[energy123]

He played his cards well given the incentives. Most investors wouldn't tolerate such recklessness, and accordingly, most funds have to operate under strict risk management or they don't get funded. PMs at multi managers are only allowed about 5-8% drawdowns.

Leopold's public visibility gave him access to dumb money whales who allowed him to personally profit off the variance by collecting bonuses when times were good, leaving the investors with the bag when the blow up happens. These investors got lucky that there were still gains after the margin call. Being up 80% after such a large drawdown is bad performance on a risk adjusted basis and is not distinguishable from chance due to the magnitude of the variance.

[bagacrap]

Yes, he combined one good bet with the ability to charm dumb whales. (Actually this sounds like a lot of startup founders.) And I'm sure he thinks it's still a good bet, but he has no idea what risk management even is. In his letter to investors, he swears he learned his lesson, but I wonder whether that lesson regards leverage, or more broadly hubris.

[energy123]

A lesson learned would be a commitment to quantify the allowed risk as a proportion of VaR or some equivalent approach that holds his fund to account as an investment mandate. Or a promise that he will do something like this in the coming weeks. The lack of specificity of the commitment keeps me sceptical, but time will tell.

[bagacrap]

Lesson learned would be to hire professionals to do the investing, while he sticks to whatever he actually knows, if anything. (At this point, mainly sweet talking investors, it seems.)