DBOT: Artificial Intelligence for Systematic Long-Term Investing

Abstract: Long-term investing was previously seen as requiring human judgment. With the advent of generative AI systems, automated systematic long-term investing is now feasible. In this paper, we present DBOT, a system whose goal is to reason about valuation like Aswath Damodaran, who is a unique expert in the investment arena in terms of having published thousands of valuations on companies in addition to his numerous writings on the topic, which provide ready training data for an AI system. DBOT can value any publicly traded company. DBOT can also be back-tested, making its behavior and performance amenable to scientific inquiry. We compare DBOT to its analytic parent, Damodaran, and highlight the research challenges involved in raising its current capability to that of Damodaran's. Finally, we examine the implications of DBOT-like AI agents for the financial industry, especially how they will impact the role of human analysts in valuation.