Why AI Fails When the Market Panics
Why AI Fails When the Market Panics
Blog Article
Joseph Plazo just reminded a room full of Asia’s brightest something Wall Street has been avoiding for years: AI may be fast, but it can’t judge the unexpected.
MANILA — This wasn’t a pep talk—it was a strategic slap.
On a humid Thursday morning at the Asian Institute of Management in Manila, Plazo addressed a sea of students from top Asian universities—Kyoto—expecting a sermon on AI’s inevitable rise.
What they got instead? A splash of cold market reality.
“AI is like your smartest intern,” Plazo noted, “But you still don’t give the intern the keys to your vault.”
The room laughed. Then they grew quiet. Because he wasn’t joking.
### AI’s Blind Spot? Human Nature
Let’s be clear—Plazo isn’t some Luddite clinging to the past. He designs trading AIs. His firm, Plazo Sullivan Roche Capital, runs some of the most accurate systems on global markets. He understands machine learning like few do.
But that’s why his warning felt urgent.
“The problem isn’t AI,” he told the room. “The problem is us. We keep believing it’ll save us from making hard decisions. That’s not its job.”
Plazo unpacked real-world case studies—moments when AI signaled winning trades… just ahead of a central bank pivot or an unexpected war. Noise that shattered the signal.
### Asia’s Best Challenged Him—and Learned Something
A student from Kyoto asked if LLMs might someday gauge global sentiment.
Plazo answered without blinking.
“AI can spot a tweetstorm. But it check here can’t hear fear in a press conference. It won’t catch regret in a central banker’s sigh.”
The room reacted. That hit different.
Another asked, “Can AI ever understand conviction?”
Plazo raised an eyebrow.
“Conviction isn’t math. It’s gut. It’s forged by failure and memory. You don’t download that.”
### Plazo’s Words = Financial Therapy
This wasn’t about flash trading or chatbots. It was about ethics.
Students admitted they saw AI as a cheat code—an escape hatch from risk, from thinking too hard. Plazo called it out.
“You can automate your trades. You will never automate your integrity.”
That line echoed. Because everyone in that room—from the copyright cowboys to the quant whizzes—wanted alpha. But not at the cost of their soul.
### Give AI the Tools—Not the Steering Wheel
Plazo didn’t trash AI. He credited its strengths:
- It filters noise.
- It backtests at scale.
- It detects technical setups better than any human.
But it can’t read sarcasm. It won’t grasp when a politician is bluffing. And it doesn’t know if your retirement burns.
“If your AI bot makes a bad call,” Plazo asked, “do you still accept blame? Or do you blame the code?”
That’s when the silence hit.
### This Isn’t Just Markets—It’s Mindset
Plazo wasn’t preaching finance. He was preaching maturity. Use AI—but don’t worship it. Let it assist—not decide.
And yes—he still believes in the machines. He’s building tools that track geopolitics, misinformation, even psychological nuance.
But he left no doubt:
“No machine can tell you when *not* to act. That’s your job.”
### Don’t Let Your Bot Decide Who You Are
As the crowd filed out—buzzing, challenged, changed—one phrase echoed down the halls:
“AI doesn’t know your values. So don’t let it make your decisions.”
In a world chasing speed, Plazo offered something rarer:
A pause.
Because investing isn’t just about *winning*. It’s about knowing **why** you played.