Why we're talking about it, this, you

know, Leopold is 24 years old. He who

runs a hedge fund that had $45 billion

in assets. Even with this huge decline,

they still run $10 billion. It still

makes it one of the world's biggest

hedge funds.

But what's gone down in the past few

days is them needing to sell off

assets in order to meet margin calls.

They had this huge exposure to AI

investments. They had a ton of leverage.

It's a story we've seen time and time

again, the risk that we see in the

market with these levered up bets.

Them needing to seek a buyer to get some

liquidity to meet the margin calls. They

found it in Citadel with Ken Griffin,

who bought a chunk of their stock

portfolios.

>> All right, guys. I got to show you

something because I don't think there's

anything crazier in terms of stories on

Wall Street or the market right now. A

couple months ago, there was a

24-year-old kid that everybody was

calling the best AI investor alive. He

was running one of the hottest hedge

funds on the entire planet, and then

about a week ago, almost all of it was

gone. I did years on Wall Street, and I

worked at Goldman Sachs, and I'm telling

you, none of this is about being smart.

It's about risk. Let me walk you through

what happened because there's a lesson

in here for every single one of us. His

name is Leopold Aschenbrenner, and look,

I'm not here to dunk on this kid, and

clearly he is brilliant. German-born,

graduated top of his class at Columbia

when he was 19 years old. And then he

goes out and works at OpenAI on a team

studying where all of this superpower AI

is headed. Now, back in June of last

year, he writes this essay called

situational awareness, right? of it is

that AI is about to get way bigger and

way faster than anybody realizes, and

it's going to take trillions of dollars

to build out. Chips, data centers,

power, all of it. That essay blew up in

Silicon Valley, and he took that

attention and raised money, reportedly

around $225 million to start his own

fund with the same name, Situational

Awareness. Now, watch what happens. He

goes all in on the AI trade, and I mean

actually all in. His fund loaded up on

names like Nebius, ticker symbol NBIS,

also Coreweave, CRWV.

You can see this on my screen right now.

These stocks had tremendous run-ups, but

also recently they had tremendous

crashes. And he ended up getting

liquidated, and he lost $35 billion.

One more stock, Micron Technology,

SanDisk, and Bloom Energy, plus a big

private stake in the AI company

Anthropic. Every single one of them

riding the same exact wave. And because

the AI sector was on fire, his fund went

absolutely parabolic. I mean, this guy

made money bicep over tricep, and then

he had extra biceps on his biceps. But

this is what actually happened. One of

the hottest funds everywhere, at its

peak, people were throwing around a $45

billion number for this thing. On paper,

this guy looked like one of the greatest

investors of all time, and he did it in

under 2 years. His Nebius bet was so

big, it literally made the news because

he went over 5%.

>> And there's major institutional

investors now, Situational Awareness IP,

which is essentially uh a hedge fund

that's was started uh by of course an

Open AI former employee. Um they

actually took a passive stake of around

5.6% and if you look at the market cap

as of yesterday, I'm just going to

roughly say it's around $3 billion

of the $58 billion market capitalization

of the business.

>> Now guys, nothing ever goes up in a

straight line. Nothing ever lasts like

that, especially in the market. Here's

what nobody cared about while things

were looking amazing. Two things. First

is concentration. He wasn't spread out.

He was packed into one single theme, and

that was AI. That's the sector that was

ripping, and it looked like he was a

genius. But, when things turn, there was

nowhere to hide. And these names had an

absolute vertical on the way up, but an

absolute elevator or cliff as they came

down. Check out what happened to Bloom

Energy, one of his top holdings. Bloom

Energy had done extremely well in fact,

over six months the stock is up 54%. So,

how does someone blow up their portfolio

when his stock is up 54%?

Well, I'll tell you what happened. As

the stock goes up, the investor

continues to buy more on risky and

dangerous leverage. And when the stock

reaches this level right here, $343 per

share, which is a ton of gains, and his

fund blows up to $45 billion in assets,

well, when you're on a ton of leverage

and the stock ends up pulling back,

especially pulling back fast, just like

this, and going basically half from

$345,

$350 per share, and you know, basically

to $175, which is literally a 50% fall,

a dangerous cliff that the stock ends up

actually jumping and losing all of this

value, that's the exact situation that

can blow up a portfolio. Here's another

stock, Nabius, which he had over 5% of

his entire money in, and because he had

so much Nabius stock, it was 5% stake in

the entire company. Basically, what

ended up happening was there was a 13G

filing. In that 13G filing, the entire

public knows his position even before

his 13F filing is filed. A 13F filing is

something that most hedge funds have to

file if they have $100 million in

assets. A 13G, though, is right there on

the spot when you have acquired too much

of one company, that is public

information. So, Nabius, he had acquired

five over 5% of their company and

trading at $280 per share. Again, this

was the peak. His fund was doing

exceptionally well, which is not that

long ago. That entire blow-up that he

had happened basically right here last

week. He ended up losing $35 billion. A

big chunk of his money just gone in a

matter of weeks. Those big swings are

just normal for the AI trade, and that's

exactly what breaks a fund that's

leveraged up and packed into just one

single trade essentially. Second and

this is a big one, leverage. It's been

reported that he was using heavy

leverage, borrowed money on his

positions. So, let me make this dead

simple for you. Leverage, if your stock

drops by a quarter, it hurts a lot, but

you live to trade another day. With the

kind of leverage that he was reportedly

using, that same drop can wipe out

completely everything. Same stock, same

move, totally different ending. So,

let's slow down right now because this

is a really important lesson for you to

learn. You should not be using leverage

in your own portfolio. Using leverage

done incorrectly will completely blow up

your portfolio. I personally use

leverage, but I've also been trading for

12 years now, and option trading

specifically is already a riskier, more

dangerous, and options are kind of built

in leverage. If you know how to use

them, they can be very powerful, but if

you're concentrated on just AI stocks

like Leopold Aschenbrenner, well, you

can see a lot of pain whenever the stock

ends up coming down, especially if

you're not diversified. So, this past

week, the AI and chip stocks fell a lot.

Last week, they had some really bad

performance. Normal market stuff happens

all the time, but for a fund that is

concentrated and leveraged, a normal

sell-off isn't normal. It turns into a

margin call, and that is when your

broker forces you to sell right now at

the worst possible moment because you

borrowed too much money. So, borrowing

money is what turns a bad week into a

completely total wipeout, right? So,

borrowing money is very dangerous and

this is exactly what Leopold

Ashenbrenner did. In my view, he already

borrowed the money to begin with. So, he

borrowed money and then he was using

leverage on top of that. Of course, he's

going to look like a genius when

everything is up. And again, I'm not

trying to say that Leopold is bad or

he's dumb. He's way smarter than me.

Probably, I'm guessing that he's way

smarter than I am. But, this guy did not

manage his risk properly whatsoever. And

it gets worse. Word gets around Wall

Street that he's in trouble and the big

sharks, they don't back off. They push

forward. They smell blood and they are

excited. He's forced to dump his entire

public stock portfolio in basically just

one shot. And guess who steps in to buy

it? Ken Griffin's Citadel, one of the

biggest, most feared funds on Wall

Street. They scooped it up and on the

way down, they ended up buying all the

assets for a lot cheaper. And a day

later, a lot of those stocks ended up

bouncing right back. That is so painful

for Leopold Ashenbrenner. And it is so

much money that Citadel made in just a

very short amount of time. Their hedge

fund ended up profiting from this very

difficult situation. So, Citadel almost

certainly walked away with a really

massive win. And Leopold, an estimated

$35 billion of that fund gone in a

single week. And here's the part that

really got me. It's reported this whole

thing went down on the same week that he

was getting married. Ooh, picture that.

Your funds are falling apart while your

wedding guests are showing up. And the

early investors, well, reportedly still

up. But, anybody who put money in near

the top or even, you know, the last 1

year is basically gone. Same fund, same

manager. The only difference was timing

and risk. So, what does this mean for

you, the viewer watching right now? So,

why I would spend 10 minutes on some

hedge fund guy that basically never met?

Because this is everything that I teach.

And it's playing out on the biggest

stage right now, and there's a lot that

you can learn.

>> Long-term vision that AI is going to be

very big

doesn't give you

a reason to take unlimited risk. And

whether we're talking about South Korean

retail investors, for that matter New

York retail investors,

or the Situational Awareness Fund,

you have to think about the long term.

You have to think about do I survive

long enough to collect on my bets.

>> So, look, not blowing up is your first

job. The smartest move isn't a home run.

It's still being here the next year to

trade and invest again. The most

successful students in my community

trading options who are generating the

type of money that lets them retire and

live a more lifestyle that they want and

not have to have a job are the ones that

are taking a boring approach, not a

risky approach, not a leveraged approach

like Leopold Aschenbrenner, and the

investor that gets to live another day.

So, Leopold here, he had the right idea

on AI, but he still got wiped out

because of how he bet, not what he bet

on. You don't put your whole entire

account on one thing. You don't need to

be crazy and dangerous leverage to end

up making money at the end of the day if

you know what you're investing in. This

is exactly why I do the boring thing. I

sell option. I collect premium. I like

to manage my risk and I like to protect

my downside. And I have a steady

approach within my community. Boring

keeps you in the game. The market

doesn't care how smart you are. It only

cares if you manage your risk properly.

That's it. That's the most important

thing. Live to see another day and be

more consistent. So, there it is. A

brilliant guy, the right call on AI, and

he still ends up blowing up because of

leverage and concentration. Right idea,

completely wrong risk, and that is the

whole story. If this one helped you, do

me a favor, hit that like button and

subscribe. It genuinely helps out the

channel. And if you want to see how I

actually manage risk and sell options,

the steady, the boring way, the link to

my community is right down in the

description. Keep learning with me. And

And let's learn. let's be safe, let's

grow together, and thanks so much for

watching. I'll catch you in the next

one.