What ChatGPT Did Well (and What It Didn't)

Imagine requesting ChatGPT to create a portfolio worth $1.2 million … and then actually implementing it. That's precisely what one of our listeners thought about doing. She employed AI to craft her entire allocation and then called into the Afford Anything podcast to inquire: “How did the robot perform? What modifications would you suggest?” In a recent episode, Joe and I analyzed her strategy — identifying what’s robust, what’s questionable, and what we’d alter if it were our investment. (Spoiler alert: her "spicy" 6% allocation to Cathie Wood’s Ark funds ignited intense discussion.) Joe vs. Robot However, there are certain insights ChatGPT can’t convey: when to maintain a position, when to rebalance, and when to disregard external distractions. Investing isn’t solely about calculations. It involves psychology — knowing which trade-offs align with your objectives, rather than merely what appears appealing on paper. It requires an understanding of the distinction between “growth” and “income,” and between “investment” and “consumption.” An algorithm can process data, but it can’t navigate the complex, human aspects of wealth building. Watch Episode #641: ChatGPT Built Her $1.2M Portfolio … But Should She Trust It? This listener's question made me ponder: if AI finds it challenging to grasp the nuanced, psychological dimensions of stock investing — one of the most standardized, liquid, and well-documented asset categories — then how much more complicated is it when the stakes involve something tangible, illiquid, and profoundly personal? Like real estate. With stocks, you purchase fractional shares of companies. Transactions can be executed instantly, with no need to speak to anyone else. You can apply dollar-cost averaging gradually. As a stock investor, a company’s financial data is publicly available, the information is clear and well-regulated, and reporting standards are uniform. The entire system is designed to be accessible to the general public. There’s a wealth of information available about stocks, and millions of individuals are engaging in the same activities as you. Real estate, on the other hand, is vastly different. Each property is unique — differing in age, condition, and location. Every market exhibits its own peculiarities — at both the regional and local levels, as well as within specific neighborhoods. You’re committing a significant amount of money to a single asset — and selling it isn’t as simple as clicking a button. There’s no equivalent of a Robinhood app for real estate (thankfully — can you imagine?!). Furthermore, your analysis extends beyond numbers; you’re providing homes and managing all that comes with it. You’ll be vetting applications, overseeing tenants, making repairs, deciding on renovations, and determining whether to increase the rent at lease renewal. Each of these decisions impacts the lives of real individuals. If ChatGPT struggles to capture the psychological subtleties of stock investing — where decisions are relatively straightforward and standardized — then it certainly cannot navigate the emotional, complex, and heavily judgment-based realities of owning rental properties. (“Judgment-heavy” refers to exercising your best judgment, not to be confused with being judged by others, although that might also be a reality.) This highlights why real human experience is valuable. Having a guiding set of principles to inform your decision-making is important. Learning from a community of individuals who have faced similar situations matters. AI can generate cap rate formulas and cash flow forecasts. However, it can’t inform you about: - The feeling of screening your first tenant and trusting your instincts when something seems amiss - Whether that vacation rental is genuinely an investment or merely a lifestyle purchase you're trying to rationalize - If you are truly prepared to exchange liquidity for long-term cash flow - How to manage a bathroom emergency at 10 PM when your tenant is in distress In summary, it cannot guide you in exercising judgment, discernment, and wisdom. Real estate involves more than just crunching numbers; it requires developing the judgment to recognize when a property is viable and having the confidence to walk away when it isn’t. Did you find this article enjoyable and want to explore more investing topics? Click here.

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