Perplexity AI's new tool for researching the stock market

https://www.zdnet.com/article/perplexity-ais-new-tool-makes-researching-the-stock-market-delightful-heres-how/

by CrankyBear • 2 years ago

74 43 2 years ago

airstrike7• 2 years ago

Speaking as a former M&A financial advisor and valuation nerd, historical financial data is very close to worthless for any valuation work, except perhaps for vaguely connecting the dots to your proprietary, forward looking financial model which is based on a deep understanding of a particular company and industry.

This reads to me like garbage in, garbage out... just like 99.9999% of current resources on financial data.

There's definitely an opportunity to disrupt this backwards "financial data" industry, but it's not going to be done by slapping LLMs and RAGs onto stale data in 10-Qs and 10-Ks.

serjester2• 2 years ago

I don't touch finance, but I'd be curious to have you elaborate on the data sources that a professional does care about.

infecto2• 2 years ago

They care about anything that helps give insight into the future. Its still obtainable data but that is where the edge comes from, taking unique data and applying your way of thinking (models) to it. This could be anything and everything that relates to the company/industry you are looking at. You take lots of different bits of information and distill it into a model. If you are in the automotive space, maybe you care how US policy is looking for China.

To put it differently, historical financials, K/Qs are all data points that have been commoditized and you can pull it instantly.

airstrike7• 2 years ago

It depends on whether you're publicly sharing your valuation work or confidentially advising a client about valuation.

The former is what equity research analysts do at major investment banks (like Morgan Stanley, BAML, JP Morgan, etc.) and boutique / middle-market research firms (Stifel, Cantor Fitzgerald, Raymond James, Guggenheim, etc.). Google has led me to this LinkedIn post with a long list of equity research firms which seems accurate and credible after skimming it briefly: https://www.linkedin.com/pulse/most-comprehensive-list-sell-...

The latter is what I used to do as an M&A advisor. Basically the "I want to buy company X, how much should I pay?" or "I may be interested in selling / people are reaching out expressing interest in my company, how much am I worth?" type of scenarios, plus some other more complex but not necessarily more fun things like merger of equals and what have you. In these situations, the analysis tends to be more of a "let's look at it from all angles" which usually gets distilled into a one-page summary nicknamed "football field" showing ranges of values according to various methodologies. Things like DCF, discounted equity value, relative trading multiples (also called "comps"), LBO (also called the "floor valuation") all get featured and are the standard metrics on which an advisor's view is supported.

As an advisor, I never came up with my own projections for valuation, because that would open the door for litigation so it's just not done. Instead, we point to what "the street" is saying, by taking the consensus view (often some filtered average/mean of equity research projections usually provided by Bloomberg, FactSet or Capital IQ for liability reasons, but which may be "handspread" in some situations by actually pulling the specific numbers from the latest available research reports from several analysts and calculating the mean).

I hope that helps answer your question but happy to answer any follow-ups too since I'm always glad to share what I know about the topic

tim3332• 2 years ago

Warren Buffett is famous for reading the annual reports, basically all of them and starting from the back where you tend to get the embarrassing stuff in small print.

He also reads mainstream press - wsj, ft etc.

infecto2• 2 years ago

I am always surprised companies create these distractions in their product. Agree on all your points. Little to no value in this tool based on the data they listed. All of these things already exist and for anyone doing work of any value, you would already have these datasets at your fingertips.

coffeeandhn• 2 years ago

Is there a "backwards" financial data service you'd recommend instead?

I've been researching a bit and everything I could find was basically APIs that charged you by the number of API request calls to extract the dataset bit by bit. First the tickers, then the aggregates... and so on.

airstrike7• 2 years ago

- $$$$ Bloomberg

- $$$ FactSet

- $$ Capital IQ

Depends on how much money you have and what your needs are but that's basically it

sirsinsalot• 2 years ago

That's a lot of "this won't work" without very much "here's what does work" leading me to conclude this is bluster and ego.

I always hear these finance people dick waving about how crap everyone else's methodologies are without examples of their own. This leads me to conclude it's all snake oil anyway.

So I'm asking, speaking as a former M&A financial advisor... What _does_ work?

immibis2• 2 years ago

nothing. There is no way to predict the stock market. Even the way you're probably thinking of. Even the ones in the replies to this comment. Even the really basic ones and the really advanced ones.

yifanl3• 2 years ago

What makes you confident a methodology that consistently beats the market exists?

airstrike7• 2 years ago

To be clear, I'm talking about fundamental (relative and intrinsic) valuation, not quant trading.

I recently answered a similar question so if you don't mind I'll just link you to it: https://news.ycombinator.com/item?id=41862295

FridgeSeal2• 2 years ago

You think the people with the stuff that even “sort of works” are likely to be giving up that edge?

tim3332• 2 years ago

I'm not a former M&A guy but observing people in the market, figuring out the fundamentals better than the other guys and investing to maximise your returns can work and people like Buffett, Watsa, Soros and the late Simmons could do well enough to give billions away to charity. A few gotchas

- It can be a bit of a zero sum game and the Buffett's and Soros make outsized returns because joe public makes lower ones.

- Investing like that is hard - Buffett would basically spend all waking hours studying the stuff when younger. Just reading a How to Invest Like Buffett article doesn't cut it.

- Most "investment professionals" make money on fees from clients and so will recommend what sells to clients - typically the hot thing of the day - rather than what's the best investment which is often cheap because most people think it's dull / doomed / unrespectable.

drexlspivey• 2 years ago

Historical financial data is used for calculating correlations between assets, historical volatility, stress testing, VaR etc. All very useful if you follow any sort of risk management when constructing a portfolio.

airstrike7• 2 years ago

That's pretty much just stock prices, not 10-Qs and 10-Ks. And it's already available elsewhere. For those use cases, you need databases and data sources, not LLMs and RAGs.

eclipsetheworld• 2 years ago

While I agree with your statement and recognize that, for now, Perplexity has only introduced a financial information platform comparable to Google Finance or Yahoo Finance, the true value of any forward-looking financial model is rooted in the depth of the qualitative research supporting it.

Building a useful forward looking financial model mostly involves qualitative analysis. This means thoroughly examining the company's and competitors' 10-Ks and 10-Qs, digesting industry reports, understanding the company’s business model, breaking down the underlying mechanics of the income statement, balance sheet, and cash flow statement, identifying the core processes driving value creation, forming solid hypotheses on how the business will evolve, etc.

I believe Perplexity, as an advanced answering engine, provides a strong foundation for supporting this kind of in-depth research and hope to see the platform evolve into this direction.

baxtr• 2 years ago

Don’t expect miracles.

At this stage of the game, though, Perplexity Finance needs much more refining before I can call it a real competitor to the existing stock analysis programs, such as Stock Rover, WallStreetZen, and TradingView.

timhigins• 2 years ago

This reads like a sponsored/promoted article. Would be nice to see a disclosure if it is or they get affiliate link revenue

fullshark• 2 years ago

It’s probably the traditional way a glowing article gets written: a reporter repeats something that a PR rep sent to their inbox cause they needed something written to hit a deadline.

sebastiennight• 2 years ago

This is why good books on PR will always tell you to write your press release like an article, so that a lazy journalist can post it verbatim. (Have gotten this result a couple times from press releases I wrote when I was running my previous company!)

kid64• 2 years ago

Typical payola rubbish that dominates Ars Technica, Forbes, and too many other once-legit publications.

burkaman• 2 years ago

Am I missing something, or is this just a normal stock browser like Yahoo Finance? I don't see anything remotely new in the article or the site (https://www.perplexity.ai/finance/NVDA) and it doesn't seem to have anything to do with AI. It's a nice-looking feature but I don't think it's newsworthy.

linsomniac2• 2 years ago

The benefit is that it gives you some suggested topics of investigation, including references to where it found that information. For example, I looked at one stock I'm interested in and it suggested there was a potential short squeeze in the making, and the references pointed out that that was 7 months ago. So it was summarizing it thinking that was a current state. It also suggested summaries about how changes in classification of the business might impact the stock price.

I'll probably use this in some of my investigations, but definitely need to look at the citations.

m3kw9• 2 years ago

This is the perplexity’s take on the roulette historical roll display.

linsomniac2• 2 years ago

Somewhat related: Last night I fed 3 companies proxy statements to Notebook LM and had it generate a "podcast" on them. One of which was a 100 page document, which I read the bulk of, and the podcast was pretty good, though it did misrepresent one 2023 statement as being a current statement. Definitely a tool I'm going to be using more.

rvz• 2 years ago

Do not fall for this snake-oil scam garbage from Perplexity. You are better off with TradingView.

whiplash451• 2 years ago

If the world needed any evidence that perplexity is desperate, this is it.

kkfx• 2 years ago

It would be much more interesting (and challenging) a platform to automatic trend recognition through news, while it could only be valid if personal, due to obvious bias any owner can introduce...

Perplexity AI's new tool for researching the stock market

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