Money Monday: The risks and rewards of utilizing AI for investing

Artificial intelligence is changing the way people invest, offering powerful tools once reserved for Wall Street. But CPA Paul Hood says there are still serious concerns about relying on AI without fully understanding the risks.

AI could level the playing field for investors

Oklahoma CPA Paul Hood joined Money Monday to break down the current state of artificial intelligence and how it’s impacting the world of investing. While institutional investors have long had access to expensive algorithmic tools, Hood says AI may finally bring similar capabilities to everyday people.

“What is competent decision-making other than just compiling the available data and making educated guesses?” Hood said. “The more data you have, the quicker you assimilate it, the better.”

That’s why big firms have had an edge for years, using high-dollar software to rapidly analyze trends, run trading algorithms, and shave milliseconds off trade times, which Hood says can mean “millions and millions of dollars.”

Meanwhile, individual investors are often stuck making decisions with much less data.

“You've got the guy sitting at home in his bathrobe, maybe he's reading the Wall Street Journal... but he's at a total disadvantage,” Hood said.

Robo-advisors are rising, but not without risk

Hood says AI-powered robo-advisors and investing tools are being designed to analyze a massive amount of information across industries, from oil prices to politics. These tools can make real-time recommendations on when to buy, hold, or sell.

“To be able to literally look across all time... and compile that data almost on an instantaneous basis to be able to make recommendations… is amazing,” he said.

But Hood cautions against relying too heavily on AI to do all the thinking.

“To me, it’s kind of like the self-driving cars,” he said. “All the cars are talking to each other... but something goes wrong, and all the people just go off the cliff.”

He worries that if everyone uses the same AI-driven advice without question, markets could react in extreme and potentially dangerous ways.

Proceed with curiosity—and caution

For investors, the message is clear: AI tools offer exciting possibilities, but they’re not foolproof.

“It’s got a lot of potential to kind of equalize the playing field for Main Street versus the market people,” Hood said. “But it also has the opportunity... if people just blindly follow it, to end up with some bad results.”