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John Reid, the vice president sitting next to Citigroup Chairman Walter Riston, did not speak at the entire meeting.

In reality, his feelings at that moment were very complicated.

If you look closely, you can see that besides feeling fortunate, he also has a hint of regret.

Previously, when Lin Haoran stated at the meeting that the US economy might decline, John Reed was the only one in the room who abstained from voting.

Afterwards, because he agreed with Lin Haoran's words, he privately approached Lin Haoran.

The two had a long and in-depth conversation.

Lin Haoran gave him a detailed analysis of the potential risks such as unsustainable corporate profits and overvaluation in a high-interest-rate environment, and suggested that he at least reduce some of his high-risk positions, increase cash reserves, or even short some listed companies that might plummet.

John Reed was persuaded.

He decided to use his forward-looking capital to make covert investments.

However, a series of events that followed, coupled with the opinions of various experts, caused him to change his originally firm mind.

He did indeed follow Lin Haoran's advice and quietly established a large number of short positions through "Forward Capital," which he controlled privately and was completely isolated from Citibank's business.

At the time, Lin Haoran not only analyzed macroeconomic risks, but also gave some specific sector and stock recommendations, targeting those with the highest valuations, the most fragile cash flow, and the most sensitive interest rates.

John Reed did as instructed.

But in the end, he hesitated.

When Lin Haoran left the United States, public opinion overwhelmingly mocked this "arrogant Eastern prophet";

When Citigroup insiders, Wall Street peers, and even several respected economic veterans all said that "the adjustment is healthy and the foundation of the bull market remains unchanged";

John Reed's confidence wavered when the stock market even surged slightly after Lin Haoran left.

He wondered if he had overinterpreted the warning of a young foreigner, and if he had gone to extremes in the illusion of being the only one who was sober in a world of fools.

Therefore, when issuing the final instructions, he reduced the planned leverage of 10 times to 3 times.

He told himself: This is still a radical move, enough to prove his judgment and courage, while retaining a degree of "caution" to avoid utter ruin if he makes a wrong judgment.

It was this very "caution" that he now deeply regrets.

If he had been more resolute back then and insisted on using 10x leverage, no, even if he had only maintained 5x, then during those thrilling ten days, "Forward Capital's" profits would not have been the current one hundred million US dollars, but could have been two hundred million or even more!
Perhaps, it could completely offset the losses incurred by Citigroup!

That would be an astonishing record that would make any hedge fund manager envious, and would solidify his unparalleled reputation for "foresight".

Now, this "mere" $100 million profit seems so insignificant, even somewhat ironic, compared to the potential losses of hundreds of millions of dollars for Citigroup as a whole.

It proved Lin Haoran was right, and it also proved that John Reed once possessed insight close to the truth, but ultimately succumbed to the noise of the crowd and his own wavering.

Moreover, John Reed knew that Lin Haoran's Huanyu Investment Company must have some investments in the US stock market, even though Lin had not told him about it.

But judging from Lin Haoran's past behavior, the other party will definitely make a lot of money this time.

Thinking about this made John Reed even more regretful.

“Reed?” Walter Riston’s voice pulled him back from his turbulent thoughts. “Do you have any additional comments on the group’s current loss-mitigation plan?”

John Reed composed himself and forced his attention back to the conference room.

He saw the anxious, self-reproachful, or bewildered faces of his colleagues, and he saw Li Guowei's calm expression.

He knew how dazzling Li Guowei's "liability-avoidance" stance, and the seemingly all-knowing boss behind him in Hong Kong, were in everyone's eyes at that moment.

If only they had listened to Lin Haoran and made preparations for the impending decline in US stocks back then, how glorious Citigroup would be today!

Unfortunately, it's too late to regret it now.

With the current drop in stock price, Citigroup's previous investments have become a burden, and withdrawing will not be so simple.

If you retreat slowly, the stock price may fall further.

A swift retreat would inevitably cause the stock price to collapse even faster, leading to a sharp increase in losses and potentially triggering deeper questions about Citigroup's own financial situation, creating a vicious cycle.

This is precisely the classic prisoner's dilemma on Wall Street.

“Mr. Riston,” John Reed forced himself to suppress his regret and responded in the calmest and most professional tone possible, “the stop-loss plan is technically sound.”

However, the core issue lies in the pace of execution and the market's capacity to absorb the losses. If we collectively and rapidly sell off large positions, it would be tantamount to announcing extreme panic to an already fragile market, which could very well trigger a stampede and result in losses far exceeding model predictions.

He paused, his gaze sweeping over each of his tense colleagues: "I think we need a more strategic 'orderly retreat' plan."

This is not just a sell-off, but includes several aspects: First, immediately suspend all automatically triggered or aggressive selling programs to avoid algorithmic trading amplifying volatility.

Second, we will assess which parts of our holdings have relatively good liquidity and are less sensitive to price shocks, and prioritize dealing with these parts to recover core funds.

Third, and most importantly, is to seek hedging and conversion, rather than simply selling.

“Hedge and switch?” a senior director asked doubtfully. “The market is currently in a one-way downward trend, and traditional hedging tools are extremely expensive and may be ineffective.”

“I’m not talking about traditional stock index futures or options hedging,” John Reed said, his voice rising slightly, with a sharp edge ignited by the crisis. “I mean, using this downturn to reallocate our assets.”

Many of the stocks we hold are not companies whose fundamentals have all deteriorated; they have simply been unfairly sold off due to panic.

Could we consider redirecting some of our funds to high-quality assets that we believe are truly undervalued and have long-term resilience, while we are forced to sell some positions?

For example, certain consumer staples companies, utility companies with strong cash flow, or industry leaders whose valuations have fallen to historical lows but whose business models have not been disrupted?

He subconsciously thought of several areas that Lin Haoran had mentioned privately. In the early stages of stagflation or recession, companies with pricing power, low debt, and stable cash flow are often more defensive and can even be the first to recover in the later stages of a crisis.

Although the other party did not name the company, John Reed, as an expert in this industry, naturally had his own judgment.

“This sounds like an attempt to ‘buy the dip,’” another executive director frowned. “The risk is too great. What we need now is to reduce risk exposure, not increase uncertainty.”

“This is not blindly buying the dip,” John Reed countered. “It is an asset swap based on value judgment. We sell assets that are still overvalued or whose prospects have indeed deteriorated, and buy assets whose risk-reward ratio is more attractive after the crisis readjustment.”

The goal is to optimize the potential return structure of the future investment portfolio while reducing overall risk exposure. This is more conducive to our long-term recovery than simply engaging in panic selling.

John Reed remembered Lin Haoran saying that this period of decline and adjustment in the US stock market would last at most a few months, and that a big surge would definitely follow once the adjustment period ended.

Therefore, according to John Reed, replacing loss-making junk assets with high-quality assets that have been wrongly sold off is not only for reducing losses now, but also to gain an advantage in the future rebound, and even to surpass them.

A brief silence and hushed discussions ensued in the meeting room.

Reed's advice is indeed more complex and challenging than simply stopping losses, requiring accurate judgment and decisive execution.

However, in the current situation where there seems to be no solution, it offers a less passive approach.

Walter Ryston pondered.

He was certainly aware of the drawbacks of simply "cutting losses".

Reed's plan, though risky, at least attempted to turn the crisis into an opportunity for structural adjustment to some extent.

More importantly, Reed's composure and strategic thinking at this moment stood in stark contrast to the general frustration in the meeting room.

Even now, John Reed still hasn't revealed Foresight Capital's secret investments.

For him, with such low leverage, it was too late for regrets.

After all, it's a bit late to increase investment and expand now.

However, this round of investment by Foresight Capital is far from over.

John Reed now completely admires Lin Haoran. He remembers Lin Haoran saying that the US stock market downturn would last at least two or three months before it adjusted.

In other words, Forward Capital's short positions can be held for at least another month or two to expand its gains.

The thought made his heart pound.

On the one hand, there is excitement about the potential huge profits, and on the other hand, there is deeper regret. If the leverage ratio were higher, the profits at this moment would be astronomical!

But the frustration was quickly replaced by a stronger determination: we cannot miss the next opportunity.

This can be seen as an attempt to hedge against Citigroup's heavy losses by using the profits of its subsidiary, Foresight Capital, which he controls, even though this may not be able to make up for Citigroup's overall losses.

But John Reed knew that this incident would greatly enhance his influence within Citigroup. While everyone else was mired in difficulties and suffering heavy losses, only his subsidiary was profitable, which would be his most powerful bargaining chip on the power chessboard.

Then, his position as successor will be completely secured!
Later, even the chairman would listen to him and obey his every word, which became the cornerstone for his consolidation of power.

This idea acted like a shot in the arm, reigniting John Reed's burning ambition amidst his regret.

Therefore, John Reed's feelings at this moment were unimaginably complex.

There was a hidden excitement about the huge profits that Foresight Capital was about to make, as well as a deep fear of the huge losses that Citigroup was experiencing overall.

He felt both immense admiration for Lin Haoran's accurate prediction and deep regret for not fully trusting him at the crucial moment.

There is both a strong ambition to emerge from the crisis and wield greater power, and an instinctive nervousness about taking on greater responsibilities and facing more complex situations.

These many emotions clashed and intertwined in his chest, but he forcefully suppressed them under a calm and expressionless face due to his strong willpower.

He knew that at that moment, everyone in the conference room was looking at him, whether openly or secretly.

Walter Riston awaited his arrival, his colleagues assessed his worth, while Legoway calmly observed.

……

And in the outside world.

In fact, as early as when the US stock market began to decline, many US media outlets had already re-reported Lin Haoran's remarks when he answered students' questions at MIT.

Before this, they had ridiculed Lin Haoran quite a bit.

But after several days of consecutive declines in the US stock market, they had to admit that the louder they mocked them, the more their faces stung.

However, the media is a fickle group, and they don't care how they mocked Lin Haoran before.

The Wall Street Journal was one of the first media outlets to react.

The day after the US stock market crash, its front-page headline quietly changed from the doubts and ridicule of the previous days to a slightly reflective tone: "The prophet's foresight? Lin Haoran's pessimistic view on the US stock market unexpectedly comes true."

Although the article still tries to remain objective and lists various technical reasons for the market decline, it cannot hide the surprise at Lin Haoran's accurate prediction, and even carries a hint of barely perceptible awe.

The New York Times published a lengthy analysis in its business section titled "From 'Clown' to 'Prophet': An Eastern Investor's Comeback and Wall Street's Collective Misjudgment."

The article begins bluntly: "Just over ten days ago, the name Lin Haoran was synonymous with 'arrogance and ignorance' on Wall Street."

His prediction of an impending correction in the US stock market was scoffed at by almost all financial experts, institutional analysts, and business leaders, and even became a laughing stock on evening talk shows.

However, the market, the fairest yet most ruthless referee, proved with a series of severe setbacks who was truly the one who saw through the emperor's new clothes.

A financial columnist for the Los Angeles Times wrote in a more personal tone: "I was wrong, we were all wrong. In that commentary, I implied that Mr. Lin Haoran needed to 'learn about the complexities of the American market.'"

Now it seems that we are the ones who need to learn. He comes from the East, but he seems to have sensed the storm earlier than those of us in the trading floors of New York and Chicago.

This is not just luck, but a profound insight into economic cycles and human greed that transcends geographical and cultural boundaries.

Perhaps it's time to remove our tinted glasses and listen carefully to the voices from across the Pacific.

CNN Money also quickly adjusted its reporting stance.

In the daily market summary program, the host changed his joking tone from the previous days and said seriously, "We have to re-evaluate Mr. Lin Haoran's views."

As it turns out, his warnings about the pressure on corporate profits and the accumulation of market risks in a high-interest-rate environment were not unfounded. Although no one can accurately predict every turning point in the market, his macroeconomic logic framework has clearly stood the test.

Now, investors are frantically reviewing every detail of his speech, trying to find clues about what's next.

Although Fox Business Network has a relatively conservative stance, even its well-known hosts had to admit: "Whether you like Lin Haoran or not, you have to respect the facts. His predictions were correct, while many of the 'experts' we know were wrong."

This forces us to consider: Are our information sources diverse enough? Are we relying too heavily on traditional, potentially outdated, analytical models? This lesson from Hong Kong is costly, but it may also be invaluable.

The Associated Press report summarized in relatively plain language: "Lin Haoran, the young Eastern tycoon who has once again come into the public eye because of the 'Hong Kong Rich List,' has once again become the focus of global financial news."

This time, it wasn't because of his wealth figures, but because of his accurate market predictions. Amidst a chorus of optimism on Wall Street, he stood out from the crowd and warned of risks, and his views were quickly validated after the market crash.

This event not only enhanced his personal reputation but may also prompt global investors to take Asian economic analysis and investment wisdom more seriously.

BusinessWeek and Fortune magazine were relatively reserved, not immediately giving it extensive coverage on their covers or front pages, but both added commentary on Lin Haoran's prediction in their latest issues.

A BusinessWeek analysis article titled "The Value of Prophets: When Consensus Goes Wrong" implicitly affirms the importance of independent thinking and non-mainstream viewpoints in investing.

Fortune magazine, in a feature article about "future investment leaders," added a mention of Lin Haoran, calling him "a unique figure who breaks through the echo chamber of Wall Street with his extraordinary insights."

The "shift" or "reflection" of these mainstream media outlets quickly transformed Lin Haoran from a ridiculed "outsider" and "clown" into a "market prophet" and "independent thinker" with extraordinary insight, the courage to challenge authority, and proven correct by facts.

Although some media outlets still expressed reservations or attempted to cover up the situation, the undeniable fact that US stocks have continued to plummet has shifted the tone of public opinion.

This reversal of public opinion not only washed away the ridicule Lin Haoran had previously endured, but also greatly enhanced his personal brand value and his influence in the global capital circle.

What's even more interesting is that, faced with the market's relentless slap in the face, those financial tycoons and authoritative experts who had once loudly refuted Lin Haoran now seem to have been silenced.

The chief strategist of a well-known investment bank, who once confidently assured viewers in a television interview that the "bull market is firmly established," appeared embarrassed and evasive when pressed by the host in the latest episode.

They attributed the decline to "unexpected liquidity shocks" and "overreaction of short-term sentiment," never mentioning their previous confident predictions, and even less daring to mention Lin Haoran's name again.

The renowned economist who published a column in The Wall Street Journal claiming that Lin Haoran's views were "oversimplified and ignored the strong profitability of American companies" has quietly shifted the topic in his latest column.

They began discussing the issue of "global supply chain resilience," avoiding any mention of the current market crash.

A Goldman Sachs partner who had privately told clients that "Lin Haoran's remarks were just sensationalism" can now only vaguely explain to clients that "the market environment has changed drastically" when faced with inquiries, and strongly recommends the company's "risk hedging products".

Some clients even called him directly and verbally abused him until he was speechless, naturally because he had caused them to suffer heavy losses in the stock market.

He was well aware that this misjudgment not only damaged his personal reputation but could also cause clients to doubt the company's research capabilities.

Morgan Stanley's star analyst, who once implied in a mainstream newspaper column that Lin Haoran "did not understand the depth of the US market," has quietly changed the title of his latest research report from "Why the Bull Market Will Continue" a few weeks ago to "Finding Structural Opportunities in the Current Volatility."

The report's analysis of the market decline was unusually "comprehensive" and "technical," but it made no mention of any "prediction" or "previous misjudgment," as if nothing had ever happened.

The most embarrassed are those financial influencers and experts who once publicly mocked Lin Haoran on television for his "Eastern witchcraft finance" or "taking a chance."

Their TV program's comment section has now become a massive "desecration" site, with many viewers calling the TV station just to mock them.

Some people, on the other hand, try to divert attention with more extreme market views, such as shouting that "this is just a normal correction in a bull market, and a violent rebound is imminent."

Some people have simply chosen to "go into hiding" for the time being, ceasing to express any clear market opinions.

Even within the Federal Reserve, some officials who were previously confident about a "soft landing" for the economy have begun to become more cautious in private conversations.

While maintaining a consistent stance on policy in public, internal discussion documents have quietly raised concerns about economic growth risks and financial market stability.

Lin Haoran's statement that "corporate profits are unsustainable in a high-interest-rate environment" now seems like an accurate prediction of their previous optimism, casting a shadow over their hearts.

Even Walter Riston, chairman of Citigroup, who expressed a “different view” from Lin Haoran during a Q&A session, avoided media inquiries by saying he was “busy with internal affairs.”

This reversal of public opinion is less a crowning achievement for Lin Haoran personally, and more a heavy blow to the "expert authority" system that Wall Street has long cultivated, built on overconfidence and groupthink.

It ruthlessly reveals that in the face of a complex global economy and financial markets, no one possesses a "crystal ball" that is always right.

Those financial models, consensuses, and authoritative voices that were once considered golden rules may be incredibly fragile in the face of real market storms.

Lin Haoran's "rise" symbolizes a new possibility: voices from outside traditional financial centers, with different perspectives, more independent thinking, and a deep understanding of the nature of economic cycles, may be able to capture systemic risks and opportunities earlier.

This is a disturbing sign for Wall Street, which is accustomed to dominating global financial discourse.

Of course, Wall Street's silence and monologue will not last forever.

Capital's memory is fleeting, but the calculation of profit is eternal.

Soon, they will try to digest this lesson, adjust the narrative, and may even try to "co-opt" or "cooperate".

But at this moment, those financial tycoons and experts who once spoke with absolute certainty are collectively tasting the bitterness of their misjudgments, and appear somewhat overshadowed by the ever-growing halo brought by the name Lin Haoran.

Lin Haoran, this challenger from the East, not only proved himself right with the market crash, but also began to shake the solid fortress of Western financial discourse with this collective silence that swept Wall Street.

The media frenzy triggered by the fulfillment of the prophecy did not stop at "reflection" and "silence," but quickly escalated into a campaign to "deify" Lin Haoran personally.

This kind of "deification" is not a coronation in the traditional sense, but rather a natural reaction during a time of extreme volatility in global capital markets and a collapse in confidence, where people instinctively seek out, shape, and worship a symbol that can provide certainty and guidance. (End of Chapter)