By Sumit Chanda, Founder and CEO of JARVIS Invest
We cannot imagine our lives without technology, even for a day. It is there in all facets of our lives. We use technology to commute (cars), spend (UPI), and socialize (social media platforms).
Recently, investors have had the option to use technology to make better and smarter investment decisions. Advanced technologies like Machine Learning (ML) and Artificial Intelligence (AI) have ensured that everyone can now become a successful trader and long-term investor without the need to spend days in front of the computer screen analysing stocks.
How does technology help you become a successful investor in the long run?
If you want to be successful in stock investing, you need to follow two steps. The first is to select quality stocks at the right price. Second, exit the stocks that may eat up your capital. Both these steps require certain levels of expertise, and not everyone can do them adequately. However, today, with AI-driven platforms, these steps are super easy. The technology-driven platform will recommend stocks based on your risk profile and investment horizon. The notable part is that technology does not stop there.
In long-term investing, you must regularly monitor your portfolio to minimise the risk. Most investors are clean bowled in this step. Technology helps investors play long innings since it continuously monitors the portfolio and eliminates all the risks.
Another essential aspect of long-term investing is portfolio rebalancing. Most investors know that they need to rebalance their portfolios regularly. However, when it comes to actual implementation, it gets challenging. Balancing requires you to exit some stocks and reinvest the capital in other companies. Most investors fail to make the right decisions here. With technology, investors don’t have to put in any effort. The tech-driven will scan the stocks on millions of data pointers and recommend what to sell and buy at the right time.
Is technology useful only to new investors and not seasoned investors?
When we discuss technology in investing, the first impression is that it will help only new investors. However, that is not true. Even seasoned investors can use technology as it makes their lives easier. They may have all the resources for investing, but sometimes having additional tools can change the returns considerably.
Unless you have driven a Tesla, you won’t know what it is about driving a technology-driven car. Similarly, unless seasoned investors don’t use technology for investing, they won’t know what they are missing.
Many hedge funds are using technology to manage the funds, and they are doing better than human-driven hedge funds.
Benefits of opting for tech-driven models
There are a lot of benefits to opting for tech-driven models for investing. It is not only about the higher returns. The complete investing process becomes a lot simpler for everyone when we use technology for investment.
As an investor, you can go through financial data, market insights, access notes, and look for undervalued companies, all in real time due to technologies like natural language processing and speech recognition. With robo-advisory, investors can manage their investments and buy the right products easily. Traders can find stocks to trade in with just a few clicks.
Almost every new investor and some seasoned ones fail to manage risk in the stock market. The main reason is that most investors do not have a risk management strategy or system. An advanced tech-driven model will have an in-built risk management system to help traders and investors in their respective journeys.
What do the numbers say – Is technology better?
At the end of the day, every investor wants to have the best return on their investment. How much return does your investment generate compared to the benchmark? Essential point investors miss when comparing returns is that one should always compare apples to apples. Knowing your risk profile is the first step in investing. So if you are a conservative investor, always take the benchmark as a large-cap fund or hybrid fund for comparison.
Jarvis Invest is an AI-driven platform that investors have been using to generate returns that beat the benchmark. For a blended risk profile, Jarvis is able to beat the NIFTY50 returns 14 times in the last 17 months (Jan 2021 to May 2022).
If you are using a platform that uses the right technology and making the most of that technology, you will benefit both as a trader for short-term gains and an investor for long-term gains.