Investors in Situational Awareness deserved to lose their shirts

The plight of the hedge fund says more about them than about its 24-year-old founder

A black-and-yellow illustration of a balloon with a tied knot and a small hand peeking out from underneath

Illustration: Satoshi Kambayashi

Aug 4th 2026|4 min read

Readers of J.R.R. Tolkien’s “The Lord of the Rings” trilogy meet Frodo Baggins, its hero, when he is still in his tweens. This, Tolkien explains, is what hobbits call “the irresponsible twenties between childhood and coming-of-age at 33.” So Frodo’s cousin Bilbo waits until he has reached this ripe age before giving him a ring with the power, it turns out, to conquer the world.

Any investor who entrusted Leopold Aschenbrenner with their money and is now cross with him should take note. Mr Aschenbrenner is in his mid-20s and runs Situational Awareness, a hedge fund—named without irony—which posted a loss of 67% in July. He launched it in 2024 after writing a 165-page essay with the same title, arguing that artificial “superintelligence” would transform society before the decade was out.

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