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Elon Musk has claimed that the present iterations of synthetic intelligence (AI) will surpass people basically mind by the tip of 2025. Seven full months earlier than these little chat fashions act like human know-it-alls? I’m sceptical.
However Giant Language Fashions (LLMs) are nonetheless nonetheless enjoyable to mess around with, usually faster at discovering a bit of information than Google Search, and infrequently supply some fascinating nuggets of reality. With that in thoughts, I set about asking ChatGPT concerning the prospects of the UK’s premier index, the FTSE 100.
The query
When will the FTSE 100 attain 10,000?
The reply got here in three components with various levels of optimism.
1. Optimistic Case (2-3 years): End result: FTSE 100 reaches 10,000 by 2027-28.
2. Average Case (5+ years): End result: FTSE 100 hits 10,000 by 2030 or later.
3. Bearish Case (not this decade): End result: FTSE 100 struggles to achieve 10,000 even by 2035.
The final line makes for some grim studying. The prospect of Britain’s premier index nonetheless languishing within the 9,000s a decade from now gained’t be making too many traders comfortable, nor anybody with a stake within the financial system doing effectively both.
Alternatively, hitting the five-digit mark by 2027 seems like a rosy flip of occasions – that’s a 19% bounce over the following two years.
Appears like we want just a little extra context.
Hey ChatGPT, wish to bounce in?
The FTSE 100 “has been traditionally slower-growing than US indices (just like the S&P 500) attributable to its heavy weighting in power, financials, and client staples, and decrease publicity to tech”.
Listed here are some truisms on the state of the index. A lesser-known truth concerning the UK and US markets is that they’re much extra comparable than they first seem – it’s actually massive tech corporations that make such a marked distinction in issues like efficiency and valuation.
There wasn’t a lot else of curiosity within the response, so it doesn’t sound like I’m going to get something too revelatory out of my bot pal right now.
What ChatGPT missed
What struck me most about ChatGPT’s insights was extra what it missed, that being dividends. The truth that the FTSE 100 boasts the best common dividend amongst any of the developed markets is one thing that shouldn’t be ignored. That’s as a result of dividend funds don’t enter into the change in worth degree.
Even when the FTSE 100 does keep degree for an additional 100 years, traders would nonetheless be scooping up yearly dividends all of the whereas.
Tesco (LSE: TSCO) shares illustrate this properly. The grocery store is a £24bn big promoting these “client staples” ChatGPT talked about we discover a number of on the FTSE 100. Progress’s modest at this level. Nobody expects Tesco to develop 10-fold and make an enormous bump in direction of that 10,000 determine. There are those that would possibly wish to search for different firms with a much less saturated market.
However a 3.47% dividend drawn from steady revenues may be very engaging for many who need a constant passive earnings from an funding. Its robust branding, sticky Clubcard bonuses and deal with buyer expertise make this my favorite inventory in a cut-throat sector.
I personal shares within the massive store myself and I’d say that is one for traders to think about.
