It looks like Leopold Aschenbrenner lacks situational awareness when it comes to trading with leverage.
Aschenbrenner is a 24-year old owner of Situational Awareness LP, who gained fame for having incredible returns of 400% YTD, and 2200% lifetime, for his hedge fund. However, the recent tech selloff (which is beginning to recover it’s lost value) caused brutal losses for SALP’s public portfolio, forcing the firm to sell off much of it’s assets to Citadel, another hedge fund, at a hefty discount.
This is a pretty apt display of the volatility that characterizes the current tech stock market, with no one wanting to miss out on the rally driven by the AI boom. Indeed, Aschenbrenner mostly got investors to give money to SALP in the first place mostly because of his manifesto (which also goes by the name Situational Awareness) he posted about the AI boom, betting on physical AI infrastructure buildout. Hence why his firm has so much capital for a 24-year old.
Given that many of the levered bets on the AI boom are petering out, we should start to see a correction and for AI stocks to start rising again. Both SALP in the American market and Korean retailers have exited their levered bets, so the resiliency of price increases should be better from now on.
Now, I know people are going to bring up the fact that SALP still up 80% YTD, but this is only if you factor in private investments. We care about the public portfolio more because it competes against a general benchmark (the SOXX, for example, is up 60% YTD in comparison). His public portfolio is utterly liquidated with only around 3-4B remaining, meaning his firm is negative all-time in assets.
Maximilianne on
Trading with leverage isnt inherently bad but the whole point of leverage is you construct a portfolio with (genuinely) uncorrelated (as much as possible) strats that give a positive return and have very low volatility or drawdown, and then you turn up the leverage dial up or down as appropriate for the risk level you are willing to tolerate. The real risk is of course correlation moves to 1 in bad events and tail events aren’t as rare as you think see LTCM
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It looks like Leopold Aschenbrenner lacks situational awareness when it comes to trading with leverage.
Aschenbrenner is a 24-year old owner of Situational Awareness LP, who gained fame for having incredible returns of 400% YTD, and 2200% lifetime, for his hedge fund. However, the recent tech selloff (which is beginning to recover it’s lost value) caused brutal losses for SALP’s public portfolio, forcing the firm to sell off much of it’s assets to Citadel, another hedge fund, at a hefty discount.
This is a pretty apt display of the volatility that characterizes the current tech stock market, with no one wanting to miss out on the rally driven by the AI boom. Indeed, Aschenbrenner mostly got investors to give money to SALP in the first place mostly because of his manifesto (which also goes by the name Situational Awareness) he posted about the AI boom, betting on physical AI infrastructure buildout. Hence why his firm has so much capital for a 24-year old.
Given that many of the levered bets on the AI boom are petering out, we should start to see a correction and for AI stocks to start rising again. Both SALP in the American market and Korean retailers have exited their levered bets, so the resiliency of price increases should be better from now on.
Now, I know people are going to bring up the fact that SALP still up 80% YTD, but this is only if you factor in private investments. We care about the public portfolio more because it competes against a general benchmark (the SOXX, for example, is up 60% YTD in comparison). His public portfolio is utterly liquidated with only around 3-4B remaining, meaning his firm is negative all-time in assets.
Trading with leverage isnt inherently bad but the whole point of leverage is you construct a portfolio with (genuinely) uncorrelated (as much as possible) strats that give a positive return and have very low volatility or drawdown, and then you turn up the leverage dial up or down as appropriate for the risk level you are willing to tolerate. The real risk is of course correlation moves to 1 in bad events and tail events aren’t as rare as you think see LTCM