“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
During a speech delivered at one of Southeast Asia’s top business schools, Joseph Plazo, voiced concerns that many in his field tend to ignore.
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?
- Has the recommendation been challenged by human insight—policy awareness, historical precedent, market tone?
- Is the leadership team prepared to justify the trade read more beyond performance metrics?
???? **Governance in the Age of Machine Capital**
Plazo’s comments come at a time of 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:
“Technology is advancing—but decision-making frameworks are not.”
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.
“We need models that don’t just predict—but interpret.”
Investors from Tokyo and Jakarta reportedly expressed interest in these models after the speech. One regional fund manager noted:
“If AI is to be sustainable, it must learn to say no—not just go faster.”
???? **The Final Warning: Crises May Be Logical, Not Emotional**
Plazo ended with a line that encapsulated his thesis:
“It won’t be chaos that brings us down—but confidence in models we don’t challenge.”
It was less a warning than a call to apply the same rigour to ethics as we do to execution.