A top technical analysis trader says to embrace the machine, both by AI investing and by gaining experience with how generative AI works.
"If I still had Dorsey, Wright & Associates, I would have every person in the firm do this once a week: Ask AI a question on the business," Tom Dorsey, co-founder of Dorsey, Wright & Associates, told Investor's Business Daily's "Investing with IBD" podcast.
Tom Dorsey cofounded Dorsey, Wright & Associates in 1987, centering the business on technical analysis and stock strategies. The firm was acquired by Nasdaq in 2015 and renamed Nasdaq Dorsey Wright.
Dorsey says anyone serious about investing in today's market needs experience with how generative AI works to understand how the technology can disrupt their investing strategies — or give them an advantage in AI investing. "I'm telling you what, (generative) AI is unbelievable," Dorsey said.
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Nvidia Rides Wave Of Generative AI Investing
Dorsey points to Nvidia, the leading stock that's riding a wave of generative AI investing. Nvidia specializes in producing microchips and processors suited to handling the complex calculations used in generative AI. He says there is potential for the stock to grow.
"Stocks that hit 90 almost always go to 100, I would say," he said, commenting on the share price. "So stocks (like Nvidia) that hit 900 will probably always go to a thousand, and this could be one of those that goes to 2,000," said Dorsey. He added that Nvidia stock managed to make several of his relative strength screens.
Nvidia is a clear outperformer, according to IBD Research, and enjoys a perfect 99 Composite Rating. It's ranked No. 1 in the Electronics- Fabless Semiconductor industry group. The AI investing play continues to appear on IBD watchlists like the IBD 50, Tech Leaders and Leaderboard.
Learning About AI Investing Through Experience
Dorsey compares generative AI to other disruptive technologies like the fax machine and internet. He says the best way to learn about AI investing is by learning what such tools can do at work.
Before collaborative software like email and Slack, Dorsey says traders would gather around someone's desk to chat for five minutes to hash out a strategy.
"Now, I am a proponent of people not working in the office," said Dorsey, who says software has become powerful enough to allow traders to work remotely with no penalty.
He says understanding generative AI can help identify weak points in day-to-day work but can also foster a better understanding of how to invest in AI itself. "You need an advisor who knows what to do with the portfolio and where you are riskwise and all those kinds of things," he said.
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