{"id":5953,"date":"2026-08-02T10:09:01","date_gmt":"2026-08-02T10:09:01","guid":{"rendered":"https:\/\/metrotransitreview.com\/?p=5953"},"modified":"2026-08-02T10:09:01","modified_gmt":"2026-08-02T10:09:01","slug":"nostradamus-of-ai-leopold-aschenbrenner-didnt-have-the-crystal-ball-seeing-hedge-fund-portfolio-dip-67","status":"publish","type":"post","link":"https:\/\/metrotransitreview.com\/?p=5953","title":{"rendered":"\u2018Nostradamus of AI\u2019 Leopold Aschenbrenner didn\u2019t have the crystal ball seeing hedge fund portfolio dip 67%"},"content":{"rendered":"
\n

The celebrated crystal ball of the \u201cNostradamus of AI\u201d hasn\u2019t merely gone cloudy \u2014 it has rolled off the table and shattered on the parlor floor.<\/p>\n

Read more Idaho In-N-Out worker was shot dead by \u2018disgusting human who doesn\u2019t value lives of others or his own,\u2019 chain owner says<\/a><\/p>\n

Wall Street breathed a huge sigh of relief last week as an AI-focused hedge fund called Situational Awareness reportedly sold most of its portfolio \u2014 reportedly down 67% last month on the backfiring of debt-fueled bets on chipmakers and assorted artificial-intelligence firms \u2014 to billionaire Ken Griffin\u2019s Citadel.<\/p>\n

While the rescue quelled fears of a forced liquidation of the $20 billion fund that could tank the markets, it nevertheless left trading desks across town asking the same question: Is this the canary in the coal mine?<\/p>\n

Are we finally seeing the start of the dot-com bubble of AI?<\/p>\n

The prevailing sentiment was best summed up by a veteran Wall Street sage who has seen a lot of flameouts in his day. <\/p>\n

Let\u2019s just say he wasn\u2019t impressed by Leopold Aschenbrenner, the 25-year-old German-born \u201cNostradamus\u201d figure who is the founder of Situational Awareness. <\/p>\n

(Great name for an organization in dire need of a wake-up call, by the way.)<\/p>\n

\u201cJust your typical leveraged \u00adidiot who was right until he was wrong,\u201d the source said, adding that the implosion is a \u201cone-off.\u201d<\/p>\n

Another source waxed slightly more poetic: \u201cAh, yes \u2014 a 25-year-old kid who\u2019s a billionaire on paper because of a bubble. Everybody thinks they can raise a fund but they forget about how hard it is to be a good fiduciary.\u201d<\/p>\n

Still, a third trusted source felt there was room for conversation: \u201cA significant issue. Not viewed as systemic right now. I wonder if that changes as more problems arise.\u201d<\/p>\n

Indeed, the fact is that most of Wall Street is closely monitoring the Situational Awareness situation because they were holding many of the same positions as \u00adAschenbrenner.<\/p>\n

Another top hedge fund manager I won\u2019t name tells me he has been getting crushed on similar investments in chipmakers essential to the AI supply chain, as well as other companies feeding off this technology.<\/p>\n

Irrational exuberance<\/h2>\n

Many of them, like the erstwhile wunderkind, had been killing it for the past year, powered by exuberance \u2014 or maybe irrational exuberance \u2014 that AI is not just game-changing technology for mankind, but also something that will throw off tons of profits.<\/p>\n

But unlike Aschenbrenner, my source isn\u2019t a novice investor who attracted a cult following that included a few big players with his AI pixie dust. <\/p>\n

Aschenbrenner graduated from Columbia at age 19, so he must be smart, the thinking goes. <\/p>\n

He worked at OpenAI, so surely he is a visionary like Sam Altman. <\/p>\n

He wrote a viral treatise that predicted AI\u2019s dominance across business and culture, so he must be the next Satoshi Nakamoto, right?<\/p>\n

Read more The fastest way to make America healthier isn\u2019t another drug \u2014 it\u2019s dinner<\/a><\/p>\n

Well, if you also noticed, there\u2019s not much investment experience on this r\u00e9sum\u00e9. <\/p>\n

Unlike my guy who took some losses in the AI selloff, Aschenbrenner hasn\u2019t been through enough market swings to survive this one easily. <\/p>\n

Maybe more to the point, unlike Mr. Situational Awareness, my source isn\u2019t 400% leveraged.<\/p>\n

Surviving market upheavals like the granddaddy of them all in 2008 will teach you that, or in his words, \u201cSam Altman is a smart guy, but you wouldn\u2019t want him managing a portfolio.\u201d<\/p>\n

Griffin, of course, is one of the world\u2019s great investors. <\/p>\n

He doesn\u2019t take risks out of the goodness of his heart. <\/p>\n

He must see some value in what Aschenbrenner stitched together. <\/p>\n

After buying it at depressed prices that markets often create when they\u2019re in panic mode, he\u2019s going to make some money when things level out.<\/p>\n

And yet, I\u2019ve seen this act before, a rumbling before the dot-com crash of 2000 that the excitement over something new and possibly transformational means every company in its ecosystem will change the world and make boatloads of money. <\/p>\n

In fact, just a few did.<\/p>\n

Ditto for the 2008 financial crisis. <\/p>\n

The heart of that problem was securitization. <\/p>\n

Banks can keep selling mortgages and various loans to anyone even without a job because you eliminate risk by mixing the good loans with the bad ones. <\/p>\n

But who\u2019s to say what\u2019s a good or bad loan when everyone \u201cthinks\u201d housing prices will keep rising \u2014 \u00aduntil, of course, they didn\u2019t.<\/p>\n

In the bowels of the AI ecosystem I\u2019m hearing similar stories. <\/p>\n

One big investor at a major pension fund tells me that the \u201camortized\u201d cash returns with any near-term visibility on most AI companies he\u2019s seeing are negligible. <\/p>\n

\n<\/div>\n

He loves using AI tools, but many of them are free or priced cheap to gain a following. <\/p>\n

They can\u2019t stay that way forever if they\u2019re going to pay for an infrastructure build that demands hundreds of billions in borrowing.<\/p>\n

Capital is becoming increasingly scarce for anyone but the largest players, meaning VC shops in this space will face difficulties getting funding and withstanding margin calls on businesses that need more time. <\/p>\n

Read more Teen lifeguard reveals near-death battle to save boy from crushing California waves<\/a><\/p>\n

A shakeout is coming, my source told me. <\/p>\n

Situational Awareness is the coal mine\u2019s canary.<\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

The celebrated crystal ball of the \u201cNostradamus of AI\u201d hasn\u2019t merely gone cloudy \u2014 it has rolled off the table and shattered on the parlor floor.<\/p>\n","protected":false},"author":1,"featured_media":5952,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5,27],"tags":[],"class_list":["post-5953","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business","category-charles-gasparino"],"yoast_head":"\n\u2018Nostradamus of AI\u2019 Leopold Aschenbrenner didn\u2019t have the crystal ball seeing hedge fund portfolio dip 67% - Metro Transit Review<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/metrotransitreview.com\/?p=5953\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"\u2018Nostradamus of AI\u2019 Leopold Aschenbrenner didn\u2019t have the crystal ball seeing hedge fund portfolio dip 67% - 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