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Hedge fund near-collapse highlights risks in highly leveraged AI trades
The fund nearly collapsed after a period of market volatility, underscoring how leverage can amplify drawdowns during rapid swings in AI-related positioning.
The New York Times Business reports that Situational Awareness drew Wall Street attention for its highly leveraged approach to trades tied to the AI theme.
According to the outlet, the fund nearly collapsed during a wave of market volatility, illustrating the potential downside when leverage meets sudden market swings.
The episode points to the fragility of crowded, heavily financed strategies when volatility rises faster than expected, the outlet said.
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