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Investors in Situational Awareness deserved to lose their shirts
- toomuchtodo 2mo agohttps://archive.today/B12aL https://archive.today/B12aL
- glitchc 2mo agoRead the bio. Found it (emphasis mine): > While at Columbia, he co-founded the university's effective altruism (EA) chapter.[5] Just another smart, yet ethically challenged, individual. Nothing to see here.
- simianwords 2mo agoHow is he ethically challenged? This looks like an accusation that doesn't have merit
- glitchc 2mo agoAs per the article, he formed a trading company without any background in investing, and once his investments tanked, he sold the stocks for pennies on the dollar to a financial firm, leaving investors holding the bag while pocketing trading fees associated with a $45B USD portfolio.
- like_any_other 2mo agoHow is effective altruism related? I skimmed their wiki page [1], but didn't find anything endorsing such actions. [1] https://en.wikipedia.org/wiki/Effective_altruism https://en.wikipedia.org/wiki/Effective_altruism
- kimixa 2mo agoNo, but to most people the only exposure they've had to the term "Effective Altruism" (if they've even heard of the it) is morality-washing personal greed that never quite seems to get past the "accumulation" or "self-serving boondoggle" stages. As a brand it's tainted. You might argue unfairly, but that's never mattered in "public brand perception" before.
- glitchc 2mo agoSam Bankman-Fried is an effective altruist (or was anyways, not sure what he is after they denounced him). The list of effective altruists reads like a who's who of scummy people. https://www.wired.com/story/deaths-of-effective-altruism/ https://www.wired.com/story/deaths-of-effective-altruism/
- simianwords 2mo ago> https://www.wired.com/story/deaths-of-effective-altruism/ https://www.wired.com/story/deaths-of-effective-altruism/ This is a joke of an article. It shows a few incidental deaths while ignoring the total number of saved lives due to EA. It literally points to ~2 incidental deaths while Give Well saves ~300k lives. Its remarkably ignorant. Is there a word for this kind of fallacy? Cherry picking sounds too Reddit-coded.
- simianwords 2mo agobad ethics is when you run a company in free market transparently and don't have a monotonically increasing revenue?
- jandrese 2mo agoEffective Altruism is one of those things that sounds smart on the surface, but in practice is a yellow flag. The fact that he started the club is a red flag. In short, Effective Altruism says you don't engage in charity until you have sufficient means to actually make a difference. Basically, you leverage capitalism to accumulate enough wealth to actually be able to solve a big problem, then you go all in on solving that problem. Sounds great right? In the real world these people never accumulate enough wealth to actually start solving problems. Even when they become billionaires. In practice it is a convenient excuse to act like the most depraved capitalist while still pretending to sit on the high horse and talk down to people who simply try to help with the means available to them.
- skavi 2mo agocan you support those claims?
- jandrese 2mo agoOne has to only look at the actual participants to find ample examples: https://www.youtube.com/watch?v=rQZWMmINqxo https://www.youtube.com/watch?v=rQZWMmINqxo https://www.youtube.com/watch?v=S54GrXDjokg https://www.youtube.com/watch?v=S54GrXDjokg https://www.thephilosopher1923.org/post/a-mirror-for-tech-bros https://www.thephilosopher1923.org/post/a-mirror-for-tech-br... https://www.persuasion.community/p/the-problem-with-effective-altruism https://www.persuasion.community/p/the-problem-with-effectiv...
- TimorousBestie 2mo agoIt’s the “tractability” part of the ITN framework: https://forum.effectivealtruism.org/topics/itn-framework https://forum.effectivealtruism.org/topics/itn-framework In practice, it can be used as a fully-general counterargument to supporting most charities, since decisively and completely solving problems in this space is rare. It’s harder to split a problem into component parts than it is to throw up one’s hands and say, “well, this isn’t tractable.”
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- skavi 2mo agowhy does involvement with EA imply being ethically challenged? i’m personally not involved, but on its face it seems better than not doing any kind of charitable work.
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- JumpCrisscross 2mo ago> why does involvement with EA imply being ethically challenged? Because almost everyone prominent in the movement has had some combination of lack of judgment and morals. There various terms for rationally pursuing philanthropy; associating with effective altruism involves embracing its ideas, people and culture.
- wbl 2mo agoAnd yet they do more good than the moral critics do.
- JumpCrisscross 2mo ago> yet they do more good than the moral critics do Going to need a good source for that crowd having done more good than the frauds of even just their most-notorious members. Masquerading as an altruist to justify massive management fees for running a fund of concentrated, leveraged positions is one of the oldest lipsticks on financial pigs.
- glitchc 2mo agoMoral critics save a lot of lives by not doing. Sometimes not doing is the best moral option ex. I will not kill or I will not exploit. And it does not come cheap. Someone who says "I will not work for Facebook" is taking a stand at the expense of significant personal gain.
- YetAnotherNick 2mo agoI think the central finding in EA is donating money while earning good is better than donating time directly for charity. To me it seems correct but controversial for many people(likely because you are maximizing your personal income)
- mholm 2mo ago> He reported returns of 439% for the first half of 2026 > which posted a loss of 67% in July So it's still up 44% this year? The article notes this, but seems unnecessarily adversarial against an investor who is still wildly successful.
- flowerthoughts 2mo agoThe same goes for all reporting on YouTube. Many publishers jumpers the gun without looking at context. It's also interesting that Citadel is mentioned everywhere as the buyer, as if it's strange that a huge market maker firm would be involved in a large forced sale. Seems the fund also has Anthropic shares, so it's not like their entire portfolio got margin called.
- arduanika 2mo ago"Citadel" is a name that makes headlines, for better or worse. Ken Griffin hasn't exactly lived his life in such a way as to avoid the limelight. But you're right, this is just the sort of thing that Citadel and similar firms do once in a while, when the opportunity arises. (Spicier claim: When Citadel bailed out Melvin at the hype of the GME craze, that was also just business as usual, not a conspiracy as the redditors believed.) Another way to parse it when they put "Citadel" in their headlines, is that they're trying to communicate to knowledgeable investors that there's no need to panic. The book is in experienced hands now, with enough capitalization to weather any further attacks, and the contagion probably won't spread.
- ymolodtsov 2mo agoFrom everything I read it seems that they're only up on the Anthropic stock and that doesn't account for newer clients who invested later.
- JumpCrisscross 2mo ago> it's still up 44% this year? Devil is in the details of what Citadel paid for its positions, whether there are any performance tails/clawbacks, how and when the GP charges fees, et cetera. Aschenbrenner is almost certainly up. I'd be surprised if his median LP is breaking even.
- openquery 2mo agoI don't understand the point of this piece. There is nothing breaking or remotely interesting which we didn't already know. Mind you I don't particularly care about Aschenbrenner or his fund but it feels to me like typical journalists reporting on hindsight without any sort of skin in the game. "Hhm, how could you be so dumb so as to trust your money to a 22 year old". Peter Thiel did the same with Zuck and like him or hate him he did pretty well. If you want to show how smart you are hash your predictions, post them publicly with a commitment to reveal by a certain date and then show the world how this was so obvious in hindsight.
- sgustard 2mo agoMostly I found it odd to open with a comparison of hobbit to human ages when it's well known that hobbits can live to 130.
- JumpCrisscross 2mo ago> don't understand the point of this piece >> What, then, to make of Situational Awareness’s plunge? ...Mr Aschenbrenner was hardly alone in such bets; over 80% of fund managers responding to Bank of America’s latest monthly survey named “long global semiconductors” as the most crowded trade. The big worry is that this trade’s whiplash-inducing reversal will have set other investment firms teetering, too. If Citadel hadn't stepped in, Situational Awareness may have had to fire sell tens of billions of dollars of assets. Assets others have leveraged positions in. That, in turn, could have triggered margin calls and a potential credit or even bank crisis.
- jandrese 2mo agoIs this firm big enough to cause a financial crisis on its own? Has the leverage situation gotten so dire? Is this just postponing the inevitable at this point?
- JumpCrisscross 2mo ago> Is this firm big enough to cause a financial crisis on its own? I'm still trying to figure out what their gross and net positions were. But taking reported figures at face value, yes, $45bn is more than enough to start a credit crisis, particularly if everyone is crowded into a small set of leveraged positions that begin fire selling.
- ElProlactin 2mo ago> Good for Mr Aschenbrenner for chancing his arm. The mystery is what on earth his investors were thinking. Perhaps they weren’t. In which case, that would be more worrying than anything about Situational Awareness’s humbling. The Economist should change its name to The Populist with this type of screed. Here's the reality: 1. Lots of money is invested willy-nilly for all sorts of reasons (or no reason at all) in all sorts of dubious and poorly-managed vehicles. 2. Except for the profile of the fund manager and that this was AI, this failure wasn't all that special. The seed capital for the fund is reported to have been around $225 million and it was highly leveraged on top of significant gains so there's a whole class of LPs who probably aren't even going to lose anything on this. It's the people who put capital in more recently who are going to lose. 3. The people who will lose money investing in this fund are the type of people who have a full wardrobe. It's going to be a very long time before they "lose their shirts".
- mmoustafa 2mo agoIt is just the most visible “close call”. Most of the time we don’t hear about these incidents until they blow up, that is if we hear at all.
- ElProlactin 2mo agoBut there was no "close call". His fund was not systemically important. It was mostly public equity investments in some of the largest names in the market that were highly leveraged.
- JumpCrisscross 2mo ago> this failure wasn't all that special >> people who will lose money investing in this fund are the type of people who have a full wardrobe If Citadel hadn't bailed him out, Situational Awareness very likely could have triggered a cascade of fire sales. That would not only hurt ordinary investors' positions, it could have also triggered a credit or even banking crisis (depending on how the margin loans are held). A big, leveraged, concentrated fund blowing up isn't novel. But it's the traditional way to start a recession.
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- JumpCrisscross 2mo ago> By July this year he was said to be overseeing as much as $45bn Does anyone know if this refers to AUM or the gross size of his positions after leverage?
- kgwgk 2mo agoAUM. Oversee: to be in charge of how an amount of money is invested or spent.
- JumpCrisscross 2mo ago> Oversee: to be in charge of how an amount of money is invested or spent No. "Oversee" can refer to the gross or net position. If I raise $10bn and use that to buy $100bn in assets, I absolutely control and thus oversee the latter.
- kgwgk 2mo agoWhatever. (It’s still AUM.)
- u1hcw9nx 2mo ago$45 billion was AUM. The leverage was 4x or 5x of that and highly concentrated. Citadel bought $16 billion public portfolio with 10% discount.
- JumpCrisscross 2mo ago> $45 billion was AUM Do you have a credible source specifically claiming this? I want to know whose data they're looking at. (Specifically, I want to unpack how they're marking their private positions.)
- u1hcw9nx 2mo agohttps://www.cnbc.com/2026/07/31/leopold-aschenbrenner-situational-awareness-fund-fire-sale.html https://www.cnbc.com/2026/07/31/leopold-aschenbrenner-situat...
- m3kw9 2mo agoI'm not sure what the outrage is. It's still up pretty good for the year, but if you brought at the top, like any stock, you'd lose your shorts.
- elianaive 2mo agoThe discourse on this is way too clearly schadenfreude. He's still up significantly YTD.
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- arjie 2mo agoThe fund is up 80% for the year or something, right? Did I see it wrong? Why is everyone acting like he blew up?
- tyromaniac 2mo ago[dead]
- grey-area 2mo ago> The mystery is what on earth his investors were thinking. Perhaps they weren’t. In which case, that would be more worrying than anything about Situational Awareness’s humbling. I think this piece is pointing out two things: That this bubble still has a long way to deflate if it is indeed deflating. The numbers involved truly are spectacular and unwinding could be catastrophic. That there is a lot of blind faith in the market in unsubstantiated predictions - like AGI this decade (or indeed AGI at all based on LLMs), and a lot of follower behaviour among investors chasing the latest trade.