booms and bursts but knowledge variance was also high in those times which allowed the markets to do what it does best, take money from ignorant investors and transfer it to knowledgeable investors. The markets have always been a medium for wealth transfer, plain and simple. With IndexGPT, such new market entrants will have very high average knowledge but low knowledge variance which may breakdown the wealth transfer dynamics of the markets. Some might say the markets will be more efficient which maybe true but I fear, unless the knowledge threshold of a few are raised, many wealthy individuals may exit the markets or profit from "tricking" IndexGPT. We can only wait to see which scenario plays out.
High Noise to Signal Ratio
Artificial Intelligence tools by definition have very high noise to signal ratios so much so that the best of these tools try to reduce this ratio. Now if everyone is using IndexGPT (or any variant of it) to investment in the markets, because these tools will be in continual training, the natural tendency will be for these tools to irk out more returns by "overfitting" a "fleeting" phenomena. This will increase their noise to signal ratio and could eventually be their doom. No one knew (except maybe those at OpenAI) that Chat-GPT was going to be such a huge success until it was. Same way no one knows if IndexGPT will be a huge success until it happens. All we can do as intelligent humans is to hedge our risks both ways - if it becomes a success, we need to have a strategy to take advantage of it, and if it flops, we also need a strategy to not be hurt by it.
What do you think? Let me know in the comments section.
Yours in learning,
AI + Finance
