The Model Risk Premium Is Back and Why AI Driven Trading Still Breaks at Regime Shifts
Markets go through long stretches where models seem unbeatable. Price behavior feels orderly, correlations hold, and systematic strategies outperform human discretion. During these periods, confidence in AI driven trading grows quietly. Then something changes. Policy expectations shift, liquidity tightens, or macro assumptions flip. Suddenly the same models that worked so well begin to fail at […]