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What is the tricky point that led to this situation? H1, the rising star, with an investment value in the tens of billions, a figure that once profited over 400 percent just a few days ago. Why has the portfolio collapsed today? >> It indicates that the situation that occurred is due to forced leverage. They might have leveraged heavily, and they did not have enough money to add the necessary collateral during the appropriate time. This situation is similar to many investors in Korea. It's a good lesson. People who have experienced success are usually very confident. You profited 400% in 6 months, and you still held on. I understand that because successful people are generally like that. I don't know, but looking at all the events that have happened, it seems like it has been favorable all along. Including at some point, I even wondered if Citadel was involved in this. Mr. Guitar, going back one day before the Fed announced its policy interest rate. A research paper was released stating that the Fed would surprise by raising interest rates at this meeting, causing panic in Wall Street and concern about bonds, leading to a sharp decline in AI technology stocks. Thailand Gold Summit 2026, the biggest gold seminar in Thailand, is now available for rewatch. >> Most people [music] trade gold 95%. >> Hey, why are they losing money? >> A crisis period is the best time for you to convert cash into assets that are decreasing in value. >> You can watch the full replay of all Main State Sessions. For more details, follow ZP Event. The turmoil from Korea to the large H1 fund on Wall Street. Mr. Roj, looking at the latest situation, how are the events that occurred connected, and what is their impact on the market? >> I must say it's a big deal. The situation regarding Situational Awareness. Because over the past year, this fund has been talked about a lot, and its size has grown very rapidly. Starting from 1 billion dollars about a year ago, it reached a peak in June, at the beginning or end of June this past June, to 45 billion dollars. It's in the top tier of H funds. What's interesting is that this fund is managed by Mr. Leo Po, who is very young, only 25 years old this year. He is a former analyst at OpenAI who resigned to start his own fund. He used the knowledge gained from working with AI, what to use, what are the resources, what are the bottlenecks, to invest in his hedge fund. And he achieved astonishing returns. His size increased from 1 billion to 45 billion in just over a year. This is considered a record high for hedge funds. I think this is something that has been closely watched, to the point where at one point, Mr. Jim Cramer even praised him as the next Warren Buffett. I think there are interesting stories. In fact, if we look at his investment methods, they are not very complicated. It's a strategy called "long shot." He buys stocks he thinks will go up and sells stocks he thinks will go down. He uses the same idea that most of us are familiar with: the growth of AI will lead to a shortage of AI infrastructure, and AI infrastructure semiconductors will increase in price. So he bought them. Meanwhile, AI disruption will destroy businesses like software services that might have weaker moats. So he shorted those. And the strategy has worked very well over the past year, attracting investors to put their money with Mr. Leo Po. [Cough] [Inhale] >> Yes, Mr. Roj, what is the tricky point that led to this situation? H1, the rising star, with an investment value in the tens of billions, a figure that once profited over 400 percent just a few days ago. Why has the portfolio collapsed today? >> His management method is what we call "equity long short." He buys one and shorts another, and the positions of buying and selling might be similar, equal, or slightly larger. In part, it can be seen as risk management because there are both buys and sells. If the market goes up, there will be both profitable and losing positions. If the market goes down, there will also be both profitable and losing positions. The problem is that what he does is quite focused. It's focused on only a few industry sectors and only a few stocks, and their market capitalization is not very large. [Cough] I have to say this. At the same time, the short side is the same. This makes his position, as a hedge fund investor who has to report his status, visible to everyone. They can read what positions you hold. And if it's tens of billions of dollars, moving anything is not easy. It's difficult to move here and there. So it becomes a target as well. People who are watching think, "This young man is a rising star. The stock has gone up a lot, and I haven't rebalanced yet. I'm still adding. He's also using a lot of leverage. News reports say four times, which is not insignificant. So, if it's four times, and it drops 25% or goes wrong by 25%, it's all gone. Right? [Inhale] I think this is the starting point. People have been watching for a long time, especially the older players in the industry. Like Netflix, which is another one mentioned in the news, is the number one in the industry and has been around for a very long time, with extensive experience in finance. Mr. Leo Po might be good at technology, innovation, or understanding the AI supply chain. But in finance itself, he might not be aware. His weakness is when the market is normal, or when things go as expected, it's okay. Long short, as mentioned. But what happened last month is that AI technology stocks, all the infrastructure, fell sharply. The narrative is overspending, right? And they have to review ROIC. And they doubt whether the supply will increase significantly. This caused many stocks in the semiconductor and AI infrastructure sectors to drop by 30%, 40%, or even 50%. Even large stocks. So, one side, the long side, was hit hard once. As for the short side, which thought that software and services would be disrupted, they actually went up during the same period, by about 10-20%, depending on the stock. This squeezed him from both sides. The long side lost money, and the short side lost money. Therefore, the risk he could bear increased very rapidly. It was hit very quickly. And on the surface, people who have been in the industry for a long time can see it. At this level, where is your stop loss? Right? We see that the recent events have not been favorable to Situational Awareness. Because he was wrong, not the market. He was wrong on both sides, long and short. Normally, it's not like this. >> Yes, Mr. Roj, so was it a wrong bet, concentrated risk, or leverage? What was the problem, or all three? >> I have to say this is after the fact. I don't want to add to anyone's troubles, but it's a lesson. I think what Situational Awareness did wasn't entirely wrong. Because AI infrastructure still exists. All hyperscalers, except Microsoft, have announced increased investment budgets. Microsoft is still investing the same amount. And today, we see that after the situation has eased, the market has reversed. The stocks that fell sharply, after being sold, have risen nicely. Last night, the stocks that were shorted, which had risen a lot, immediately fell when ownership changed. This indicates that the situation that occurred is due to forced leverage. They might have leveraged heavily, and they did not have enough money to add the necessary collateral during the appropriate time. This situation is similar to many investors in Korea. We see a similar picture: they invest in stocks they believe have a future. They might be right in the long run, but in the short term, the market moved too fast, and they couldn't provide the collateral. This is the problem that occurred. As for what will happen in the future, I think we have to keep watching to see if the AI infrastructure issue is over, or if software and services will come back. I don't think we can say clearly what will happen today. But it's a good lesson. People who have experienced success are usually very confident. You profited 400% in 6 months, and you still held on. I understand that because successful people are generally like that. But when everything moves against them, it can make things worse very quickly. Don't forget that in 6 months, it increased by over 400%, which is 439%, right? In just one month, not even a full month, 30 days, it dropped so much that you had to sell assets. I understand there might be some debt to brokers, so they had to sell everything. >> Yes, and what is the consequence of this event, Mr. Roj? Will it be a domino effect, causing further damage, or will it be the end of the liquidation that is happening in the market, a crisis that wipes out portfolios? >> This is indeed something to think about. I don't know, but looking at all the events that have happened, it seems like it has been favorable all along. Including at some point, I even wondered if Citadel was involved in this. Mr. Guitar, going back one day before the Fed announced its policy interest rate. A research paper was released stating that the Fed would surprise by raising interest rates [Cough] at this meeting, causing panic in Wall Street and concern about bonds, leading to a sharp decline in AI technology stocks. That is part of what happened. I don't know what their intention was, but in reality, the Fed did not raise interest rates. Three parties might have said they would raise them, but overall, they did not raise interest rates, which is what most analysts had predicted for a long time. >> As soon as the event happened, it was pressured. Then, K. Griffin stepped in and took over Mr. Po's portfolio. Just one night later, it reversed all positions. This makes one wonder if it was orchestrated for this purpose. All the situations that have occurred. It's hard to answer because there's no evidence. But I think this: if we look at it realistically, did fundamentally good stocks deserve to drop 30%, 40%, 50% in just one month? That's not normal, right? In reality, you can check. For companies whose stock prices have fallen sharply, everyone announced profits better than expected, and profits are still growing. But the stock fell, right? So it makes me think it's paradoxical in terms of fundamentals versus stock prices in the short term. This is what happens. Will it end here? Ultimately, stock prices and money always return to fundamentals. In the short term, it will be as we see. I still think that if we continue to see AI infrastructure being invested in, and Microsoft, Google, Amazon, Meta, everyone is trying to show that these investments have ROIC, or rather, ROIC, Return on Invested Capital, right? Google Cloud grew 82%, right? Microsoft [Cough] Azure grew 43%, right? Amazon is doing the same. I think if innovation still exists and demand still exists, stocks will eventually return to where they should be. But this period is due to forced leverage, panic, concern, doubt, and the macroeconomic picture, which includes war and rising interest rates. It's all mixed together. >> Yes, but on the side of the major hedge fund event, like the one that happened, is this considered a signal that the current crisis is nearing its end? That a large H1 fund like this can still have problems to this extent? Meaning that the remaining ones will likely be sold or liquidated almost entirely, or should we not be complacent that there might be more liquidation crises? >> I think this is a reiteration, it comes back. Every crisis will have news like this. Since Lehman Brothers, right? There will be news like this in every crisis. This is one example of what has happened. And usually, there might be one or two incidents. In fact, it's not just for hedge funds. Look at South Korea, right? There are many cases of forced liquidation. I think if we see this situation, it indicates that, in part, public disclosure has reached a certain level. I'm not sure if this can be believed, but there is a research paper from JP Morgan stating that liquidations in South Korea have already forced over 90% of the AUM of leveraged ETFs that have fallen. This is part of the evidence that forced liquidation has occurred to a certain extent. The fact that Koreans are protesting on the streets is another piece of evidence that liquidation has occurred to a certain extent. But will it end? It's hard to say unless you hold the books yourself. And I think normally, liquidations don't happen just once. There will be forced liquidations, then rebounds, then people will leverage again, and then they will be forced again. It will be a process of consolidation. I think this round, the recovery of the Korean market, and others, still carries risks. What I mean is, [Inhale] those who were stuck before and haven't been liquidated yet, when they reach their capital or close to it, they might sell. Therefore, the market recovery is unlikely to be V-shaped. It's more likely to be a gradual upward trend. As for the bottom, I think fear should have peaked. Because everyone, last night I was reading, everyone was talking about Korea on social media. That means it's quite widespread. People are probably thinking, if they are not confident in their own views or don't have enough commission, they will gradually or perhaps have already adjusted their positions. I think this part has passed to some extent. At least, we can be relieved that forced liquidation is likely more than halfway through. As for whether it's 90% as JP Morgan suggested, I think we have to keep watching. It's hard to say. However, the risk now is significantly reduced compared to the beginning of the month. But if anyone still has a small position, it might be an opportunity. But this is a lesson, especially for Koreans. >> Thank you everyone for following us all along. Our goal is to reach 1 million subscribers for this channel to create a broader society for learning about economics, business, and investment. We now have YouTube Membership. By subscribing, you will receive exclusive access to content and seminars from [music] PRP and Team Business Tomorrow. Please subscribe.