No. of Recommendations: 12
Years ago, I met a handsome 20-something cousin and his gorgeous 20-something plus-one at a family reunion. They were both bond traders, well-dressed and exuding confidence.
In a few minutes’ conversation, I discovered that they knew ZERO about the history of bond yields or economics.
What happens when kids with no knowledge of financial history gain power over massive investment funds?
wsj.com - Leopold aschenbrenner situational awareness AI fund
His Wedding Guests Were Arriving—Just as His $45 Billion Fund Was Falling Apart
Leopold Aschenbrenner was hailed as the ‘Nostradamus of AI.’ But his Situational Awareness hedge fund took on too much leverage, leading to a crash he never saw coming.
By Berber Jin, Peter Rudegeair,
Gregory Zuckerman and Anissa Gardizy, The Wall Street Journal, July 31, 2026
The 24-year-old investor had amassed a fortune by promising he could see into the future, building a $45 billion investing powerhouse that primarily bought stocks in the AI trade. For months, the holdings of his hedge fund Situational Awareness shot up in value, as did Aschenbrenner’s standing in the upper echelons of San Francisco’s elite.
But by the time guests began to arrive, his fund was unraveling—and Wall Street was closing in.
Aschenbrenner borrowed too much money to make his AI bets, leaving him at risk as they faltered. With the value of his portfolio tumbling, he scrambled to raise cash to satisfy his lenders, appealing to some of the largest hedge funds and selling billions of dollars in holdings in a fire sale to Ken Griffin’s Citadel...
The fund had gained about 270% after fees this year through May. At that point, it was up more than 1,000% after fees since inception. It had ballooned to well over $20 billion under management, reaching the size of other well-known hedge funds that took decades to build...
His fund was down 67% on the month, he wrote. “These dynamics are essentially similar to a bank run: vulnerability begetting more vulnerability,” he wrote. ... [end quote]
I’m not surprised that a kid who wasn’t even born in the U.S. doesn’t know anything about the history of bubbles. But I am surprised that grown-ups who should have taken the time to study financial history would let a kid manage their money in a clear bubble example of using leverage to magnify risk.
Wendy
