At a gathering of students and young professionals 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.”

???? **The Model Is Perfect. The Context Is Missing.**

Mr. Plazo is not a critic from the fringe. His algorithms are widely used by institutional investors from Europe to East Asia.

But that success, he suggests, carries risk.

“Optimisation without orientation is simply acceleration in an unknown direction.”

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 interpreted data, not decisions.”

???? **Strategic Friction as a Form of Risk Management**

Plazo referred to what he terms **“strategic friction”**—the time it takes to think before a trade.

“That pause is not inefficiency,” he said. “It is governance.”

He presented a framework his firm uses, called **Conviction Calculus**. It includes three questions:

- What are get more info the reputational implications of this decision?
- Does the broader geopolitical or sectoral context support it?
- If this fails, will someone take responsibility—or will the blame lie with the code?

???? **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.

“The models did what they were told. But no one asked whether they should.”

???? **The Case for Narrative-Aware AI**

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:

“We need systems that understand politics, not just price movement.”

???? **Silent Errors in a World That Doesn’t Pause**

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.