Brightwave founder Mike Conover discusses whether generative AI can perform thematic investing and idea generation typically done by human analysts.
Insight
Conover: AI models outclass human working memory, not core reasoning
“It's not clear that you get superhuman reasoning capabilities from human level demonstrations of skill. And by that, I mean the pre-training corpus, but then additionally, the fine tuning corpuses, I think you largely mimic the demonstrations that are present …”
Opinion
Conover: Million-token context windows fail to extract deep insights from SEC filings
“It, I think empirically is not the case that you can just throw all of the SEC filings in, you know, a million token context window and get deep insight that is useful out the other end.”
Insight
Conover: Push-button automated financial modeling misses the core purpose of modeling
“The other piece of this is that the financial modeling is often very, when we talk to our users, it's very personal. So they have a specific view of how a company is structured. They have the, you know, one key driver of asset performance that they think is re…”
Assertion Not checkable as stated
Conover: AI model developers are absolutely overfitting to public evaluation benchmarks
“And I think the work around over, you know, overfitting on the test, I think is like that. 100% is happening.”
Prediction Not checkable as stated
Conover: Economic incentives to pre-train commodity foundation models from scratch are diminishing
“The incentives, the economic incentives for companies to train their own foundation models, I think, are diminishing. So the, like, window in which you are the dominant pre-train, and let's say that you spend five to forty million dollars, you know, for like a…”
Opinion
Conover: Identifying mispriced assets is ill-suited to human intellect
“If you think of the job of an active asset manager, the work to be done is to understand something about the market that nobody else has seen in order to identify a mispriced asset. And it's our view that that is not a task that is well suited to human intelle…”