Wait is this real? Did a random 25yo get 45B under management because he got some interviews after getting fired from OpenAI? I missed all of this and it almost seems like performance art to me.
His fundamental thesis is as an AI maximalist, with expertise on who will be the winners.
His fund completely blew up, even though his fundamental thesis still may be correct.
He made a ton of money early, but then he just kept increasing his bet size via leverage. The problem is that these stocks may be going up, but they are EXTREMELY volatile. When the whole market went down with some of the Iran news, his margin levels dipped too low, and his lenders issued margin calls. He had to sell his stakes at losses, and his fund collapsed.
Now, part of the problem is he was not a legacy hedge fund with great relationships with his banks, because if he was, he might have been able to postpone the margin calls. Had he been able to do that, he would have been ok, because his positions actually recovered within a few weeks.
It didn’t matter, though, because he was forced to sell at the low point.
In other words, even if your long term bet is correct, if you are maxing out your margin to max out your bet, you are one volatile dip away from blowing up.
No matter how good the bet, you have to be able to ride out the volatility to survive.
It’s like if someone offered you a bet on a coin flip, where they will pay 5x your bet if you win. How much should you bet on each flip?
Well, by expected value you should bet everything you have, because your EV is 2.5x, so the more you bet the higher your expected value.
However, if you bet it all, you have a 50% chance of losing all your money and not being able to make any more bets.
But thats sort of the whole problem, believing you know a lot about the future of AI, even if you’re correct, does not mean you have the expertise to manage a fund around that belief, and it’s absolutely shocking to me he was able to get that much money
Regardless he was still able to build a giant pile of cash before alighting it on fire.
It's an interesting look into who gets opportunities in our society.
His "main thing" is success in calling economic impacts of undervalued large shifts, and the premise of the fund is basically that the same thing is occurring around AI, where he also has specific subject matter expertise.
I'm going to need better evidence to believe he has any skill.
From what I can see, his investors could have just bought AI related stocks themselves.
i know nothing about this specific person, but the typical rule is that if it has already reached the general news cycle, you are too late.
Aschenbrenner only created his Situational Awareness fund 2 years ago, so he wasn't exactly prescient in predicting the rise of AI - he just had enough conviction to go all in, with leverage, on an investing theme that was already pretty obvious.
https://xcancel.com/porterstansb/status/2083606266388029691
(I also enjoyed the meandering in to Amex and Wells & Fargo's founding stories)
After he got fired, he wrote a 165 page thesis on AI in early 2024 that all ended up becoming true in 2026; you can read it for yourself and be the judge: https://situational-awareness.ai
That's what he based the fund on.
It's generational foresight not available to 99.999999999999999999% of 25 year olds. I want to get ahead of the default cynicism and "oh it's just dumb luck woe is me" aspect of HN.
This is why hedging and neurotic levels of risk-management are necessary. Running a highly levered and highly correlated portfolio is a disaster waiting to happen regardless of whether your overall thesis is correct or not.
There are not enough human 25 years old in history for this many 9s. You had 21 nines, which would only make sense if there were 10 billion billion humans ever and that he is the only one. However, the current estimate is there were 107 billion humans ever alive in history, so your statement is impossible even if the estimate is off by 10000 fold.
It's a rhetorical device that I have yet to see used to good effect. The kind of rhetorical device that undercuts the argument rather than strengthens it.
18 decimal places... goddamn that's more than you get on a computer usually. We must be counting 25 year olds that won't even be born for millenia.
...no? The essay is literally titled "The Decade Ahead", its predictions have not come true in 2026.
> The AGI race has begun. We are building machines that can think and reason. By 2025/26, these machines will outpace many college graduates. By the end of the decade, they will be smarter than you or I; we will have superintelligence, in the true sense of the word
I'd argue even the 2025/26 part of that isn't true, though the "many" in "many college graduates" makes the claim very difficult to verify.
But even putting all that aside I think it's still a valuable evidence point when discussing "intellectual arrogance". No doubt this 25 year old is very smart when it comes to AI. But there's this belief that if someone is smart at one thing then they're surely smart at everything. Turns out "smart at AI" doesn't automatically translate to "can sensibly manage a $45bn fund".
He didn’t have the foresight to avoid collapsing his hedge fund in a minor selloff by hedging.
You might be overselling his ability to predict the future.
And I want to get ahead of this absurd romanticism. I have plenty of counterpoints in all types of technical domains (3D printing, blockchain, you name it). Oracles don't exist, just stories of right place right time survivors.
> That's what he based the fund on.
His thesis was so true that his fund folded. Fancy that.
Yes, being unable to pay margin call means your fund is folding.
It's not part of the strategy or operating agreement of a GP/LP structure to sell a specific fund to another investment firm at a discount. The fund may buy and sell assets to create returns for LPs but selling the fund itself at a discount is not a successful exit, e.g. they folded.
What happened to SA is not what anyone would call “a fund folding”. Normally you’d assume folding means the fund went bankrupt, or closed at a loss.
This fund is not closing and not on a loss. It’s not bankrupt, and apparently it is opening up new positions and continuing to invest in its main theme last I saw it in the news.
It is on a major drawdown from its peak a few months ago, but it’s still up for the year, most of its investors are likely well in the positive. If you make a huge investment and it goes up 5x before trimming its gains and ending up 100%, you’ll be annoyed, you’ll wish you sold at the top, but you’ve still doubled your money.
Getting margin called and closed this way is not the same as going bankrupt.
> Getting margin called and closed this way is not the same as going bankrupt.
Technically we don't actually know the details here since no one here is privy to the specific fund structure - which is very likely WAY more complex than reported.
So, realistically we're arguing semantics. I said it folded and for intents and purposes if you're getting margin called and have to sell, then that's folding.
Just like in poker I can fold and not play anymore and still have a stack of chips.
In fact, the returns were so astronomical that they took a $35B loss (around 67%) which means they were still UP 80% for the year in 2026.
Today they have around $10B under management.
As an investor, how would you feel about being up 80% for the year? Exactly. They're having a phenomenal year.
He currently still has $10B under management.
What's the point of posting blatantly wrong details? It's pretty easy to look them up.
What actually happened is that AI-assisted training of LLMs (mind you -- stuck on that same old transformer architecture, with nothing resembling a medium-term memory, and fine-tuning still doesn't really work as a form of "learning") is right now giving us ~linear-ish progress... beecause we already hit the slowdown in the S curve of what human researchers can achieve.
We are also energy-constrained in ways that the exponential forecasts have no answer for other. Compute is not getting more efficient fast enough to achieve anything close to exponential growth driven by growth in computing power. There are social, moral, and political limits on the amount of energy we can dedicate to AI training in any given time period. And it's not just energy, we're short on RAM wafers and water for cooling and eventually we're going to hit other limits on various minerals and elements of the supply chain etc. etc. So even if it were true that R&DEffort == RateOfProgress without resource constraints, we're likely not going to see that exponential progress because we also need corresponding exponential scifi-scale progress in computing efficiency, cooling, and, energy delivery.
Basically this kid made a bunch of very clever and grand predictions which were always kind of ridiculous and no, they have not come to pass in 2026 and we are not at all on track to achieve AGI in the next 12 months, despite what Altman keeps trying to make the public think.
"Any reasonable expected rate" does a lot of work here. For example, I haven't expected LLM contributions to open math problem that early.
For example, doing it at Columbia is meaningful. Doing it at a random school, not so much.
His strategy was to trade on MNPI available to him via relationships that no larger fund/bank compliance department would sign off on, in a portfolio no fund/bank risk department would allow.
Calling the fund “situational awareness” and then demonstrating a complete lack of situational awareness was rather amusing.
> It's generational foresight not available to 99.999999999999999999% of 25 year olds.
They though they would laugh all the way to the bank...but that laugh was already the problem...
"We Need To Talk About Leopold" - https://youtu.be/rE75WvOtcu8
As a side note, it’s pretty insane how many people of the AI industry have a relationship to effective altruism
> Gebru and Torres argue that these ideologies should be treated as an "interconnected and overlapping" group with shared origins. They claim these constitute a movement that allows its proponents to use the threat of human extinction to justify expensive or detrimental projects and consider it pervasive in social and academic circles in Silicon Valley centered on artificial intelligence. As such, the acronym is sometimes used to criticize a perceived belief system associated with Big Tech.
(I mean sure from sibling comments I get that this is, in fact, not performance art but you gotta admit that if it were it'd be damn good!!!)