George Hahn connects the dots across the week’s biggest stories: how leverage brought down one of the hottest AI hedge funds, why South Korea’s market crash offers a warning for American investors, and what Sam Harris teaches us about attention, anxiety, and the pursuit of happiness.
00:48 - The Golden Age of Fraud
01:33 - The CapEx Accounting Mismatch Behind Soaring S&P Profits
02:52 - AI Jesus's Overnight Collapse
04:04 - South Korea's Leverage Crisis and Its Human Cost
06:32 - Ad Break
09:15 - Loneliness, Leverage, and Financial Nihilism
10:31 - The Death of Boredom
12:04 - You Can't Beco...
What Scott Galloway said
Written from the verified transcript and checked against it. Every figure links to the moment it was said.
Scott Galloway discussed the collapse of the $45 billion AI fund run by Leopold Aschenbrenner, which was 5x leveraged, margin called, and forced to liquidate its public equity portfolio, with Galloway calling it 'a story of leverage once again.' He then analyzed South Korea's market plunge, noting that 92% of investors in single-stock leveraged ETFs were retail, 3.4% of adults received margin calls, and the human cost led to a debt counseling hotline as part of suicide prevention. Galloway argued that 'leverage doesn't create risk. It removes your margin for being wrong.' He also highlighted the trend of US leveraged ETFs growing from $120 billion to over $200 billion in AUM, with more than half being single-stock ETFs. The conversation connected these financial events to a broader generational financial nihilism, and Galloway's guest Sam Harris discussed how boredom and attention relate to happiness, concluding that 'you can't become happy, you can only be happy.'
Key takeaways
Leopold Aschenbrenner's fund was 5x leveraged, margin called, and forced to liquidate its entire public equity portfolio.
92% of investors in South Korean single-stock leveraged ETFs were retail, and 3.4% of the adult population received margin calls.
South Korea's debt counseling hotline is part of its suicide prevention plan, highlighting the human cost of the market crash.
US leveraged ETFs AUM jumped from $120 billion in April to over $200 billion, with more than half being single-stock ETFs.
Sam Harris argued that happiness cannot be achieved by acquiring things but only by being present in the moment.
Welcome to the week from PropG Media, where we break down what mattered and what it all means. I'm George Hahn, and it's Friday, August 7th. Today, a hedge fund blew up. South Korea's stock market plunged 44% and the AI trade found its floor. Then, why a generation locked out of financial security is taking bigger risks to get ahead. And finally, Sam Harris on what's actually worth your attention. Let's get into it.
Last week, the debt that was propping up the AI boom finally came into view. This week, we found out what it does to people. On Friday's PropG Markets, Scott and Ed sat down with Jim Chanos, the short seller who called Enron, and who now teaches a course on the history of financial fraud.
The fraud cycle follows the financial cycle with a lag. And the longer the financial cycle goes on, the more amount of fraud is ultimately uncovered on the down cycle. So, I've already dubbed this the golden age of fraud. And I suspect that when we're on the down part of this cycle, the bodies will float to the surface as they always do. But remember, the corollary to that is the harshest prosecutor and the staunchest defense attorney of a company is its stock price. Nobody goes after frauds at all-time highs. They only go after them after investors have lost money because these kinds of things are political.
And that's a big question because, like the dot-com boom, we have an accounting identity problem that follows these capex booms. Namely, that the companies that are spending the money do not expense immediately most of that money that's being spent. It's capitalized and depreciated over five to ten years. The companies receiving a lot of that money, the Nvidias of the world, the Caterpillar tractors of the world, the utilities, they're receiving it in terms of revenues and profits immediately. So the same dollar is basically contributing to profits in a far greater extent than it does in a more normalized economy, where it would be recognized as revenue by one company and expense by another. And that's what we're seeing. And that's why S&P profits have taken off in the last two years. It's because of this mismatch.
That was the theory. This week we saw it play out. Leopold Aschenbrenner is 24. His fund, Situational Awareness, was up 439% for the first half of the year, swelling to roughly $45 billion. He told investors the sell-off had created an unusually attractive opportunity. Six days later, after mounting losses and margin calls, the fund sold most of its public stock portfolio to Ken Griffin's Citadel in a fire sale. Situational was left managing roughly $10 billion.
Last week we learned a truth bomb, which is that it turns out he was 5x levered up. He was then margin called and then he decided — well, not decided, he was forced to liquidate his entire public equity portfolio, and supposedly he's also selling his stake in Anthropic too. And it is remarkable because if you've been online, if you've been on Twitter and you're kind of plugged into the investing community, this guy was considered AI Jesus. He was like the savant of our time. He could predict the future. He knew everything that was going to happen. And literally overnight, the whole thing has collapsed. And what is it? It's a story of leverage once again. He was levering up into the hottest stocks, into the hottest momentum trades in the world. Looked really smart until suddenly he didn't.
That was the institutional version. The retail version happened on the other side of the world. South Korea's market fell 44% from its June highs. $2 trillion in value gone. The cause was a product launched in May: single-stock leveraged ETFs tracking Samsung and SK Hynix, multiplying daily returns by two, three, even five times. Here's both Scott and Ed on Monday's Prof G Markets.
Leverage on the way up is a ton of fun. It's ugly on the way down. And my understanding is — talk about a gambling economy — 92% of investors in these products were retail. And so there were two brokerage accounts for every citizen in South Korea. So it was never institutional risk, it was household risk. And Goldman estimates that 3.4% of South Korea's adult population has received a margin call. I mean, that's insane when you think about it. So the human cost here is so real that South Korea has rolled out a debt counseling hotline as part of its suicide prevention plan. That's a sentence that should give us all pause. And so the lesson here isn't new. It's just very expensive for every generation to relearn this, and that is: leverage doesn't create risk. It removes your margin for being wrong.
You mentioned the craziest stat, I think, which is that more than 3% of the adult population has now received a margin call in South Korea. But I think probably most astounding is some of the imagery that we're seeing coming out of South Korea. If you go to the National Assembly building in Seoul, South Korea right now, and you go on the sidewalk, you will find a pile of funeral wreaths on the street.
Galloway, S. (2026, August 7). The Week: The $45 Billion AI Fund That Imploded [Interview transcript]. The Prof G Pod – Scott Galloway. CEOInterviews.AI. https://ceointerviews.ai/interview/3003129/
MLA
Scott Galloway. "The Week: The $45 Billion AI Fund That Imploded." The Prof G Pod – Scott Galloway, 7 Aug. 2026. Transcript, CEOInterviews.AI, https://ceointerviews.ai/interview/3003129/.
BibTeX
@misc{galloway2026_3003129,
author = {Scott Galloway},
title = {The Week: The $45 Billion AI Fund That Imploded},
howpublished = {Interview transcript, The Prof G Pod – Scott Galloway. CEOInterviews.AI},
year = {2026},
month = {aug},
url = {https://ceointerviews.ai/interview/3003129/},
note = {Speaker-attributed transcript with timestamps}
}
