Last week, a hedge fund that had returned 439% in the first six months of the year imploded in a spectacular way.

Situational Awareness was run by Leopold Aschenbrenner, San Francisco's golden boy. He graduated from Columbia at 19, joined OpenAI's Superalignment team, and then published a 165-page essay predicting rapid progress toward artificial general intelligence. It went viral. He turned that essay into a fund, and in under two years he raised roughly $20 billion.

Then he levered it four to one. Every dollar of capital controlled four dollars of stock, which turned a good year into a spectacular one. Since inception (less than two years ago) the fund was up more than 1,000% after fees.

But leverage cuts both ways, and July went the other way. AI infrastructure names sold off hard, the collateral behind his borrowings shrank, the margin calls came, and there wasn't enough cash to meet them. Before Thursday's open, Ken Griffin's Citadel bought the whole portfolio in a single block, at a major discount.

This is now a familiar story. Every year or two, a new investing genius comes along with a brilliant theory. The problem isn’t their intelligence, it’s their strategy.

In March 2021, Bill Hwang's family office Archegos imploded after making concentrated bets on tech and media stocks, at roughly five-to-one leverage. Twenty billion dollars of Hwang's own wealth evaporated in two days.

In February 2021, it was Cathie Wood. ARK Innovation had roughly tripled in under a year on disruptive tech, and money poured in near the top. From peak to trough the fund fell 81.6%. Five years later it still sits at about half its peak, and most of the investors who bought the story never got back to even.

And then there's Long Term Capital Management, run in the 1990s by Nobel laureates and PhD quants. Net returns above 40% in its first two full years, then gone in 1998. Its leverage ran near twenty-five to one.

These stories all have one thing in common: very high IQ people posting a few years of spectacular returns, and the Buffett comparisons that inevitably follow. But the people who actually get wealthy in the stock market don't get there in a hurry. They don't get there by timing the market, and they don't get there on borrowed money.

The biggest fortunes aren't made overnight. They're built by owning great companies and holding them for a very long time. Durability matters more than magnitude; but durability is slow, and slow is the one thing almost nobody has the patience for. Trying to get rich quickly tends to end the same way: you don't, and you blow up.

Temperament beats intelligence in this business, and Situational Awareness is just the latest reminder.

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