{"text":[[{"start":6,"text":"On Friday, MainFT scooped the overall impact of Leopold Aschenbrenner’s $35bn July trading loss on Jane Street Capital’s own, otherwise enviable, investment record."}],[{"start":18.04,"text":"And the losses generated by Aschenbrenner’s leveraged AI stock bets put him up at the top of the global leaderboard of fund facepalms. We know this because we found a cool table on Wikipedia. It’s a catalogue of financial disasters, based largely on this CFA monograph by Thomas S Coleman — an ex-Moore Capital risk-guy-cum-finance-academic — though it captures far more than just hedge fund trainwrecks."}],[{"start":43.72,"text":"Anyway, we thought it would be fun to bring the magic of dataviz to the top part of this table to more easily contextualise the quantum of Aschenbrenner’s loss."}],[{"start":null,"text":"
"}],[{"start":53,"text":"We’ve colour-coded the losses by the type of entity that generated them, and populated cool custom pop-ups that provide a ton of details — like the people linked to them, whether there was jail time, what happened to the funds that took losses, that kind of thing. We’ve also curated links you can click to read more about each meltdown."}],[{"start":72.6,"text":"Only seven of these top 25 trading losses are from funds: most are either banks (which are, in turn, mostly rogue traders) and normie companies who mishedged."}],[{"start":82.48,"text":"Now there are two steps to a fund losing a lot of money."}],[{"start":85.52,"text":"The first step is to inspire faith in either a large number of fairly wealthy people or a small number of immensely wealthy people to pay you vast sums because you’ve got both great ideas and decent risk management."}],[{"start":98.12,"text":"The second step is to do exactly the thing loads of people use to make a lot of money: throw together a credible investment thesis, have sufficiently high conviction in it that you’re able to persuade yourself and others to cast aside risk management 101, maybe chucking a bunch of financial leverage into the mix for good measure."}],[{"start":115.76,"text":"The second step is easy. There are thousands of people yoloing in their mums’ basements around the world doing just this right now, drawing from their experience either bragging rights on Reddit and a new Lambo/ existential dread of imminent bankruptcy (delete according to the luck of their draw). So if you’re interested in maximising your ranking on any quantitatively measured global leaderboard of trading losses, the first step is probably more important."}],[{"start":142.58,"text":"With around $89bn of AuM, Millennium Management needs to drop just a couple of per cent in a month to find itself with a $2bn trading loss — something that could reasonably be expected to do a few times a year, and something they reportedly just did in July. The Vanguard 500 Index Fund had $1.7tn of net assets at the end of July, meaning daily ups and downs in the S&P 500 are likely to eclipse Situational Awareness’s July record at some point most months. Although maybe not actually realising these losses means they don’t count."}],[{"start":177.16,"text":"Are these just pedantic asides? Not really. When it comes to funds, we’re fairly sure that this league table, like every other we’ve chanced upon, is only really capturing the kind of meltdowns that make good copy."}],[{"start":194.2,"text":"There’s Tiger Global’s ca $40bn bloodbath in 2022, for example, which arguably should put it at the top of the list. There’s a case that Jane Street should, itself, be catapulted into the least desirable leaderboard in the financial world, given the reported $15bn hit that it took in July from its exposure to Aschenbrenner’s flameout. And we might even be able to colour its bar blue, with opinion moving day-by-day in the direction of Jane Street being a quasi hedge fund rather than just a market maker."}],[{"start":220.04,"text":"After all, the number is large and the copy is excellent."}],[{"start":226.2,"text":""}]],"url":"https://audio.ftcn.net.cn/album/a_1786960881_2830.mp3"}