Situational Awareness down 67% in July in AI stock rout • Hacker News Board

energy123 wrote: post #77

jvsg_ wrote: post #34

Earlier quoted context omitted.

Citadel spread the rumor that the Fed was going to hike rates this week. This led to Situational Awareness getting margin called on their longs.

That's a meme conspiracy theory on twitter that nobody in the industry takes seriously.

Please educate me what exactly is the conspiracy theory here. Are you saying it is beneath Citadel to play this trick?

Re: Situational Awareness down 67% in July in AI stock rout

#163

Post by aanet » Sat, Aug 01, 2026, 2:03 AM UTC

ElProlactin wrote: post #124

cmiles8 wrote: post #114

"Smart men go broke three ways - liquor, ladies and leverage."

And if you're really good, you do all three.

SBF would agree

Re: Situational Awareness down 67% in July in AI stock rout

#164

Post by bagacrap » Sat, Aug 01, 2026, 2:17 AM UTC

sudb wrote: post #158

bagacrap wrote: post #142

Earlier quoted context omitted.

What exactly do you think he's gonna tell his clients? "Oops haha I'm a fraud"

Obviously not, no need to patronize. Did you read it? It seems to be honest about the numbers but it's pretty skillfully written to reassure.

I don't see how this is a response to my riposte. Of course he's going to try to reassure his investors so they don't take back what's left of their money. It's skillfully written to reassure people who were foolish enough to trust someone with zero investing experience, I guess. It is really a lot of words to describe getting margin called.

> honest about the numbers

His books are not public but I would bet my house that the numbers in the letter are carefully chosen to deceive. He reportedly started with 225M and gained 1500% or thereabouts, I.e. 16x. That gets you to 3.6B. But the assets were 45B at their peak. So then we have something like 40B other investment dollars coming in after he got famous. Two thirds of that he proceeded to set on fire. I don't know who would believe he's somehow still "up" YTD and worth leaving their money with. If anything this whole ordeal is an amazing advertisement for Ken Griffin.

Re: Situational Awareness down 67% in July in AI stock rout

#165

Post by bagacrap » Sat, Aug 01, 2026, 2:26 AM UTC

ymolodtsov wrote: post #64

loco5niner wrote: post #52

Earlier quoted context omitted.

Yeah, probably. Its too bad.

If there's any purpose in hedge funds as a structure it's that they provide liquidity for the market. So it's in everyone's best interest to let them do price discovery against each other.

It's not just liquidity. Price discovery helps everyone. The earlier the correct price is discovered, the less we're all screwed when the bubble pops. I think they're rewarded too well for the function they serve but whaddya gonna do.

Re: Situational Awareness down 67% in July in AI stock rout

#166

Post by bagacrap » Sat, Aug 01, 2026, 2:31 AM UTC

energy123 wrote: post #103

He played his cards well given the incentives. Most investors wouldn't tolerate such recklessness, and accordingly, most funds have to operate under strict risk management or they don't get funded. PMs at multi managers are only allowed about 5-8% drawdowns. Leopold's public visibility gave him access to dumb money whales who allowed him to personally profit off the variance by collecting bonuses when times were good…

Yes, he combined one good bet with the ability to charm dumb whales. (Actually this sounds like a lot of startup founders.) And I'm sure he thinks it's still a good bet, but he has no idea what risk management even is. In his letter to investors, he swears he learned his lesson, but I wonder whether that lesson regards leverage, or more broadly hubris.

Re: Situational Awareness down 67% in July in AI stock rout

#167

Post by bagacrap » Sat, Aug 01, 2026, 2:35 AM UTC

sakopov wrote: post #109

Equally interesting to me is how Citadel made up a rumor about the FED raising rates at this weeks FOMC meeting causing a historic selloff in AI stocks which then allowed them to pick up Situational Awareness on the cheap.

To be honest, if that's even true, they've done us all a service. Leverage is the biggest driver of investing bubbles and bubbles hurt all investors (401ks) and even the economy in the sense that they create huge capital dislocations. Like the fact that all software engineers are being forced to work on something marketable as AI.

Re: Situational Awareness down 67% in July in AI stock rout

#168

Post by 1vuio0pswjnm7 » Sat, Aug 01, 2026, 2:38 AM UTC

1vuio0pswjnm7 wrote: post #161

26 Jun 2025 18:15:45 UTC Situational Awareness: A One-Year Retrospective https://www.lesswrong.com/posts/EGGruXRxGQx6RQt8x/situationa... https://news.ycombinator.com/item?id=44389862 [ok] 30 Aug 2025 07:36:18 UTC Situational Awareness: The Decade Ahead (2024) https://situational-awareness.ai/ https://news.ycombinator.com/item?id=45072686 [ok] 12 Oct 2025 15:02:14 UTC Situational Awareness: The Decade Ahead https://si…

31 Jul 2026 05:36:28 UTC

Martin Shkreli Breaks Down the Collapse of Situational Awareness [video]

https://www.youtube.com/watch?v=RJdgh9eEZvw

https://news.ycombinator.com/item?id=49119380

[ok]

31 Jul 2026 13:25:57 UTC

Citadel buys Situational Awareness equity holdings after steep AI losses

https://www.ft.com/content/5fb44089-ecdf-4b48-bc14-1e8b4682b...

https://news.ycombinator.com/item?id=49122857

[ok]

31 Jul 2026 13:37:36 UTC

Situational Awareness Down 67% in July in AI Stock Rout

https://www.wsj.com/finance/investing/situational-awareness-...

https://news.ycombinator.com/item?id=49122994

[ok]

31 Jul 2026 15:20:19 UTC

The Loss of Situational Awareness

https://www.theverge.com/ai-artificial-intelligence/973467/a...

https://news.ycombinator.com/item?id=49124243

[ok]

Re: Situational Awareness down 67% in July in AI stock rout

#169

Post by mancerayder » Sat, Aug 01, 2026, 2:49 AM UTC

2PqboPPmKegvanx wrote: post #47

scrlk wrote: post #31

> Aschenbrenner party blamed short sellers who targeted the firm’s positions for exacerbating the fund’s losses, the letter said. The letter compared Situational’s experience to a bank run. 4 years ago, it was SBF blaming Changpeng Zhao for shorting FTT and triggering a run on FTX. Now another EA has followed the path of making a lot of money relatively quickly and losing it just as fast, using the exact same argumen…

>Now another EA has followed the path of making a lot of money relatively quickly and losing it just as fast let's be clear here - he didn't actually "lose" a ton of money. he was up 439% net in the first half of 2026. his issue was getting margin called due to being short on software (which went up) and long on AI infra (which went down) - getting margin called != losing money.

Wait, he was heavy in AI while shorting software?

What happened to the word hedge in hedge fund?

Re: Situational Awareness down 67% in July in AI stock rout

#170

Post by [deleted] » Sat, Aug 01, 2026, 4:55 AM UTC

vessenes wrote: post #3

This is everywhere. For reference, former FTXer and OpenAIer raised $225m into a hedge fund structure, went long and short, and reportedly peaked at $40bn of value; leverage bit hard this week and they sold their entire-ish portfolio to Citadel at $10bn. (Which, I imagine was very likely aiming at this outcome in their trading in the last few weeks). Not reported anywhere -- was additional money raised in to the fund…

[deleted]