I asked ChatGPT if I was an idiot for buying Aston Martin shares and it said…
Two years ago I did something really stupid. I bought Aston Martin (LSE: AML) shares. Not just stupid because itâs gone badly wrong, but because my investment process was dreadful. I bought the FTSE 250-listed James Bond-endorsed car maker for all the wrong reasons.
Iâm no petrol head. I watch the Bond films but Iâm hardly a superfan. Even so, I was seduced by the reflected glamour and fond memories of the Aston Martin DB5 Corgi die-cast model I got for Christmas 1974, complete with ejector seat and tyre-slasher blades.
That, in case it needs saying, is not a sound investment thesis.
FTSE 250 disaster movie
I also forgot one of the most basic market lessons of all. Just because a share price has fallen 90%, as Aston Martinâs had since its October 2019 IPO, doesnât mean it canât fall another 90%.
The shares are down another 40% over the past year. Personally, Iâm down more than 50%. Itâs comfortably the worst investment in my Self-Invested Personal Pension (SIPP).
I bought on a whim, using spare cash in my SIPP, and promptly learned a painful lesson. Was I an idiot? The simple answer is yes. But out of curiosity, and perhaps a desire for consolation, I decided to ask ChatGPT.
I would never use AI for stock picking (ChatGPT openly admits it isn’t designed for that). Aston Martin aside, I research my stock purchases carefully, and can’t rely on chatbots because the information can be outdated and wildly wrong. Anyone using it to pick stocks is asking for trouble. So what did it say?
Bad stock pick
As expected, it began with a few kind words. It likes to reassure. âFirst, donât beat yourself up too muchâ, it told me. âYou took a conscious risk, understood it was speculative, and learned something uncomfortable but valuableâ. Ah. How reassuring. I still favour stupid though.
It said I’d underestimated how long a weak business can stay weak. âItâs a classic behavioural trap. Aston Martin felt like a fallen icon that had to bounce. Unfortunately, markets donât work that wayâ.
ChatGPT then said with unaccustomed waspishness: “A stock can fall 85% and still be over-leveraged, structurally unprofitable and dependent on repeated bailouts. Aston Martin has been all three”. Ouch!
The bot then did what it does best, and produced lists.
The bull case for Aston Martin
- Enduring global brand prestige.
- New models may stabilise volumes.
- Margins improving.
- The chance of a relief rally if execution improves.
The bear case for Aston Martin
- Heavy debt, chronic cash burn, repeated dilution.
- Tiny margin for error in a cyclical luxury market.
- Shareholders last in line if anything goes wrong.
Thatâs about as far as Iâd trust ChatGPT. It’s good at generalities, less so at accurately sifting through financial data and making decisions based upon it. Here’s my view. Iâm certainly not throwing more money at Aston Martin. I wouldnât suggest investors consider it today.
Despite that, Iâm not selling. My holding’s tiny and thereâs value in keeping it as a permanent reminder of Warren Buffett’s rule number-one of investing. Donât lose money.
It’s also a reminder of my own newly minted rule: donât be stupid.
The post I asked ChatGPT if I was an idiot for buying Aston Martin shares and it said⦠appeared first on The Motley Fool UK.
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Harvey Jones has positions in Aston Martin Lagonda Global Plc. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.
