“Joseph Plazo on Why Algorithms Still Need Human Judgment”“Machines Can Trade. But Can They Govern?”
“Joseph Plazo on Why Algorithms Still Need Human Judgment”“Machines Can Trade. But Can They Govern?”
Blog Article
At a recent event hosted by the Asian Institute of Management in Manila, the algorithmic investor and strategist Joseph Plazo argued that automation may have outpaced accountability.
He offered a sober reminder: faster trades are not always wiser ones.
“If you allow a machine to manage your portfolio,” he said, “ensure it reflects your priorities—not just your profit targets.”
???? **When the Code Needs a Conscience**
Mr. Plazo is not a critic from the fringe. He has helped shape the future of machine-driven investing.
But that success, he suggests, carries risk.
“A well-trained model can still make perfectly logical errors.”
He cited a case during the COVID-19 pandemic when a bot under his supervision flagged a short on gold—just before the US Federal Reserve announced an intervention.
“We cancelled the trade. It failed to anticipate a shift that any seasoned investor would have questioned.”
???? **Why Delay Still Matters**
Plazo referred to what he terms **“strategic friction”**—the time it takes to think before a trade.
“Speed without governance is simply exposure.”
He presented a framework his firm uses, called **Conviction Calculus**. It includes three questions:
- Are we trading in line with our long-term thesis—or merely responding to signals?
- Does the broader geopolitical or sectoral context support it?
- If this fails, will someone take responsibility—or will the blame lie with the code?
???? **Asia’s Automation Drive and Its Oversight Deficit**
Plazo’s comments come at a time of get more info accelerating fintech growth across Asia. From Singapore to Seoul, AI-led investing is seen as both policy strategy and capital advantage.
But as Mr. Plazo points out:
“You can scale capital faster than accountability.”
In 2024, two hedge funds in Hong Kong lost billions after AI models failed to factor in geopolitical risk—a result of logic executed too quickly, and too narrowly.
“It was not error, but automation without skepticism.”
???? **AI That Understands More Than Market Signals**
Plazo remains bullish on AI’s potential—but not its current limitations.
His firm is building what he describes as **“narrative-integrated AI”**—systems that account for macro context, cultural tone, and regulatory environment, not just price and volume.
“Data is abundant. Insight is scarce.”
Investors from Tokyo and Jakarta reportedly expressed interest in these models after the speech. One regional fund manager noted:
“This is the first practical answer to AI’s ethical vacuum we’ve seen in Asia.”
???? **What Happens When the Machine Is Always Right—But Still Wrong?**
Plazo ended with a line that encapsulated his thesis:
“The next financial crisis will not be triggered by emotion—but by perfect logic, executed too quickly, and left unquestioned.”
For investors and policymakers alike, the message was clear: AI is here to stay. But leadership cannot be automated.