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As an experienced investor, what I pick for my Stocks and Shares ISA is largely dictated by what I already hold.
For example, I wouldn’t buy FTSE 100 defence giant BAE Systems today, even though it’s going gangbusters, because I loaded up last year.
So while researching this year’s stock picks, I decided to call in AI, to ask what I should do if I was a newbie. I suspect quite a few ISA investors are doing that, but I’d urge caution.
Its first pick was Reckitt Benckiser
As ChatGPT admits itself, it’s not a stock picker. It also makes mistakes. But it’s still fun to play around with.
I asked it to suggest five FTSE 100 shares across five different sectors, offering a mixture of dividends and growth for the long term.
Its first pick was consumer goods and healthcare specialist Reckitt Benckiser (LSE: RKT). ChatGPT notes that it owns well-known brands like Dettol, Nurofen, Durex and Finish, and benefits from steady demand for hygiene, health and household products.
“This makes it relatively recession-resistant, while strong pricing power and innovation keep revenues growing,” it said.
This is true, although it isn’t the full story, which shows why it’s vital investors do their own research. Reckitt shares actually trade lower than they did 10 years ago, as the cost-of-living crisis hit sales and the board struggled with strategy and delivery.
To be fair, ChatGPT did point out that “competition from cheaper own-brand products is another risk, especially if consumer spending tightens.”
The Reckitt share price is up 20% in the last year though, plus there’s a trailing 3.89% dividend yield. It’s a decent portfolio building block, but investors should dig deeper than simply asking a robot.
ChatGPT then goes on name one stock I already own: insurance and asset manager Legal & General Group, praising its “high and sustainable dividend yield”.
Obviously, I can’t disagree with that, although again, I’d urge caution because earnings have been bumpy likely, and share price growth patchy.
My robot buddy then tipped Rio Tinto, saying the global miner should benefit from the green energy transition and pay strong dividends when commodity prices are high.
Rightly, it warns of volatile commodity markets and the Chinese slowdown. I think Rio is worth considering, but only with a minimum 10-year view, as the near term looks bumpy due to high interest rates and trade wars.
Decent spread of FTSE 100 stocks
My next robot pick is pharmaceutical giant AstraZeneca, the biggest UK company of all (where does ChatGPT get its inspiration from?!)
It’s hard to argue against this one, given solid long-term growth and dividends, and growth opportunities as humanity gets older and sicker.
I don’t agree with ChatGPT’s final pick, electricity and gas transmission giant National Grid. It’s been seen as a rock solid dividend growth stock for years, but as it prepares to invest £60bn in the green transition, it’s under more pressure than I like.
UK infrastructure projects usually run over time and budget, and I wouldn’t be surprised if National Grid was forced to repeat last year’s capital raise.
Other investors remain optimistic. Investing is a very personal thing. Artificial intelligence is fun, but no substitute for the real thing.
