Large Language Models and Stock Investing: Is the Human Factor Required?
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arXiv
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| Autores principales: | , |
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| Formato: | Preprint |
| Publicado: |
2026
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| _version_ | 1866911607640031232 |
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| author | Crisostomo, Ricardo Mykhalyuk, Diana |
| author_facet | Crisostomo, Ricardo Mykhalyuk, Diana |
| contents | This paper investigates whether large language models (LLMs) can generate reliable stock market predictions. We evaluate four state-of-the-art models - ChatGPT, Gemini, DeepSeek, and Perplexity - across three prompting strategies: a naive query, a structured approach, and chain-of-thought reasoning. Our results show that LLM-generated recommendations are hindered by recurring reasoning failures, including financial misconceptions, carryover errors, and reliance on outdated or hallucinated information. When appropriately guided and supervised, LLMs demonstrate the capacity to outperform the market, but realizing LLMs' full potential requires substantial human oversight. We also find that grounding stock recommendations in official regulatory filings increases their forecasting accuracy. Overall, our findings underscore the need for robust safeguards and validation when deploying LLMs in financial markets. |
| format | Preprint |
| id |
arxiv_https___arxiv_org_abs_2603_19944 |
| institution | arXiv |
| publishDate | 2026 |
| record_format | arxiv |
| spellingShingle | Large Language Models and Stock Investing: Is the Human Factor Required? Crisostomo, Ricardo Mykhalyuk, Diana Trading and Market Microstructure Statistical Finance 91G80, 68T50 I.2.7; J.4 This paper investigates whether large language models (LLMs) can generate reliable stock market predictions. We evaluate four state-of-the-art models - ChatGPT, Gemini, DeepSeek, and Perplexity - across three prompting strategies: a naive query, a structured approach, and chain-of-thought reasoning. Our results show that LLM-generated recommendations are hindered by recurring reasoning failures, including financial misconceptions, carryover errors, and reliance on outdated or hallucinated information. When appropriately guided and supervised, LLMs demonstrate the capacity to outperform the market, but realizing LLMs' full potential requires substantial human oversight. We also find that grounding stock recommendations in official regulatory filings increases their forecasting accuracy. Overall, our findings underscore the need for robust safeguards and validation when deploying LLMs in financial markets. |
| title | Large Language Models and Stock Investing: Is the Human Factor Required? |
| topic | Trading and Market Microstructure Statistical Finance 91G80, 68T50 I.2.7; J.4 |
| url | https://arxiv.org/abs/2603.19944 |